EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of December 19, 2001 (this
"AGREEMENT"), is made by and among DAISYTEK INTERNATIONAL CORPORATION, a
Delaware corporation, with headquarters located at 0000 Xxxxxxx Xxxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxx 00000 (the "COMPANY"), and the investors named on
the signature pages hereto (each of whom is hereinafter referred to as an
"INITIAL INVESTOR" and all of whom collectively are hereinafter referred to as
the "INITIAL INVESTORS").
RECITALS:
A. In connection with the Securities Purchase Agreement dated December
19, 2001 by and among the Initial Investors and the Company (the "PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Initial Investors
1,578,400 shares of the Company's Common Stock, par value $.01 per share (the
"COMMON SHARES" or the "SECURITIES").
B. In order to induce the Initial Investors to execute and deliver the
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act and applicable state securities laws with
respect to the Common Shares.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Initial Investors hereby
agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined herein have the
respective meanings given them in the Purchase Agreement. In addition, as used
in this Agreement, the following terms have the following meanings:
1.1 "Investors" means the Initial Investors and any of their
transferees or assignees who receive or acquire Registrable Securities and who
are entitled to the benefit of this Agreement as provided in Article IX hereof.
1.2 The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
statements in compliance with the Securities Act and pursuant to Rule 415
promulgated thereunder and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
1.3 "Registrable Securities" means the Securities sold pursuant to the
Purchase Agreement and any shares of capital stock issued or issuable from time
to time (with any adjustments) in exchange for or otherwise with respect to the
Securities; provided that Securities will cease to be Registrable Securities at
such time as they have been sold under a Registration Statement or pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act").
1.4 "Registration Period" means the period between the date of this
Agreement and the earliest of (i) the second anniversary of the date of this
Agreement, (ii) the date on which all of the Registrable Securities have been
sold by the Investors under the Registration Statement or pursuant to Rule 144
or (iii) the date on which all the Registrable Securities may be immediately
sold by the Investors pursuant to Rule 144 or otherwise without registration.
1.5 "Registration Statement" means a Registration Statement of the
Company filed under the Securities Act.
1.6 "Rule 415" means Rule 415 under the Securities Act, or any
successor rule providing for offering securities on a continuous basis, and
applicable rules and regulations thereunder.
ARTICLE II
REGISTRATION
2.1 Mandatory Registration. The Company will use its reasonable best
efforts to file with the SEC within 10 business days after the Closing Date of
the purchase of the Common Shares under the Purchase Agreement a Registration
Statement on Form S-3 registering the Registrable Securities for resale in
accordance with the intended methods of resale or distribution described by the
Investors. Such Registration Statement(s) shall state that, in accordance with
Rule 416 promulgated under the Securities Act, such Registration Statement(s)
also covers such indeterminate number of additional shares of Common Stock as
may become issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions. If Form S-3 is not available at that time,
then the Company will use its reasonable best efforts to file a Registration
Statement on such form as is then available to effect a registration of the
Registrable Securities within such 10-day period.
2.2 Effectiveness of the Registration Statement. The Company will use
its reasonable best efforts to cause the Registration Statement contemplated by
the previous Section to be declared effective by the SEC as soon as practicable
after filing, and in any event no later than the 90th day after the Closing Date
(the "Required Effective Date"). However, so long as the Company filed the
Registration Statement within 10 business days after the Closing Date, if the
Registration Statement receives any SEC review, then the Required Effective Date
will be the 120th day after the Closing Date. The Company's reasonable best
efforts will include, but are not limited to, promptly responding to all
comments received from the staff of the SEC. If the Company receives
notification from the SEC that the Registration Statement will receive no action
or review from the SEC, then the Company will request that the Registration
Statement become effective within five business days after such SEC
notification.
2.3 Payments by the Company. If (i) at any time after effectiveness of
the Registration Statement, sales cannot be made thereunder during the
Registration Period for any reason, other than by reason of the operation of
Section 3.5 or because the Company has been
merged with or into another entity, for a period of more than 10 consecutive
business days, or 30 business days in the aggregate, during any 12-month period
or (ii) the Common Stock is not listed or included for quotation on Nasdaq for
more than an aggregate of 10 business days in any 12-month period, other than
because the Company has been merged with or into another entity, then the
Company will thereafter make a payment (by wire transfer or check) to each
Investor as partial compensation for such delay. The amount of the payment made
to each Investor will be equal to 1% of the purchase price paid for the Common
Shares purchased by the Investor and not previously sold by the Investor for
each 30 business days that sales cannot be made under the effective Registration
Statement or the Common Stock is not listed or included for quotation on the
Nasdaq (but in no event to exceed 8% in the aggregate) beyond the allowed
period. The number of shares not previously sold as specified in the previous
sentence shall be determined as of the end of the respective 30 day period.
