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EXHIBIT 10.8
EXECUTION COPY
THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
Dated as of November 12, 1999
Among
ARTISTDIRECT, INC.
and
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
and
XXXXXXXXX/ARTISTDIRECT PARTNERS, LLC
and
CCP/PSILOS ARTISTDIRECT, LLC
and
CCP/PSILOS UBL, LLC
and
FLATIRON FUND 1998/99, LLC
and
FLATIRON ASSOCIATES, LLC
and
SPINNAKER TECHNOLOGY FUND, L.P.
and
SPINNAKER FOUNDERS FUND, L.P.
and
SPINNAKER CLIPPER FUND, L.P.
and
PSILOS GROUP PARTNERS L.P.
and
TORONTO DOMINION INVESTMENTS, INC.
and
CONSTELLATION VENTURE CAPITAL, L.P.
and
CONSTELLATION VENTURES (BVI), INC.
and
XXXX XXXXX
and
XXXX DI DIA
and
XXXXX X. VAN DALSEM
and
XXXXX X. XXXXXXXXX
and
MEADOWLANE ENTERPRISES LTD.
and
UNIVERSAL MUSIC GROUP, INC.
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This THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made
and entered into as of November 12, 1999, by and among ARTISTDIRECT, INC, a
Delaware corporation ("AD"), CHASE VENTURE CAPITAL ASSOCIATES, a California
limited partnership, XXXXXXXXX/ARTISTDIRECT PARTNERS, LLC, a Delaware limited
liability company, CCP/PSILOS ARTISTDIRECT, LLC, a Delaware limited liability
company, CCP/PSILOS UBL, LLC, a Delaware limited liability company, FLATIRON
FUND 1998/99 LLC, a Delaware limited liability company, FLATIRON ASSOCIATES,
LLC, a Delaware limited liability company, SPINNAKER TECHNOLOGY FUND, L.P., a
Delaware limited partnership, SPINNAKER FOUNDERS FUND, L.P., a Delaware limited
partnership, SPINNAKER CLIPPER FUND, L.P., a Delaware limited partnership,
PSILOS GROUP PARTNERS L.P., a Delaware limited partnership, TORONTO DOMINION
INVESTMENTS, INC., a Delaware corporation, CONSTELLATION VENTURE CAPITAL, L.P.,
a Delaware limited partnership, CONSTELLATION VENTURES (BVI), INC., a British
Virgin Islands corporation, MEADOWLANE ENTERPRISES LTD. ("Meadowlane") and
UNIVERSAL MUSIC GROUP, INC., a California corporation ("Universal") (the
foregoing entities, collectively and with the exception of AD, the "Investor
Securityholders"), XXXX DI DIA, an individual ("Di Dia"), XXXXX X. VAN DALSEM,
an individual ("Van Dalsem"), XXXXX X. XXXXXXXXX, an individual ("Gradstein"),
and XXXX XXXXX an individual ("Xxxxx"; each of the Investor Securityholders, Di
Dia, Van Dalsem, Gradstein and Xxxxx, a "Securityholder" and collectively, the
"Securityholders"), XXXX X. XXXXXX, an individual residing at 0000 Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("Xxxxxx"), and XXXXXX XXXXXX, an individual
residing a 00000 Xxxxxx Xxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("Xxxxxx").
The Securityholders are the purchasers and holders, as the case may be,
of certain Registrable Securities (as defined below) issued by the Company. The
Company and the Securityholders deem it to be in their respective best interests
to set forth the rights of the Securityholders in connection with public
offerings and sales of the Registrable Securities.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed them in the Stockholders Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, the Company and each of the parties
hereto, intending legally to be bound, hereby agree as follows.
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SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" of any Person means any other Person who either directly or
indirectly is in Control of, is Controlled by, or is under common Control with
such Person; provided, that for purposes of this definition, an investment
entity shall be deemed to be Controlled by its investing manager, investment
advisor or general partner or by reason of contract or otherwise.
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in the City of New York
are authorized by law, regulation or executive order to close.
"Capital Stock" shall mean any and all shares, interests, participation
rights or other equivalents (however designated) of capital stock of the
Company, and any and all rights, warrants and options to purchase any of the
foregoing.
"Company" shall mean AD and any successor to AD by way of merger,
consolidation, share exchange, or other reorganization or recombination.
"Consent Letter" shall mean that certain letter dated the date hereof,
among the Company and the Series C Preferred Stockholders, regarding the Series
C Preferred Stockholders' consent to the issuance of additional shares of Series
C Preferred Stock.
"Control" shall mean the power to direct the affairs of an entity by
reason of ownership of equity securities, by contract, or otherwise.
"Current Registration Statement" shall mean the Company's Registration
Statement on Form S-1 initially filed with the Securities and Exchange
Commission on September 22, 1999 (file number 333-87547), as amended from time
to time.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended (or any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to time.
"First Issue AD Securities" shall mean the common stock issued or
issuable upon conversion of the 5,850,519 shares of Series A Preferred Stock
issued to Constellation Venture Capital, L.P. and Constellation Ventures (BVI),
Inc. pursuant to the Merger Agreement. The amount of First Issue AD Securities
shall not be adjusted to include any securities issued or issuable in connection
with any Preferred Return thereon.
"Founders" shall mean Xxxxxx and Xxxxxx.
"Holder" shall mean any Person that owns Registrable Securities, and
including such successors and assigns as acquire Registrable Securities,
directly or indirectly, from such Person; provided, however, that for purposes
of Sections 3, 4 and 10, the term "Holder" shall not include the Founders,
including such successors and assigns as acquire Registrable Securities,
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directly or indirectly, from the Founders. For purposes of this Agreement, the
Company may deem the registered holder of a Registrable Security as the Holder
thereof.
"Investor Securityholders" has the meaning set forth in the preamble.
"Meadowlane Requisite Share Number" shall mean a number of Registrable
Securities representing (on an as converted basis) not less than the lesser of
(A) 25% of the aggregate shares of the Registrable Securities held by Meadowlane
as of the date of any such determination (calculated on a fully diluted basis)
or (B) $5 million in fair market value of Registrable Securities, as reasonably
determined by the Board of Directors of the Company.
"Merger Agreement" shall mean that certain Merger Agreement dated as of
October 6, 1999 by and between the Company and ARTISTdirect, LLC.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, any instrumentality, division, agency, body or department thereof).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
"Registrable Class" shall mean the class of Capital Stock which includes
the Registrable Securities.
"Registrable Securities" shall mean (i) the common stock issuable upon
conversion of the Company's Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock, (ii) the shares of common stock issued pursuant to
the Merger Agreement (including any such shares which were transferred to Di
Dia, Van Dalsem and Gradstein prior to the date hereof), (iii) any shares of
common stock acquired from time to time (A) from the Company pursuant to Section
2.1 of the Stockholders Agreement or (B) pursuant to Section 5.5 of the
Stockholders Agreement, (iv) any shares of Common Stock acquired from the
Company in connection with a Roll-up Transaction (as defined in that certain
Memorandum of Understanding dated as of the date hereof between the Company and
Universal and/or its Affiliates), (v) any common stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend, split or reverse split, combination,
recapitalization, reclassification, merger or consolidation, exchange, or other
distribution with respect to, or in exchange for or in replacement of, the
shares referenced in (i), (ii), (iii) and (iv) above, excluding in all cases,
however, any Registrable Securities sold by a Holder in a transaction in which
such Holder's rights under this Agreement are not assigned. Notwithstanding the
foregoing, common stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a broker
or
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dealer or underwriter in a registered public distribution, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(1) thereof (including Rule 144 promulgated
thereunder) so that all transfer restrictions, and restrictive legends with
respect thereto, if any, are removed upon the consummation of such sale.
"Registration Expenses" shall have the definition set forth in Section 7
hereof.
"Registration Statement" shall mean any registration statement which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"Requisite Share Number" shall mean (i) in the case of a demand made for
an initial public offering of the Company, a number of Registrable Securities
representing (on an as converted basis) not less than either the lesser of (A)
5% of the aggregate shares of the Registrable Class outstanding as of the date
of any such determination (calculated on a fully diluted basis) or (B) $5
million in fair market value of Registrable Securities, as reasonably determined
by the Board of Directors of the Company, or (ii) in the case of a demand made
for an offering after an initial public offering of the Company a number of
Registrable Securities (A) described in clause (i)(B) above or (B) such lesser
number of Registrable Securities as constitutes, in the aggregate, not less than
2% of the total number of shares of the Registrable Class then outstanding
(calculated on a fully diluted basis), provided, that such number includes all
Registrable Securities then owned by the Securityholders (or issued in
connection with any dividend, split or reverse split, combination,
recapitalization, reclassification, merger or consolidation, exchange or
distribution in respect of the interests issued thereunder).
"Rescission Offer Registration" shall mean (i) any registration
statement of the type contemplated under the caption "Rescission Offer" in the
current version of the Company's Registration Statement or Form S-1 (a copy of
which is attached as Exhibit A hereto) and (ii) any other registration
statement, in each case of (i) and (ii), solely covering shares issued or
issuable to employees, artists and their managers and advisors.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act,
as amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"SEC" shall mean the Securities and Exchange Commission, or any other
federal
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agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Series C Preferred Stockholder" shall mean Meadowlane and Universal and
any of their permitted transferees pursuant to Section 5.5 of the Stockholders
Agreement and to whom such transferees are assigned rights hereunder pursuant to
Section 15 hereunder.
"Series C Requisite Share Number" shall mean a number of Registrable
Securities representing (on an as converted basis) not less than the lesser of
(A) 10% of the aggregate shares of the Registrable Securities held by the Series
C Preferred Stockholders as of the date of any such determination (calculated on
a fully diluted basis) or (B) $5 million in fair market value of Registrable
Securities, as reasonably determined by the Board of Directors of the Company.
"Shelf Registration" shall mean the registration of Registrable
Securities for sale on a continuous or delayed basis pursuant to Rule 415.
"Shelf Registration Statement" shall mean a Registration Statement filed
in connection with a Shelf Registration.
"Stockholders Agreement" shall mean that certain Amended and Restated
Stockholders Agreement dated as of the date hereof, among the Company and
certain of its stockholders.
"Underwritten Offering" shall mean a registered offering in which
securities of the Company are sold to an underwriter for resale to the general
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities entitled
to the benefits of this Agreement are the Registrable Securities. This Agreement
will terminate with respect to any Holder after the earlier of (i) ten years
following the consummation of an initial public offering of the Registrable
Class of the Company or (ii) such time as Rule 144 or another similar exemption
under the Securities Act is available for the sale of all of such Holder's
Registrable Securities without restriction as to volume.
SECTION 3. DEMAND REGISTRATION.
(a) Demand Registrations.
(i) Securityholders' Demand. Upon the written request of a
Securityholder or Securityholders (other than a Series C Preferred Stockholder,
which shall not be entitled to initiate a registration effected pursuant this
Section 3(a)(i)) of a majority of the Registrable Securities (the "Initiating
Holders"), requesting that the Company effect the registration under the
Securities Act, at any time after the earlier of (A) May 18, 2004 or (B) the
expiration or earlier termination of any lockup period required by the managing
underwriter or
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underwriters of the initial public offering of the securities of the Company
(which such period shall not exceed 180 days), of Registrable Securities and
securities of the same class as the Registrable Securities (which shall be
treated as Registrable Securities pursuant to this Agreement in connection with
such offering) constituting not less than the Requisite Share Number; provided,
however, that to the extent the Initiating Holders hold Registrable Securities
constituting less than the Requisite Share Number, the Initiating Holders shall
offer to the Founders the first opportunity to include a "pro rata portion" (as
defined below) of their respective securities of the same class as the
Registrable Securities in any demand registration effected pursuant to this
Section 3(a)(i) in order to meet the Requisite Share Numbers, and specifying the
intended method of disposition thereof (which may, if the Company is eligible to
register common stock on Form S-3 or any similar form, include a continuous or
delayed offering pursuant to a Shelf Registration Statement), the Company will
use its best efforts to effect, as expeditiously as possible, the registration
under the Securities Act of such Registrable Securities; provided, however, that
the Company shall not be obligated to (X) effect more than an aggregate of four
demand registrations pursuant to this Section 3(a)(i) or (Y) register any
Registrable Securities pursuant to this Section 3(a)(i) for a period of 6 months
following the date on which a Registration Statement filed in respect of any
previous demand registration under Section 3(a), if any, was declared effective;
provided further, that the Company's delay right set forth in the foregoing
proviso shall not apply to any registration request pursuant to this Section
3(a)(i) delivered to the Company within 60 days of the expiration of the
applicable lock-up period described in clauses (i)(A) and (i)(B) above.
For the purposes of this Section 3(a)(i) the term "pro rata portion"
shall mean Xxxxxx Xxxxxx'x or Xxxx Xxxxxx'x pro rata portion of the difference
between (i) the number of shares of Registrable Securities with respect to which
(based on their respective share ownership) the Initiating Holders made their
demand and (ii) the Requisite Share Number.
Upon receipt of any request for registration pursuant to this Section
3(a)(i) from any Holders of Registrable Securities, the Company shall promptly
give written notice of such request to all other Holders (including the Series C
Preferred Stockholders). The Company shall include in the requested registration
all Registrable Securities requested to be included by such of the other Holders
who shall make such request by written notice to the Company delivered within 10
Business Days of their receipt of the Company's notice. If the Company shall
receive a request for inclusion in the registration of the Registrable
Securities of additional Holders, it shall promptly so inform the Initiating
Holders.
The Initiating Holders holding a majority of the Registrable Securities
requested to be registered pursuant to this Section 3(a)(i) may, at any time
prior to the effective date of the Registration Statement relating to such
registration, revoke such request by providing a written notice to the Company
revoking such request; provided, however, that the Registration Expenses with
respect to (i) the first such revoked request shall be borne by the Company,
(ii) the second such revoked request shall be borne by the Initiating Holders
and any other holder that indicated it would be including its securities in such
demand registration and (iii) the third such revoked request and any request
made thereafter shall be borne by the Initiating Holders or at the election of
the Initiating Holders, shall be borne by the Company; provided, however, that
upon making any such election to cause the Company to bear such Registration
Expenses, the amount of
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demand registrations that the Company shall be obligated to effect pursuant to
this Section 3(a)(i) shall be reduced by one.
(ii) Series C Preferred Demand. Upon the written request of one or
more Series C Preferred Stockholders requesting that the Company effect the
registration under the Securities Act, at any time after the earlier of (A) May
18, 2004 or (B) the one-year anniversary of the consummation of the initial
public offering of the securities of the Company, of Registrable Securities
constituting the Series C Requisite Share Number, and specifying the intended
method of disposition thereof (which may, if the Company is eligible to register
common stock on Form S-3 or any similar form, include a continuous or delayed
offering pursuant to a Shelf Registration Statement), the Company will use its
best efforts to effect, as expeditiously as possible, the registration under the
Securities Act of such Registrable Securities; provided, however, that the
Company shall not be obligated (X) to effect more than three demand
registrations pursuant to this Section 3(a)(ii) or (Y) register any Registrable
Securities pursuant to this Section 3(a)(ii) for a period of 6 months following
the date on which a Registration Statement filed in respect of any previous
demand registration under Section 3(a), if any, was declared effective; provided
further, that the Company's delay right set forth in the foregoing proviso shall
not apply to any registration request pursuant to this Section 3(a)(ii)
delivered to the Company within 60 days of the expiration of the applicable
lock-up period described in clauses (ii)(A) and (ii)(B) above; and provided
further, that the number of demand registrations set forth in the first proviso
shall be increased by up to two additional demand registration rights, if any,
pursuant to the Consent Letter.
Upon receipt of any request for registration pursuant to this Section
3(a)(ii) from any Holders of Registrable Securities, the Company shall promptly
give written notice of such request to all other Holders. The Company shall
include in the requested registration all Registrable Securities requested to be
included by such of the other Holders who shall make such request by written
notice to the Company delivered within 10 Business Days of their receipt of the
Company's notice. If the Company shall receive a request for inclusion in the
registration of the Registrable Securities of additional Holders, it shall
promptly so inform the Holders requesting registration under this Section
3(a)(ii).
The Holders of a majority of the Registrable Securities requested to be
registered by the Series C Preferred Stockholders pursuant to this Section
3(a)(ii) may, at any time prior to the effective date of the Registration
Statement relating to such registration, revoke such request by providing a
written notice to the Company revoking such request; provided, however, that the
Registration Expenses with respect to (i) the first such revoked request shall
be borne by the Company, (ii) the second such revoked request shall be borne by
such Holders and any other holder that indicated it would be including its
securities in such demand registration and (iii) the third such revoked request
and any request made thereafter shall be borne by such Holders or at the
election of such Holders, shall be borne by the Company; provided, however, that
upon making any such election to cause the Company to bear such Registration
Expenses, the amount of demand registrations that the Company shall be obligated
to effect pursuant to this Section 3(a)(ii) shall be reduced by one.