These payments will be prorated on a daily basis during the 30 business day
period and will be paid to each Investor in check within five business days
following the end of each month as to which payment is due hereunder, assuming
that the respective Investor delivered to the Company at least 2 business days
prior thereto information with respect to the number of Common Shares not
previously sold by such Investor (together with reasonable supporting
documentation). The damages described above shall be the Investors' sole and
exclusive remedy for such failure except where such failure is due to the
intentional failure by the Company to comply with the timeline set forth in this
section.
2.4 Effect of Late Registration. If the Registration Statement has not
been declared effective by the Required Effective Date, then the Company will
make a payment (by wire transfer or check) to each Investor as partial
compensation for such delay (the "Late Registration Payments"). The Late
Registration Payments will be equal to 1% of the purchase price paid for the
Common Shares purchased by such Investor and not previously sold by such
Investor for each 30 business days after the Required Effective Date (but in no
event to exceed 8% in the aggregate). The number of shares not previously sold
as specified in the previous sentence shall be determined as of the end of the
respective 30 day period. The Late Registration Payments will be prorated on a
daily basis during the 30 business day period and will be paid to the Initial
Investors in check within five business days after the earlier of (i) the end of
the 30 business days following the Required Effective Date or (ii) the effective
date of the Registration Statement. Assuming that the respective Investor
delivered to the Company at least 2 business days prior thereto information with
respect to the number of Common Shares not previously sold by such Investor
(together with reasonable supporting documentation), the Investors may make a
claim for additional damages as a remedy for the Company's failure to comply
with the timelines set forth in this section. The damages described above shall
be the Investors' sole and exclusive remedy for such failure except where such
failure is due to the intentional failure by the Company to comply with the
timeline set forth in this section (it being understood that a failure to comply
with the timelines set forth in this section as a result of comments raised by
the SEC in its review of the Registration Statement shall be deemed
unintentional).
2.5 Piggyback Registrations.
(a) If, at any time prior to the expiration of the Registration
Period, a Registration Statement is not effective with respect to all of the
Registrable Securities and the Company decides to register any of its securities
for its own account or for the account of others (if the agreement pursuant to
which such securities are being registered for the account of others
so allows), then the Company will promptly give the Investors written notice
thereof and will use its reasonable best efforts to include in such registration
all or any part of the Registrable Securities requested by such Investors to be
included therein (excluding any Registrable Securities previously included in a
Registration Statement). This requirement does not apply to Company
registrations on Form S-4 or S-8 or their equivalents (relating to equity
securities to be issued in connection with an acquisition of any entity or
business or equity securities issuable in connection with stock option or other
employee benefit plans) or to registration statements that would otherwise not
permit the registration of resales of previously issued securities. Each
Investor must give its request for registration under this paragraph to the
Company in writing within 15 days after receipt from the Company of notice of
such pending registration. If the registration for which the Company gives
notice is a public offering involving an underwriting, the Company will so
advise the Investors as part of the above-described written notice. In that
event, if the managing underwriter(s) of the public offering impose a limitation
on the number of shares of Common Stock that may be included in the Registration
Statement because, in such underwriter(s)' judgment, such limitation would be
necessary to effect an orderly public distribution, then the Company shall
include in such registration (i) first, the securities the Company proposes to
sell, (ii) second, the securities desired to be sold pursuant to such
Registration Statement by the stockholder or stockholders which are requiring
the Company pursuant to a contractual registration right to file such
Registration Statement and (iii) third, the Registrable Securities requested by
the Investors and other securities requested by other securities holders to be
included in such offering, pro rata among the holders of such Registrable
Securities and other securities on the basis of the number of shares requested
to be included by each such holder.
(b) No right to registration of Registrable Securities under
this Section 2.5 limits in any way the registration required under Section 2.1
above. The obligations of the Company under this Section 2.5 expire upon the
earliest of (i) the effectiveness of the Registration Statement filed pursuant
to Section 2.1 above with respect to the Registrable Securities or the
respective portion thereof, (ii) the date by which the Company has afforded the
opportunity for the Investors to exercise registration rights under this Section
2.5 for two registrations (provided, however, that any Investor that has had any
Registrable Securities excluded from any Registration Statement in accordance
with this Section 2.5 may include in any additional Registration Statement filed
by the Company the Registrable Securities so excluded), or (iii) expiration of
the Registration Period.