(iii) Meadowlane Demand. Upon the written request of Meadowlane
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requesting that the Company effect the registration under the Securities Act, at
any time after the consummation of the Roll-Up Transaction (if at all), of
Registrable Securities constituting at least the Meadowlane Requisite Share
Number, and specifying the intended method of disposition thereof (which may, if
the Company is eligible to register common stock on Form S-3 or any similar
form, include a continuous or delayed offering pursuant to a Shelf Registration
Statement), the Company will use its best efforts to effect, as expeditiously as
possible, the registration under the Securities Act of such Registrable
Securities; provided, however, that the Company shall not be obligated to (A)
effect more than one (or two, if the fair market value of the shares of the
Company's stock received by Meadowlane in connection with, and at the time of,
the Roll-Up Transaction is equal to or greater than $100,000,000) demand
registration(s) pursuant to this Section 3(a)(iii) or (B) register any
Registrable Securities pursuant to this Section 3(a)(iii) for a period of 6
months following the date on which a Registration Statement filed in respect of
any previous demand registration under Section 3(a), if any, was declared
effective; provided further, that the Company's delay right set forth in the
foregoing proviso shall not apply to any registration request pursuant to this
Section 3(a)(iii) delivered to the Company within 60 days of the consummation of
the Roll-Up Transaction.
Upon receipt of any request for registration pursuant to this Section
3(a)(iii) from any Holders of Registrable Securities, the Company shall promptly
give written notice of such request to all other Holders. The Company shall
include in the requested registration all Registrable Securities requested to be
included by such of the other Holders who shall make such request by written
notice to the Company delivered within 10 Business Days of their receipt of the
Company's notice. If the Company shall receive a request for inclusion in the
registration of the Registrable Securities of additional Holders, it shall
promptly so inform Meadowlane.
Meadowlane may, at any time prior to the effective date of the
Registration Statement relating to a registration under this Section 3(a)(iii),
revoke such request by providing a written notice to the Company revoking such
request; provided, however, that the Registration Expenses with respect to (i)
the first such revoked request shall be borne by the Company, (ii) the second
such revoked request shall be borne by Meadowlane and any other holder that
indicated it would be including its securities in such demand registration and
(iii) the third such revoked request and any request made thereafter shall be
borne by Meadowlane or at the election of Meadowlane, shall be borne by the
Company; provided, however, that upon making any such election to cause the
Company to bear such Registration Expenses, the amount of demand registrations
that the Company shall be obligated to effect pursuant to this Section 3(a)(iii)
shall be reduced by one.
(b) Effectiveness of Registration Statement. The Company agrees to use
its best efforts to (i) cause the Registration Statement relating to any demand
registration pursuant to this Section 3 to become effective as promptly as
practicable; (ii) thereafter keep such Registration Statement effective
continuously for the period specified in the next succeeding paragraph; and
(iii) prevent the occurrence of any event of the kinds described in clauses (4),
(5) and (6) of Section 5(a)(ii).
A demand registration requested pursuant to this Section 3 will not be
deemed to
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have been effected unless the Registration Statement relating thereto has become
effective under the Securities Act and remained continuously effective (except
as otherwise permitted under this Agreement) for a period ending on the earlier
of (i) the date which is six months after the effective date of such
Registration Statement (or as to a Shelf Registration Statement the date on
which all Registrable Securities covered thereby are eligible for sale without
limitation as to volume pursuant to Rule 144), subject to extension as provided
in the final paragraph of Section 5(a) and (ii) the date on which all
Registrable Securities covered by such Registration Statement have been sold and
the distribution contemplated thereby has been completed; provided, however,
that if, after such Registration Statement has become effective, the offering of
the Registrable Securities pursuant to such registration is interfered with by
any stop order, injunction or similar order of the SEC or other governmental
agency or court (other than by reason of any untrue statement of a material fact
or any omission of a material fact required to be stated in the Registration
Statement or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information furnished in writing by a Holder to the Company
specifically for inclusion therein), such registration will be deemed not to
have been effected. The Company undertakes to use its best efforts to cause such
interference to be removed or terminated.
(c) Inclusion of Other Securities. The Company, and any other holder of
the Company's securities who has registration rights (an "additional requesting
holder"), may include its securities in any demand registration effected
pursuant to this Agreement; provided, however, that if the managing underwriter
or underwriters of a proposed Underwritten Offering contemplated thereby advise
the Holder or Holders in writing (i) that the total amount or kind of securities
which the Company or any such additional requesting holder intends to include in
such proposed public offering is sufficiently large or of a type to materially
adversely affect the success of the proposed public offering requested by the
Holder or Holders, then the amount of securities to be offered for the account
of the Company or any such additional requesting holder, except a
Securityholder, shall first be reduced pro rata and, (ii) thereafter, if the
amount of securities of the Company and all additional requesting holders (other
than Holders) has been reduced to zero pursuant to Section 3(c)(i) and the
amount of securities the Holders intend to include in such proposed public
offering is greater than the number which can be offered without materially and
adversely affecting the success of such proposed public offering, the amount of
securities to be offered for the accounts of such requesting Holders shall be
reduced pro rata (except as provided below) to the extent necessary to reduce
the total amount of securities to be included in such proposed public offering
to the amount recommended by such managing underwriter or underwriters;
provided, however, that any First Issue AD Securities intended to be included in
any registration effected pursuant to this Section 3 shall in no event be
subject to reduction pursuant to this Section 3(c) in the case of a registration
initiated pursuant to Section 3(a)(i). For purposes of this Section 3(c), the
term "pro rata" shall mean the pro rata portion of Registrable Securities,
excluding any First Issue AD Securities.
(d) Delay of Registration. Notwithstanding the terms of this Section 3,
if the Company shall furnish to Initiating Holders (or the Series C Preferred
Stockholders, in the case of a registration pursuant to Section 3(a)(ii); or
Meadowlane, in the case of a registration pursuant to Section 3(a)(iii)), a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
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detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 90 days after receipt of the request of the
Initiating Holders (or Meadowlane or the Series C Preferred Stockholders, as the
case may be); provided, however, that the Company may not utilize this right (i)
more than twice in any 12 month period with respect to registration requests
made pursuant to Section 3(a)(i), more than twice in any 12 month period with
respect to registration requests made pursuant to Section 3(a)(ii), and more
than twice with respect to registration requests made pursuant to Section
3(a)(iii) in any 12 month period or (ii) during the 60 days following the
expiration or earlier termination of any lockup period required by the managing
underwriter or underwriters of the initial public offering of the securities of
the Company unless all Holders were given the opportunity to participate in such
initial public offering and the amount of securities offered for the accounts of
all such Holders was not reduced; and, provided, further, that the aggregate of
the period of any such deferral and the period in which dispositions of
Registrable Securities are restricted pursuant to Section 3(a) and Section 10(c)
shall not exceed 180 days in any 12 month period (other than the 12 month period
in which the initial public offering of the Company occurs, in which case such
aggregate shall not exceed 270 days), measured separately for each of (A) the
Initiating Holders, with respect to registration requests pursuant to Section
3(a)(i), (B) the Series C Preferred Stockholders, with respect to registration
requests pursuant to Section 3(a)(ii), and (C) Meadowlane, with respect to
registration requests pursuant to Section 3(a)(iii).
SECTION 4. PIGGYBACK REGISTRATION. If the Company at any time proposes
to file a registration statement with respect to any class of equity securities,
whether for its own account (other than the Current Registration Statement or in
connection with any registration statement contemplated by Section 3 or a
registration statement on Form S-4 or S-8 (or any successor or substantially
similar form), any Rescission Offer Registration, or a registration statement
filed in connection with an exchange offer or offering or securities solely to
the Company's existing securityholders), or for the account of a holder of
securities of the Company (a "Requesting Securityholder"), then the Company
shall in each case give written notice of such proposed filing to the Founders
and all Holders of Registrable Securities at least 15 Business Days before the
anticipated filing date of any such registration statement by the Company, and
such notice shall offer to the Founders and all Holders the opportunity to have
any or all of the Registrable Securities held by the Founders and such Holders
included in such registration statement. Each of the Founders and each Holder of
Registrable Securities desiring to have its Registrable Securities registered
under this Section 4 shall so advise the Company in writing within 15 days after
the date of receipt of such notice (which request shall set forth the amount of
Registrable Securities for which registration is requested), and the Company
shall include in such Registration Statement all such Registrable Securities so
requested to be included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of any such proposed public offering advises the
Company in writing that the total amount or kind of securities which the
Founders and the Holders of Registrable Securities, the Company and any other
persons or entities intended to be included in such proposed public offering is
sufficiently large to materially adversely affect the success of such proposed
public offering, then (A) the amount or kind of securities to be offered for the
accounts of the Company and holders of securities of the Company (except for the
Founders and Securityholders), to the extent that the Company did not initiate
such registration for its own account or such holders of securities are
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not Requesting Securityholders, shall first be reduced pro rata, and (B) if the
amount of securities to be offered for such accounts is reduced to zero, to the
extent further reduction is necessary, the amount or kind of securities to be
offered for the accounts of the Founders shall next be reduced pro rata and, (C)
if the amount of securities to be offered for the accounts of the Founders is
reduced to zero, to the extent further reduction is necessary, the amount or
kind of securities to be offered for the accounts of the Securityholders of
Registrable Securities shall then be reduced pro rata to the extent necessary to
reduce the total amount or kind of securities to be included in such proposed
public offering to the amount or kind recommended by such managing underwriter
or underwriters before the securities offered by the Company, to the extent the
Company has initiated the registration for its own account, or any Requesting
Securityholder, are so reduced.
Notwithstanding the foregoing, the Company may withdraw any registration
statement that is subject to this Section 4 at any time prior to the time it
became effective.
SECTION 5. REGISTRATION PROCEDURES.
(a) General. In connection with the Company's registration obligations
hereunder, the Company will:
(i) prepare and file with the SEC a new Registration Statement
or such amendments and post-effective amendments to an existing
Registration Statement as may be necessary to keep such Registration
Statement effective for the time periods set forth in Section 3(c),
provided that no Registration Statement shall be required to remain in
effect after all Registrable Securities covered by such Registration
Statement have been sold and distributed as contemplated by such
Registration Statement, and, provided, further, that as soon as
practicable, but in no event later than three Business Days before
filing such Registration Statement, any related Prospectus or any
amendment or supplement thereto, other than any amendment or supplement
which is automatically and solely made as a result of incorporation by
reference of documents filed with the SEC subsequent to the filing of
such Registration Statement, the Company shall furnish to the Holders of
the Registrable Securities covered by such Registration Statement and
the underwriters, if any, copies of all such documents proposed to be
filed, which documents shall be subject to the review of such Holders
and underwriters; not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto (other than any
amendment or supplement which is automatically and solely made as a
result of incorporation by reference of documents filed with the SEC
subsequent to the filing of such Registration Statement) to which the
managing underwriters of the applicable offering, if any, or the Holders
of a majority of the Registrable Securities on a Registrable Class
stock-equivalent basis covered by such Registration Statement (or, in
the case of a registration pursuant to Section 3(a)(ii), the Holders of
a majority of the Registrable Securities requested to be included by the
Series C Preferred Stockholders; or, in the case of a registration
pursuant to Section 3(a)(iii), Meadowlane) shall have reasonably
objected in writing to the effect that such Registration Statement or
amendment thereto or Prospectus or supplement thereto does not comply in
all material respects with the requirements of the Securities Act
(provided that the foregoing shall not limit the right of any Holder
whose Registrable Securities are covered by a Registration Statement to
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reasonably object, within two Business Days after receipt of such
documents, to any particular information that is to be contained in such
Registration Statement, amendment, Prospectus or supplement that relates
specifically to such Holder, including, without limitation, any
information describing the manner in which such Holder acquired such
Registrable Securities and the intended method or methods of
distribution of such Registrable Securities), and if the Company is
unable to file any such document due to the objections of such
underwriters or such Holders, the Company shall use its best efforts to
cooperate with such underwriters and Holders to prepare, as soon as
practicable, a document that is responsive in all material respects to
the reasonable objections of such underwriters and Holders; cause the
Prospectus to be supplemented by any required Prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act applicable to
the Company with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus;
(ii) notify the selling Holders of Registrable Securities
and the managing underwriters, if any, promptly (1) when a new
Registration Statement, Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any new
Registration Statement or post-effective amendment, when it has become
effective, (2) of any request by the SEC for amendments or supplements
to any Registration Statement or Prospectus or for additional
information, (3) of the issuance by the SEC of any comments with respect
to any filing, (4) of any stop order suspending the effectiveness of any
Registration Statement or the initiation of any proceedings for that
purpose, (5) in the case of an Underwritten Offering, if at any time the
representations and warranties of the Company contemplated by paragraph
(xi) below cease to be true and correct as of any time they are required
to be true and correct, (6) of any suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (7) of
the happening of any event which makes any statement of a material fact
made in any Registration Statement, Prospectus or any document
incorporated therein by reference untrue or which requires the making of
any changes in any Registration Statement, Prospectus or any document
incorporated therein by reference in order to make the statements
therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading; and make every
reasonable effort to obtain as promptly as practicable the withdrawal of
any order or other action suspending the effectiveness of any
Registration Statement or suspending the qualification or registration
(or exemption therefrom) of the Registrable Securities for sale in any
jurisdiction;
(iii) if reasonably requested by the managing underwriter
or underwriters or a Holder of Registrable Securities being sold in
connection with an Underwritten Offering, promptly incorporate in a
Prospectus supplement or post-effective amendment such information as
the managing underwriters and the Holders of a majority of the
Registrable Securities (on a Registrable Class equivalent basis) being
sold in such Underwritten Offering (or, in the case of a registration
pursuant to Section 3(a)(ii), the
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Holders of a majority of the Registrable Securities requested to be
included by the Series C Preferred Stockholders; or, in the case of a
registration pursuant to Section 3(a)(iii), Meadowlane) agree should be
included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the aggregate
number of shares of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the Underwritten
Offering of the Registrable Securities to be sold in such offering; and
promptly make all required filings of such Prospectus supplement or
post-effective amendment;
(iv) promptly after the filing of any document which is to
be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders of
the Registrable Securities covered thereby and the underwriters, if any;
(v) furnish to each selling Holder of Registrable
Securities and each managing underwriter, without charge, the number of
manually signed copies and as many conformed copies as may reasonably be
requested, of the then effective Registration Statement and any
post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference);
(vi) deliver to each selling Holder of Registrable
Securities and the underwriters, if any, without charge, as many copies
of the then effective Prospectus (including each prospectus subject to
completion) and any amendments or supplements thereto as such Persons
may reasonably request;
(vii) use reasonable best efforts to register or qualify
or cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with
the registration or qualification of such Registrable Securities for
offer and sale under the securities or blue sky laws of such
jurisdictions as any selling Holder of Registrable Securities or
underwriter reasonably requests in writing and do any and all other acts
or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the then
effective Registration Statement; provided, however, that the Company
will not be required to (1) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify, but for this
paragraph (vii) or (2) subject itself to general taxation in any such
jurisdiction where it would not otherwise be subject to such taxation.