2.6 Eligibility to use Form S-3. The Company represents and warrants
that, as of the date of this Agreement, it meets the requirements for the use of
Form S-3 for registration of the resale by the Investors of the Registrable
Securities, and it will use its reasonable best efforts to continue to meet such
requirements during the Registration Period.
2.7 Condition to Company's Obligations. The obligations of the Company
and the payments to be paid by the Company as set forth in this Article II with
respect to each Investor and the Registrable Securities held by such Investor
are all subject and conditioned upon the timely compliance by such Investor with
its obligations set forth in Article IV of this Agreement.
ARTICLE III
ADDITIONAL OBLIGATIONS OF THE COMPANY
3.1 Continued Effectiveness of Registration Statement. Subject to the
limitations set forth in Section 3.5, the Company will use its reasonable best
efforts to keep the Registration Statement covering the Registrable Securities
effective under Rule 415 at all times during the Registration Period. In the
event that the number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover all of the Registrable
Securities issued, the Company will (if permitted) amend the Registration
Statement or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover all of the Registrable
Securities. The Company will file such amendment or new Registration Statement
as soon as practicable, but in no event later than 30 business days after the
necessity therefor arises. The Company will use its reasonable best efforts to
cause such amendment or new Registration Statement to become effective as soon
as is practicable after the filing thereof.
3.2 Accuracy of Registration Statement. Assuming the accuracy of
information furnished by or on behalf of the Investors, any Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Company covering Registrable Securities will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading. The Company
will promptly prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to permit sales pursuant to the Registration Statement at all times
during the Registration Period (but subject to Section 3.5), and, during such
period, will comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the
Registration Statement until the termination of the Registration Period, or if
earlier, until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement.
3.3 Furnishing Documentation. The Company will furnish to each Investor
whose Registrable Securities are included in a Registration Statement, and legal
counsel, if any, representing Investors holding at least a majority of the
Registrable Securities, (a) promptly after each document is filed with the SEC,
one copy of any Registration Statement filed pursuant to this Agreement and any
amendments thereto, each preliminary prospectus (if any) and final prospectus
and each amendment or supplement thereto; and (b) a number of copies of a
prospectus, including a preliminary prospectus (if any), and all amendments and
supplements thereto, and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor. The Company will notify by facsimile each Investor whose
Registrable Securities are included in any Registration Statement of the filing
and the effectiveness of the Registration Statement and any post-effective
amendment on the date of filing of the Registration Statement, effectiveness of
the Registration Statement or any post-effective amendment, as applicable.
3.4 Additional Obligations. The Company will use its reasonable best
efforts to (a) register and qualify the Registrable Securities covered by a
Registration Statement under such other securities or blue sky laws of such
jurisdictions in the United States as each Investor who holds (or has the right
to hold) Registrable Securities being offered reasonably requests, (b) prepare
and file in those jurisdictions any amendments (including post-effective
amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain their effectiveness during the Registration Period, (c) take any other
actions necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period, and (d) take any other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions. Notwithstanding the foregoing, the Company is not
required, in connection with such obligations, to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.4, (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause material expense or
burden to the Company or (v) make any change in its charter or bylaws, which in
each case the Company determines to be contrary to the best interests of the
Company and its stockholders.
3.5 Suspension of Resale Rights.
(a) The Company will notify (by telephone and also by facsimile)
each Investor who holds Registrable Securities being sold pursuant to a
Registration Statement of the happening of any event of which the Company has
knowledge as a result of which the prospectus included in the Registration
Statement as then in effect includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will make such notification on the same date
as the Company becomes aware of the event (but in no event will the Company be
required to disclose to any Investor any of the facts or circumstances regarding
the event), will promptly prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and will deliver a
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
(b) Notwithstanding the obligations under Section 3.5(a), if in the
good faith judgment of the Company, following consultation with legal counsel,
it would be detrimental to the Company and its stockholders for resales of
Registrable Securities to be made pursuant to the Registration Statement due to
(i) the existence of a material development or potential material development
involving the Company which the Company would be obligated to disclose in the
Registration Statement, which disclosure would be premature or otherwise
inadvisable at such time or would have a Material Adverse Effect upon the
Company and its stockholders, or (ii) in the good faith judgment of the Company,
it would adversely affect or require premature disclosure of the filing of a
Company-initiated registration of any class of its equity securities, the
Company will have the right to suspend the use of the Registration Statement for
a period of not more than 30 days, provided, however, that the Company may so
defer or suspend the use of the Registration Statement no more than 90 days in a
calendar year, and provided, further, that, after deferring or suspending the
use of the Registration Statement, the Company may not again defer or suspend
the use of the Registration Statement until a period of thirty days has elapsed
after resumption of the use of the Registration Statement.