(viii) cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at
least two Business Days prior to any sale of Registrable Securities to
the underwriters or any other person;
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(ix) upon the occurrence of any event contemplated by
clause (7) of paragraph (ii) above, promptly prepare and furnish to the
selling Holders a reasonable number of copies of a supplement or
post-effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading;
(x) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange (or
quotation system operated by a national securities association) on which
securities of the same class issued by the Company are then listed, if
any, and enter into customary agreements including, if necessary, a
listing application and indemnification agreement in customary form, and
provide a transfer agent for such Registrable Securities no later than
the effective date of such Registration Statement;
(xi) in the case of an Underwritten Offering, enter into
an underwriting agreement and take all such other actions in connection
therewith in order to expedite and facilitate the disposition of such
Registrable Securities, in each case as is reasonable and customary, and
in connection therewith, (1) make such representations and warranties to
the Holders of such Registrable Securities and the underwriters in form,
substance and scope as are customarily made by issuers to underwriters
in secondary underwritten offerings; (2) obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the
underwriters and the selling Holders of such Registrable Securities and
shall cover the matters customarily covered in opinions requested in
secondary underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters); (3) obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company addressed to the selling Holders of
such Registrable Securities and the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with secondary underwritten
offerings; (4) provide such indemnification and contribution
undertakings pursuant to such underwriting agreement as are customarily
included in such agreements or reasonably required by such underwriters;
and (5) deliver such documents and certificates as may be reasonably
requested by the selling Holders of such Registrable Securities and the
managing underwriters to evidence compliance with clause (1) above and
with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company in respect of the relevant
offering. The above shall be done at each closing under such
underwriting or similar agreement;
(xii) provide a CUSIP number for the Registrable
Securities no later than the effective date of such registration
statement;
(xiii) in the case of any nonunderwritten offering: (1)
obtain customary and reasonable opinions of counsel to the Company at
the time of effectiveness of such
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Registration Statement covering such offering and updates thereof of
customary frequency, addressed to each Holder of any Registrable
Securities participating in such offering; (2) obtain "cold comfort"
letters from the independent certified public accountants of the Company
at the time of effectiveness of such Registration Statement and, upon
the request of the Holders of a majority of the Registrable Securities
(on a Registrable Class equivalent basis) covered by such registration
statement, updates thereof of customary frequency, in each case
addressed to each Holder of Registrable Securities participating in such
offering and covering matters that are no more extensive in scope than
would be customarily covered in "cold comfort" letters and updates
obtained in secondary underwritten offerings by issuers with similar
market capitalization and reporting and financial histories; provided
that any letter or update described in this clause (2) shall only be
required to the extent such letters are being issued in respect of
nonunderwritten secondary offerings under then prevailing accounting
practices; and (3) deliver a certificate of a senior executive officer
of the Company at the time of effectiveness of such Registration
Statement and, upon the request of the Holders of a majority of the
Registrable Securities (on a Registrable Class equivalent basis) covered
by such Registration Statement, updates thereof of customary frequency,
such certificates to cover matters no more extensive in scope than those
matters customarily covered in officer's certificates delivered in
connection with underwritten offerings by issuers with similar market
capitalization and reporting and financial histories;
(xiv) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and the federal and state
securities laws relating to such registration and the distribution of
the securities being offered and make generally available to its
securities holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act, no later than 60 days after the end
of any 12-month period (or 120 days, if such period is a fiscal year)
commencing at the end of any fiscal quarter in which the Registrable
Securities are sold to underwriters in a firm commitment or best efforts
offering, or, if not sold to underwriters in such an offering, beginning
with the first month of the first fiscal quarter commencing after the
effective date of such Registration Statement, which earning statements
shall cover such 12-month periods;
(xv) cooperate and assist in any filings required to be
made with the National Association of Securities Dealers, Inc.;
(xvi) make available for inspection by a representative of
the Holders of the Registrable Securities covered by such Registration
Statement, any underwriter participating in any disposition pursuant to
such registration, and any attorney or accountant retained by the
sellers or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company and cause the
Company's officers, directors and employees to supply all information
reasonably requested by, and to cooperate fully with, any such
representative, underwriter, attorney or accountant in connection with
such registration, and otherwise to cooperate fully in connection with
any due diligence investigation; provided that such representatives,
underwriters, or accountants enter into a confidentiality agreement, in
form and substance reasonably satisfactory to the Company, prior to the
release or disclosure to them of any such
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information, records or documents;
(xvii) subject to the proviso in paragraph (vii) above,
cause the Registrable Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriters, if any, to consummate the disposition of such
Registrable Securities (other than as may be required by the
governmental agencies or authorities of any foreign jurisdiction and
other than as may be required by a law applicable to a selling Holder by
reason of its own activities or business other than the sale of
Registrable Securities); and
(xviii)use its best efforts to take all action necessary
or advisable to effect such registration in the manner contemplated by
this Agreement and the applicable registration statement.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
(b) Holders' Obligations and Restrictions. In connection with any
Registration Statement in which a Holder of Registrable Securities is
participating, each such Holder will furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such Registration Statement or related prospectus. Each Holder of Registrable
Securities agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(a)(ii), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the then current Prospectus
until (1) such Holder is advised in writing by the Company that a new
Registration Statement covering the offer of Registrable Securities has become
effective under the Securities Act or (2) such Holder receives copies of a
supplemented or amended Prospectus contemplated by Section 5(a)(ix), or until
such Holder is advised in writing by the Company that the use of the Prospectus
may be resumed. If the Company shall have given any such notice during a period
when a demand registration is in effect or if any action is taken by the Company
that results in Holders of the Registrable Securities covered thereby not being
able to dispose of such Registrable Securities during the applicable period,
without limiting any other remedy available to the Holders, the Company shall
extend the period during which such registration statement shall be maintained
effective pursuant to this Agreement by the number of days during which any such
disposition of Registrable Securities is discontinued pursuant to this paragraph
or as a result of such action. The Company shall use its best efforts to limit
the duration of any discontinuance with respect to the disposition of
Registrable Securities pursuant to this paragraph. The Company shall use its
reasonable best efforts to keep the affected Holders informed from time to time
of the status of such discontinuance.
(c) Additional Procedures for Shelf Registration. If the Holders become
entitled, pursuant to an event described in clause (ii) of the definition of
Registrable Securities, to
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receive any securities in respect of Registrable Securities that were already
included in a Shelf Registration Statement, subsequent to the date such Shelf
Registration Statement is declared effective, and the Company is unable under
the securities laws to add such securities to the then-effective Shelf
Registration Statement, the Company, as promptly as reasonably practicable,
shall file, in accordance with the procedures more particularly set forth in
Section 5(a), an additional Shelf Registration Statement with respect to any
such new Registrable Securities. The Company shall use its best efforts to have
any such additional Registration Statement declared effective as promptly as
reasonably practicable after such filing and to keep such additional Shelf
Registration Statement continuously effective during the period specified in the
second paragraph of Section 3(b). A request to file an additional Shelf
Registration Statement pursuant to this paragraph shall not constitute a demand
under Section 3(a).
SECTION 6. HOLDBACK AGREEMENT. In the case of any underwritten offering
of Registrable Securities pursuant to Section 3, including under any Shelf
Registration Statement, each of the Company and each of the Founders agrees, if
and to the extent requested in writing by the managing underwriter or
underwriters administering such offering, as promptly as reasonably practicable
prior to the commencement of the 15-day period referred to below, not to effect
any public sale or distribution (other than sales pursuant to the same
Registration Statement, as permitted under this Agreement, or the Current
Registration Statement, or any registration on Form S-8 or S-4 (or any successor
or substantially similar form or a registration statement filed in connection
with an exchange offer or offering or securities solely to the Company's
existing securityholders) or a Rescission Offer Registration), of any equity
securities of the Company during the period beginning 15 days prior to the
closing date of each underwritten offering of Registrable Securities and during
the period ending on the earlier of (i) 90 days after such closing date
(provided, that if such underwritten offering is an initial public offering, the
period referred to in this clause (i) shall be 180 days after such closing date)
and (ii) the date such sale or distribution is permitted by such managing
underwriter or underwriters. Any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any privately
placed securities similar to any issue of the Registrable Securities shall
contain a provision under which holders of such securities agree not to effect
any public sale or distribution of any such securities during such period.
SECTION 7. REGISTRATION EXPENSES. All expenses incident to 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 (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), printing
expenses (including expenses of printing Prospectuses), messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and disbursements of its counsel and its independent certified public
accountants (including the expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
registration hereunder, fees and expenses of other Persons retained by the
Company, fees and expenses of one counsel for the Holders selected by the
Holders of a majority of the Registrable Securities being sold pursuant
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to any registration (or, in the case of a registration pursuant to Section
3(a)(ii), the Holders of a majority of the Registrable Securities requested to
be included by the Series C Preferred Stockholders; or, in the case of a
registration pursuant to Section 3(a)(iii), Meadowlane), incurred in connection
with each registration hereunder, and reasonable out-of-pocket expenses incurred
by the Holders (all such expenses being referred to as "Registration Expenses"),
shall be borne by the Company, whether or not any registration statement becomes
effective; provided, that Registration Expenses shall not include any
underwriting discounts, commissions or fees attributable to the sale of the
Registrable Securities (other than sales of securities for the account of the
Company).
SECTION 8. INDEMNIFICATION.
(a) Indemnification by the Company. The Company hereby agrees to
indemnify and hold harmless, to the full extent permitted by law, but without
duplication, each Holder of Registrable Securities, its officers, directors,
employees, partners, principals, equity holders, managed or advised accounts,
advisors and agents, and each Person who controls such Holder (within the
meaning of the Securities Act), against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and reasonable legal
fees and expenses) resulting from (1) any untrue statement of a material fact
in, or any omission of a material fact required to be stated in, any
Registration Statement or Prospectus or necessary to make the statements therein
(in the case of a Prospectus in light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by any Holder or any
underwriters expressly for use therein, (2) any violation or alleged violation
by the Company of any federal, state or common law rule or regulation applicable
to the Company in connection with any registration, qualification or compliance
effected by the Company pursuant to its obligations hereunder, or (3) any
failure to register or qualify Registrable Securities in any state where the
Company or its agents have affirmatively undertaken or agreed to undertake such
registration or qualification on behalf of Holders in connection with the
Company's obligations hereunder; provided, however, that the indemnification
provided for in this Section 8(a) shall not inure to the benefit of any Holder
with respect to any sale or disposition of Registrable Securities by such Holder
in violation of the provisions of Section 5(b) hereof. If so requested, the
Company will also indemnify underwriters participating in the distribution,
their officers, directors, employees, partners and agents, 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, if so requested.