(c) Subject to the Company's rights under this Section 3, the
Company will use its reasonable best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement and, if
such an order is issued, will use its reasonable best efforts to obtain the
withdrawal of such order at the earliest possible time (including in each case
by amending or supplementing such Registration Statement) and the Company will
notify each Investor that holds Registrable Securities being sold of the
issuance of such order on the date thereof and the resolution thereof (and if
such Registration Statement is supplemented or amended, deliver such number of
copies of such supplement or amendment to each Investor as such Investor may
reasonably request).
(d) Notwithstanding anything to the contrary contained herein or in
the Purchase Agreement, if the use of the Registration Statement is suspended by
the Company, the Company will give notice of the suspension to all Investors
whose securities are covered by the Registration Statement on the date of such
suspension, and will notify each such Investor on the date that the use of the
Registration Statement may be resumed.
3.6 Review by the Investors. The Company will permit a single firm of
legal counsel, designated by the Investors who hold a majority in interest of
the Registrable Securities being sold pursuant to a Registration Statement, to
review the Registration Statement and all amendments and supplements thereto (as
well as all requests for acceleration or effectiveness thereof) a reasonable
period of time prior to their filing with the SEC, and will not file any
document in a form to which such counsel reasonably objects, unless otherwise
required by law in the opinion of the Company's counsel; provided that the time
periods set forth in Section 2.2 shall be tolled to the extent that such legal
counsel does not deliver its final comments relating to such Registration
Statement to the Company within 2 business days after receipt of such
Registration Statement. The sections of any such Registration Statement
including information with respect to the Investors, the Investors' beneficial
ownership of securities of the Company or the Investors' intended method of
disposition of Registrable Securities must conform to the information provided
to the Company by each of the Investors.
3.7 Due Diligence; Confidentiality.
(a) The Company will make available upon reasonable advance notice
during normal business hours for inspection by any Investor who holds at least
10% of the Common Shares outstanding at that time and whose Registrable
Securities are being sold pursuant to a Registration Statement, and any
attorney, accountant or other agent retained by any such Investor (collectively,
the "Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records"),
as reasonably necessary to enable each Inspector to exercise its due diligence
responsibility in connection with or related to the contemplated offering. The
Company will cause its officers, directors and employees to supply all
information that any Inspector may reasonably request for purposes of performing
such due diligence.
(b) Each Inspector will hold in confidence, use only in connection
with the contemplated offering, and will not make any disclosure (except to an
Investor) of, all Records and other information that the Company determines in
good faith to be confidential, and of which determination the Inspectors are so
notified, unless (i) disclosure of such Records is necessary to comply with
federal or state securities laws, or any exchange listing or similar rules and
regulations, (ii) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (iii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, (iv) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this Agreement or any other agreement (to the knowledge of the
relevant Inspector), (v) the Company consents to the form and content of any
such disclosure, (vi) the Records or other information was developed
independently by an Inspector without breach of this Agreement, (vii) the
information was known to the Inspector before receipt of such information from
the Company, or (viii) the information was disclosed to the Inspector by a third
party not under an obligation of confidentiality. The Company is not required to
disclose any confidential information in the Records to any Inspector unless and
until
such Inspector has entered into a confidentiality agreement (in form and
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3.7. Each Investor will, upon learning
that disclosure of Records containing confidential information is sought in or
by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential.
(c) The Company will hold in confidence, and will not make any
disclosure of, information concerning an Investor provided to the Company under
this Agreement unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, or any exchange listing or similar rules
and regulations, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement, (v) such
Investor consents to the form and content of any such disclosure, (vi) the
information was developed independently by the Company without breach of this
Agreement, (vii) the information was known to the Company before receipt of such
information from the Investor, or (viii) the information was disclosed to the
Company by a third party not under an obligation of confidentiality. If the
Company learns that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, the Company will give prompt notice to such Investor prior
to making such disclosure and allow such Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
3.8 Listing. The Company shall use reasonable best efforts to (i) cause
all of the Registrable Securities covered by each Registration Statement to be
listed on each national securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange
or (ii) to the extent the securities of the same class or series are not then
listed on a national securities exchange, secure the designation and quotation
of all of the Registrable Securities covered by each Registration Statement on
Nasdaq.
3.9 Share Certificates. The Company will cooperate with the Investors
who hold Registrable Securities being sold to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to a Registration Statement and
will enable such certificates to be in such denominations or amounts as the case
may be, and registered in such names as the Investors may reasonably request,
all in accordance with Article V of the Purchase Agreement.