(b) Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement in which a Holder of Registrable Securities is
participating, each such Holder hereby agrees to indemnify and hold harmless, to
the full extent permitted by law, but without duplication, the Company, its
officers, directors, shareholders, employees, advisors and agents, 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 statement of material fact in, or any omission of a material fact
required to be stated in, the Registration Statement or Prospectus or necessary
to make the statements therein (in the case of a Prospectus in light of the
circumstances under which they were made) not misleading, to the extent, but
only
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to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion therein. If so requested, each Selling Holder also agrees to
indemnify and hold harmless Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this Section 8(b). In no event shall the liability of any selling
Holder of Registrable Securities hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Company and the other persons described above shall be entitled to request
indemnities from underwriters participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such indemnified Person
unless (A) the indemnifying party has agreed to pay such fees or expenses, (B)
the indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to the indemnified party in a timely
manner or (C) in the reasonable judgment of any such Person, based upon advice
of its counsel, a conflict of interest may exist between such person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person). The indemnifying party will not be subject to any liability for
any settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnified party will be required to consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of the claim will 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, as well as one local counsel in
each relevant jurisdiction.
(d) Contribution. If for any reason the indemnification provided for in
Section 8(a) or Section 8(b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by Section 8(a) and Section
8(b), then the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party, determined by reference to whether
the untrue statement of a material fact or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or the Holder
of Registrable Securities, on the other, and the parties' relative intent,
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knowledge, access to information and opportunity to correct or prevent such
statement or omission, provided, that no indemnifying Holder shall be required
to contribute an amount greater than the dollar amount of the net proceeds
received by such indemnifying Holder with respect to the sale of the Registrable
Securities giving rise to such indemnification obligation less any amounts
otherwise paid or payable by such indemnifying Holder as damages, penalties or
otherwise in connection with such matter. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentations.
SECTION 9. RULES 144 AND 144A. After the Company completes its initial
public offering of securities, the Company shall use its reasonable best efforts
to make publicly available and available to the Holders, pursuant to Rule 144,
such information as is necessary to enable the Holders to make sales of
Registrable Securities pursuant to that Rule. The Company shall use its
reasonable best efforts to file timely with the SEC all documents and reports
required of the Company under the Exchange Act. After the Company completes its
initial public offering of securities, the Company shall furnish to any Holder,
upon request, a written statement executed on behalf of the Company as to
compliance with the current public information requirements of Rule 144. In
addition, the Company will provide to any Holder of a Registrable Security, or
any potential purchaser of a Registrable Security, upon any such Person's
reasonable request, the information required by paragraph (d)(4) of Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) If any of the Registrable Securities covered by a demand
registration hereunder are to be sold in an Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority of the
Registrable Securities included in such offering (or, in the case of a
registration initiated pursuant Section 3(a)(ii), by the holders of a majority
of the Registrable Securities requested to be included by the Series C Preferred
Stockholders; or, in the case of a registration statement initiated pursuant to
Section 3(a)(iii), Meadowlane); provided further that such investment bankers
and managers must be reasonably satisfactory to the Company, acting in good
faith, based on identified business reasons specific to such bankers or
managers.
(b) No Person may participate in any Underwritten Offering hereunder
unless such Person (i) agrees to sell such Person's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 10 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
(c) Each Holder hereby agrees that, during the period of duration (up
to, but not exceeding, 15 days prior to the closing date of the Underwritten
Offering and 90 days thereafter or, as to an initial public offering of the
securities of the Company, 15 days prior to the closing date of the Underwritten
Offering and 180 days thereafter) specified by an underwriter of
21
22
a Registrable Class or other securities of the Company of the same class as
Registrable Securities, following the effective date of a registration statement
of the Company filed under the Securities Act, it shall not, to the extent
requested by such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees,
Affiliates of the Securityholders or the partners of the Securityholders (and
the equityholders of any successor entities thereto) and their Affiliates that
agree to be similarly bound) any Registrable Securities of the Company of the
same class as those offered pursuant to such registration statement held by it
at any time during such period except Registrable Securities included in such
registration; provided, however, that;
(i) such agreement shall be applicable only during the three-year
period following the date of the final prospectus distributed pursuant to the
initial public offering of the Company's securities;
(ii) all officers and directors of the Company, all holders of in
excess of one percent of any class of securities of the Company, and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into agreements which are no less restrictive;
(iii) the aggregate of the period in which dispositions of
Registrable Securities are restricted pursuant to this Section 10(c) and any
period during which the filing of a registration statement is deferred pursuant
to Section 3(a) and Section 3(d) shall not exceed 180 days in any 12 month
period other than the 12 month period in which the effectiveness of the
registration statement for the initial public offering of the securities of the
Company occurs in which such aggregate shall not exceed 270 days;
(iv) such restriction shall not prevent sales pursuant to Rule 144
or private placement sales to purchasers, Affiliates of the Securityholders or
the partners of the Securityholders (and the equityholders of any successor
entities thereto) and their Affiliates that agree to similar restrictions (which
agreements shall not be required for sales made pursuant to Rule 144); and
(v) this Section 10(c) shall not apply to any Holder that holds less
than 2% of any class of securities of the Company.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are consistent with the
provisions of this Section.
SECTION 11. NO INCONSISTENT AGREEMENTS. The Company has not previously
and shall not in the future enter into any agreement, arrangement or
understanding with respect to its securities which is inconsistent with the
rights granted to the Holders of Registrable Securities in
22
23
this Agreement or otherwise conflicts with the provisions hereof.
SECTION 12. AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this Section 12, 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 consent of Holders
of a majority of the Registrable Securities then outstanding and each
Securityholder who is adversely affected.
SECTION 13. REMEDIES. Any Person having rights under any provision of
this Agreement shall be entitled to enforce such rights specifically or to
recover damages or to exercise any other remedy available to it at law or in
equity. The foregoing rights and remedies shall be cumulative and the exercise
of any right or remedy provided herein shall not preclude any Person from
exercising any other right or remedy provided herein. 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
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
SECTION 14. NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air-courier guaranteeing overnight delivery:
(a) If to a Holder of Registrable Securities, at the current
address for such Holder on the transfer records of the Company, which
address initially is, with respect to each Holder:
For Constellation Venture Capital, L.P. and
Constellation Ventures
(BVI), Inc.:
Constellation Ventures Management, LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Telecopy Number: (000) 000-0000
For Chase:
Chase Venture Capital Associates, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: I. Xxxxxx Xxxxxx
Telecopy Number: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
00
00
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy Number: (000) 000-0000
and
X'Xxxxxxxx, Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
For Xxxxxxxxx/ARTISTdirect Partners, LLC:
000 Xxxxxxxx, Xxxxx 0X
Xxx Xxxx, XX 00000
Attention: I. Xxxxxx Xxxxxx
Telecopy Number: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy Number: (000) 000-0000
and
X'Xxxxxxxx, Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
For Flatiron Fund 1998/99, LLC and Flatiron
Associates, LLC:
Flatiron Partners
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy Number: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
24
25
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy Number: (000) 000-0000
and
X'Xxxxxxxx, Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
For Spinnaker Founders Fund, L.P., Spinnaker
Technology Fund, L.P., Spinnaker Clipper Fund,
L.P.:
Xxxxxx Capital Management, L.L.C.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Telecopy Number (000) 000-0000
with copies to:
Shartsis, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esq.
For Psilos Group Partners, L.P., CCP/Psilos
ARTISTdirect, LLC and CCP/Psilos UBL, LLC:
Psilos Group Partners, L.P.
CCP/Psilos ARTISTdirect, LLC
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy Number: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Ph.D.
For Toronto Dominion Investments, Inc.:
Toronto Dominion Investments, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
25
26
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telecopy Number: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy Number: (000) 000-0000
For Meadowlane Enterprises Ltd.:
c/x Xxxxxxxx Television Group
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
For Universal Music Group, Inc.:
00 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxxxx 00000
with copies to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 X. Xxxxx Xxx., Xxxxx 00
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
(b) If to Xxxxx, at the current address for Xxxxx on the transfer
records of the Company, which address initially is:
Xxxx X. Xxxxxx & Company
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
26
27
Telecopy Number: (000) 000-0000
with copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
(c) If to Di Dia, at the current address for Di Dia on the transfer
records of the Company, which address initially is:
Xxxx Di Dia
0000 Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
(d) If to Van Dalsem, at the current address for Van Dalsem on the
transfer records of the Company, which address initially is:
Xxxxx X. Van Dalsem, Esq.
c/o Gradstein, Luskin & Van Dalsem, PC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
(e) If to Gradstein, at the current address for Gradstein on the
transfer records of the Company, which address initially is:
Xxxxx X. Xxxxxxxxx, Esq.
c/o Gradstein, Luskin & Van Dalsem, PC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
27
28
(f) If to the Company or to the Founders, initially to:
ARTISTdirect, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx Xxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
and thereafter at such other address as may be designated from time to time by
notice given in accordance with the provisions of this Section 14.
(b) All such notices and other communications shall be deemed to
have been delivered and received (i) in the case of personal delivery,
telecopier or telegram, on the date of such delivery (assuming delivery
is confirmed), (ii) in the case of overnight guaranteed delivery air
courier, on the Business Day after the date when sent and (iii) in the
case of mailing, on the third Business Day following such mailing.
SECTION 15. SUCCESSORS AND ASSIGNS. Subject to compliance with Article V
of the Stockholders Agreement, any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any Holder in
connection with the transfer of its Registrable Securities without the prior
written consent of the Company; provided (a) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being transferred or assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 6 (if applicable to the transferor); and (c) such transferee or assignee
(i) agrees to act through a single representative with the transferring Holder
for the purpose of exercising rights, receiving notices and taking action
hereunder, or (ii) acquires all of the shares of Registrable Securities held by
such transferring Holder or at least one million (1,000,000) shares of such
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations). Any such transferee
or assignee shall be subject to all rights and obligations hereunder and, if
requested by the Company, shall agree in writing to be bound by the terms of
this Agreement. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including without limitation and without the need for an express
assignment, subsequent Holders of the Registrable Securities.
28
29
SECTION 16. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 17. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 18. GOVERNING LAW; FORUM. This Agreement shall be governed by,
construed and enforced in accordance with, the laws of the State of Delaware
without regard to the principles thereof relating to conflict of laws. Each of
the parties hereby submits to personal jurisdiction and waives any objection as
to venue in the County of Los Angeles, State of California. Service of process
on the parties in any action arising out of or relating to this Agreement shall
be effective if mailed to the parties in accordance with Section 14 hereof. The
parties hereto waive all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement.
SECTION 19. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 20. ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, including but not limited to, that certain Second Amended and
Restated Registration Rights Agreement dated as of May 18, 1999, among
ARTISTdirect, LLC, a California limited liability company (the Company's
predecessor) and certain of the Company's stockholders, as amended by that
certain First Amendment to Second Amended and Restated Registration Rights
Agreement dated as of October 6, 1999.
SECTION 21. ATTORNEYS' FEES. In any proceeding brought to enforce any
provision of this Agreement, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
[Remainder of Page Intentionally Left Blank]
29
30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ARTISTDIRECT, INC.
By:
-----------------------------------
Name:
Title:
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: Chase Capital Partners,
L.P.,
its General Partner
By:
-----------------------------------
Name:
Title:
XXXXXXXXX/ARTISTDIRECT PARTNERS, LLC
By: Chase Venture Capital
Associates, L.P.,
its Managing Member
By: Chase Capital Partners, L.P.,
its General Partner
By:
-----------------------------------
Name:
Title:
CCP/PSILOS ARTISTDIRECT, LLC
By: Psilos Group Investors, LLC,
its Managing Member
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxx, Ph.D.
Title: Senior Managing
Director
30
31
CCP/PSILOS UBL, LLC
By: Psilos Group Investors, LLC,
its Managing Member
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxx, Ph.D.
Title: Senior Managing
Director
FLATIRON FUND 1998/99, LLC
By:
-----------------------------------
Xxxx Xxxxxx
Managing Member
FLATIRON ASSOCIATES, LLC
By:
-----------------------------------
Xxxx Xxxxxx
Managing Member
SPINNAKER TECHNOLOGY FUND, L.P.
By: Xxxxxx Capital Management,
L.L.C., its General Partner
By:
-----------------------------------
Name: Xxxx Xxxxx
Title: Controller
SPINNAKER FOUNDERS FUND, L.P.
By: Xxxxxx Capital Management,
L.L.C., its General Partner
By:
-----------------------------------
Name: Xxxx Xxxxx
Title: Controller
31
32
SPINNAKER CLIPPER FUND, L.P.
By: Xxxxxx Capital Management,
L.L.C., its General Partner
By:
-----------------------------------
Name: Xxxx Xxxxx
Title: Controller
PSILOS GROUP PARTNERS L.P.
By: Psilos Group Investors, LLC,
its General Partner
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxx, Ph.D.
Title: Senior Managing
Director
TORONTO DOMINION INVESTMENTS, INC.
By:
-----------------------------------
Name: Xxxxxx Clause
Title: President
CONSTELLATION VENTURE CAPITAL, L.P.
By: Constellation Ventures
Management LLC, its General
Partner
By:
-----------------------------------
Xxxxxxxx X. Xxxxxxxx
Member
32
33
CONSTELLATION VENTURES (BVI), INC.
By:
-----------------------------------
Xxxxxxxx X. Xxxxxxxx
President and Chief Executive
Officer
MEADOWLANE ENTERPRISES, LTD.
By:
-----------------------------------
--------------------------------------
--------------------------------------
UNIVERSAL MUSIC GROUP, INC.
By:
-----------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Xxxx Xxxxx
--------------------------------------
Xxxx Di Dia
--------------------------------------
Xxxxx X. Van Dalsem
--------------------------------------
Xxxxx X. Xxxxxxxxx
--------------------------------------
Xxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
33
34
AMENDMENT NO. 1
TO THIRD AMENDED AND
RESTATED REGISTRATION RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT (this "Amendment") is made and entered into as of
December 20, 1999, by and among ARTISTDIRECT, INC, a Delaware corporation
("AD"), CHASE VENTURE CAPITAL ASSOCIATES, a California limited partnership,
XXXXXXXXX/ARTISTDIRECT PARTNERS, LLC, a Delaware limited liability company,
CCP/PSILOS ARTISTDIRECT, LLC, a Delaware limited liability company, CCP/PSILOS
UBL, LLC, a Delaware limited liability company, FLATIRON FUND 1998/99 LLC, a
Delaware limited liability company, FLATIRON ASSOCIATES, LLC, a Delaware limited
liability company, SPINNAKER TECHNOLOGY FUND, L.P., a Delaware limited
partnership, SPINNAKER FOUNDERS FUND, L.P., a Delaware limited partnership,
SPINNAKER CLIPPER FUND, L.P., a Delaware limited partnership, PSILOS GROUP
PARTNERS L.P., a Delaware limited partnership, TORONTO DOMINION INVESTMENTS,
INC., a Delaware corporation, CONSTELLATION VENTURE CAPITAL, L.P., a Delaware
limited partnership, CONSTELLATION VENTURES (BVI), INC., a British Virgin
Islands corporation, MEADOWLANE ENTERPRISES LTD., a British Virgin Islands
limited company ("Meadowlane"), UNIVERSAL MUSIC GROUP, INC., a California
corporation ("Universal"), BMG MUSIC d/b/a BMG ENTERTAINMENT, a New York general
partnership ("BMG"), YAHOO! INC, a Delaware corporation ("Yahoo!"), SONY MUSIC,
a Group of SONY MUSIC ENTERTAINMENT INC., a Delaware corporation ("Sony"),
ART-DIR HOLDINGS INC., a Delaware corporation ("Art-Dir Holdings") and MAVERICK
RECORDING COMPANY, a California general partnership ("Maverick") (the foregoing
entities, collectively and with the exception of AD, the "Investor
Securityholders"), XXXX DI DIA, an individual ("Di Dia"), XXXXX X. VAN DALSEM,
an individual ("Van Dalsem"), XXXXX X. XXXXXXXXX, an individual ("Gradstein"),
and XXXX XXXXX an individual ("Xxxxx"; each of the Investor Securityholders, Di
Dia, Van Dalsem, Gradstein and Xxxxx, a "Securityholder" and collectively, the
"Securityholders"), XXXX X. XXXXXX, an individual residing at 0000 Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("Xxxxxx"), and XXXXXX XXXXXX, an individual
residing a 00000 Xxxxxx Xxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("Xxxxxx").
The Company and Securityholders (other than BMG, Yahoo! Inc.,
Sony, Art-Dir Holdings and Maverick) are parties to that certain third Amended
and Restated Registration Rights Agreement dated as of November 12, 1999 (the
"Existing Registration Rights Agreement").
Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed them in the Existing Registration Rights Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Company and each of the
parties hereto, intending legally to be bound, hereby agree as follows.
1
35
SECTION 1. AMENDMENTS TO EXISTING REGISTRATION RIGHTS
AGREEMENT. The Existing Registration Rights Agreement is hereby amended
as follows:
(a) BMG, Yahoo!, Sony, Art-Dir Holdings and Maverick shall
each be added as parties to the Existing Registration Rights Agreement.
(b) The definition of "Consent Letter" in Section 1 of the
Existing Registration Rights Agreement is hereby deleted in its entirety.
(c) Sub-section (iii) of the first sentence of the definition
of "Registrable Securities" in Section 1 of the Existing Registration Rights
Agreement is hereby amended and restated in its entirety as follows:
"(iii) any shares of common stock acquired from time to time
(A) from the Company pursuant to Section 2.1 of the
Stockholders Agreement, (B) pursuant to Section 5.5 of the
Stockholders Agreement, or (C) upon exercise of the warrant
issued to Yahoo! in connection with that certain Letter of
Understanding dated as of December 1, 1999, between the
Company and Yahoo!,"
(d) The definition of "Series C Preferred Stockholder" in
Section 1 of the Existing Registration Rights Agreement is hereby amended and
restated in its entirety as follows:
""Series C Preferred Stockholder" shall mean Meadowlane,
Universal, BMG, Yahoo!, Sony, Art-Dir Holdings, Maverick and
any of their permitted transferees pursuant to Section 5.5 of
the Stockholders Agreement and to whom such transferees are
assigned rights hereunder pursuant to Section 15 hereunder."
(e) The first paragraph of Section 3(a)(ii) of the Existing
Registration Rights Agreement is hereby amended and restated in its entirety as
follows:
"Series C Preferred Demand. Upon the written request of one or
more Series C Preferred Stockholders requesting that the
Company effect the registration under the Securities Act, at
any time after the earlier of (A) May 18, 2004 or (B) the
one-year anniversary of the consummation of the initial public
offering of the securities of the Company, of Registrable
Securities constituting the Series C Requisite Share Number,
and specifying the intended method of disposition thereof
(which may, if the Company is eligible to register common
stock on Form S-3 or any similar form, include a continuous or
delayed offering pursuant to a Shelf Registration Statement),
the Company will use its best efforts to effect, as
expeditiously as possible, the registration under the
Securities Act of such Registrable Securities; provided,
however, that the Company shall not be obligated (X) to effect
more than five demand registrations pursuant to this Section
3(a)(ii) or (Y) register any Registrable Securities pursuant
to this Section 3(a)(ii) for a period of 6 months following
the date on which a Registration Statement
2
36
filed in respect of any previous demand registration
under Section 3(a), if any, was declared effective; provided
further, that the Company's delay right set forth in the
foregoing proviso shall not apply to any registration
request pursuant to this Section 3(a)(ii) delivered to the
Company within 60 days of the expiration of the applicable
lock-up period described in clauses (ii)(A) and (ii)(B)
above."
(f) Section 14(a) of the Existing Registration Rights
Agreement is hereby amended by adding the following addresses:
For BMG Music d/b/a BMG Entertainment
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Vice President, Corporate
Development
with copies to:
Xxxxx & Srinivasen
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
For Yahoo! Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President,
Corporate Development
Telecopy Number: (000) 000-0000
with copies to:
Yahoo! Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
For Sony Music, a Group of Sony Music
Entertainment Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
3
37
Attention: Senior Vice President, Business
Affairs and Administration
Telecopy Number: (000) 000-0000
with copies to:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President and General
Counsel
Telecopy Number: (000) 000-0000
and
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telecopy Number: (000) 000-0000
For Art-Dir Holdings Inc.
c/o Time Warner Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
with copies to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
For Maverick Recording Company
c/o Maverick Records LLC
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
and:
SR/MDM Venture, Inc.
4
38
c/o Warner Bros. Records Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000-0000
Attn: Vice Chairman
Facsimile: (000) 000-0000
with copies to:
Grubman, Indursky & Xxxxxxxxx, P.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
or Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Legal Department
Warner Music Group Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Facsimile: (000) 000-0000
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 2. NO OTHER CHANGES. Except as expressly provided
for in Section 1 above, all of the provisions of the Existing Registration
Rights Agreement shall continue in full force and effect.
[Remainder of Page Intentionally Left Blank]
5
39
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
ARTISTDIRECT, INC.
By:
-------------------------------------
Name:
Title:
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: Chase Capital Partners, L.P.,
its General Partner
By:
--------------------------------------
Name:
Title:
XXXXXXXXX/ARTISTDIRECT PARTNERS, LLC
By: Chase Venture Capital Associates, L.P.,
its Managing Member
By: Chase Capital Partners, L.P.,
its General Partner
By:
--------------------------------------
Name:
Title:
CCP/PSILOS ARTISTDIRECT, LLC
By: Psilos Group Investors, LLC,
its Managing Member
By:
---------------------------------------
Name: Xxxxxx X. Xxxxxx, Ph.D.
Title: Senior Managing Director
6
40
CCP/PSILOS UBL, LLC
By: Psilos Group Investors, LLC,
its Managing Member
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxx, Ph.D.
Title: Senior Managing Director
FLATIRON FUND 1998/99, LLC
By:
---------------------------------------
Xxxx Xxxxxx
Managing Member
FLATIRON ASSOCIATES, LLC
By:
---------------------------------------
Xxxx Xxxxxx
Managing Member
SPINNAKER TECHNOLOGY FUND, L.P.
By: Xxxxxx Capital Management, L.L.C., its
General Partner
By:
---------------------------------------
Name: Xxxx Xxxxx
Title: Controller
SPINNAKER FOUNDERS FUND, L.P.
By: Xxxxxx Capital Management, L.L.C., its
General Partner
By:
---------------------------------------
Name: Xxxx Xxxxx
Title: Controller
7
41
SPINNAKER CLIPPER FUND, L.P.
By: Xxxxxx Capital Management, L.L.C., its
General Partner
By:
---------------------------------------
Name: Xxxx Xxxxx
Title: Controller
PSILOS GROUP PARTNERS L.P.
By: Psilos Group Investors, LLC,
its General Partner
By:
---------------------------------------
Name: Xxxxxx X. Xxxxxx, Ph.D.
Title: Senior Managing Director
TORONTO DOMINION INVESTMENTS, INC.
By:
---------------------------------------
Name: Xxxxxx Clause
Title: President
CONSTELLATION VENTURE CAPITAL, L.P.
By: Constellation Ventures Management LLC,
its General Partner
By:
--------------------------------------
Xxxxxxxx X. Xxxxxxxx
Member
8
42
CONSTELLATION VENTURES (BVI), INC.
By:
--------------------------------------
Xxxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
MEADOWLANE ENTERPRISES, LTD.
By:
---------------------------------------
-------------------------------------------
-------------------------------------------
UNIVERSAL MUSIC GROUP, INC.
By:
---------------------------------------
-------------------------------------------
-------------------------------------------
9
43
------------------------------------------
Xxxx Xxxxx
------------------------------------------
Xxxx Di Dia
-------------------------------------------
Xxxxx X. Van Dalsem
-------------------------------------------
Xxxxx X. Xxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx
10
44
BMG MUSIC d/b/a BMG ENTERTAIMENT
By:
---------------------------------------
-------------------------------------------
-------------------------------------------
11
45
YAHOO! INC.
By:
---------------------------------------
-------------------------------------------
-------------------------------------------
12
46
SONY MUSIC, a group of SONY MUSIC
ENTERTAINMENT INC.
By:
---------------------------------------
-------------------------------------------
-------------------------------------------
13
47
ART-DIR HOLDINGS, INC.
By:
---------------------------------------
-------------------------------------------
-------------------------------------------
14
48
MAVERICK RECORDING COMPANY
By:
--------------------------------------
Name: Xxx Xxxxxx
Its: Co-Chief Executive Officer
15