3.10 Plan of Distribution. At the request of the Investors holding a
majority in interest of the Registrable Securities registered pursuant to a
Registration Statement, the Company will promptly prepare and file with the SEC
such amendments (including post-effective amendments) and supplements to the
Registration Statement, and the prospectus used in connection with the
Registration Statement, as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.
3.11 Securities Laws Compliance. The Company will comply with all
applicable laws related to any Registration Statement relating to the sale of
Registrable Securities and to offering and sale of securities and with all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations promulgated by the SEC).
3.12 Further Assurances. The Company will take all other reasonable
actions as any Investor may reasonably request to expedite and facilitate
disposition by such Investor of the Registrable Securities pursuant to the
Registration Statement.
ARTICLE IV
OBLIGATIONS OF THE INVESTORS
4.1 Investor Information. As a condition to the obligations of the
Company to complete any registration pursuant to this Agreement with respect to
the Registrable Securities of each Investor, such Investor will furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended methods of disposition of the Registrable Securities held by it
as is reasonably required by the Company to effect the registration of the
Registrable Securities. At least five days prior to the first anticipated filing
date of a Registration Statement for any registration under this Agreement, the
Company will notify each Investor of the information the Company requires from
that Investor whether or not such Investor has elected to have any of its
Registrable Securities included in the Registration Statement. If, within three
days prior to the anticipated filing date, the Company has not received the
requested information from an Investor, then the Company may file the
Registration Statement without including Registrable Securities of that Investor
and the obligations of the Company set forth in Article II shall terminate with
respect to such Investor and the Registrable Securities held by it.
4.2 Further Assurances. Each Investor will cooperate with the Company,
as reasonably requested by the Company, in connection with the preparation and
filing of any Registration Statement hereunder, unless such Investor has
notified the Company in writing of such Investor's irrevocable election to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
4.3 Suspension of Sales. Upon receipt of any notice from the Company
under Section 3.5, each Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until (i) it receives copies of a supplemented or amended
prospectus contemplated by Section 3.5(a) or (ii) the Company advises the
Investor that a suspension of sales under Section 3.5(b) has terminated. If so
directed by the Company, each Investor will deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Investor's possession (other than a limited
number of file copies) of the prospectus covering such Registrable Securities
that is current at the time of receipt of such notice.
ARTICLE V
EXPENSES OF REGISTRATION
The Company will bear all reasonable expenses, other than underwriting
discounts and commissions, and transfer taxes, if any, incurred in connection
with registrations, filings or qualifications pursuant to Articles II and III of
this Agreement, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one firm
of legal counsel selected by the Initial Investors pursuant to Section 3.6
hereof (not to exceed $5,000).
ARTICLE VI
INDEMNIFICATION
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
6.1 Indemnification of the Investors. To the extent permitted by law,
the Company will indemnify and hold harmless each Investor that holds such
Registrable Securities, any directors or officers of such Investor or any person
who controls such Investor within the meaning of the Securities Act or the
Exchange Act (each, an "Investor Indemnified Person") against any losses,
claims, damages, expenses or liabilities (joint or several) (collectively, and
together with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened in respect
thereof, "Claims") to which any of them become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such Claims arise out of or are based
upon any of the following statements, omissions or violations in a Registration
Statement filed pursuant to this Agreement, any post-effective amendment thereof
or any prospectus included therein: (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (b) any untrue statement or alleged untrue statement of a
material fact contained in the prospectus related to the Registration Statement
(as it may be amended or supplemented) or the omission or alleged omission to
state therein any material fact necessary to make the statements made therein,
in light of the circumstances under which the statements therein were made, not
misleading, or (c) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any other law related to the Registration
Statement, including without limitation any state securities law or any rule or
regulation thereunder (the matters in the foregoing clauses (a) through (c)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6.3 with respect to the number of legal counsel, the Company will
reimburse the Investors and each such controlling person and other Investor
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any Claim. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 6.1: (i) does not apply to Claims arising out of or based upon a
Violation that occurs in reliance upon and in conformity with information
furnished in writing to the Company by an Investor Indemnified Person expressly
for use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3.3 hereof; (ii) does not apply to
a Claim arising out of or based on any failure by any Investor Indemnified
Person to comply with prospectus delivery requirements (or the Securities Act,
the Exchange Act or any other law or legal requirement applicable to them) or
any covenant or agreement contained in the Purchase Agreement or this Agreement;
and (iii) does not apply to amounts paid in settlement of any Claim if such
settlement is made without the prior written consent of the Company, which
consent will not be unreasonably withheld. This indemnity obligation will remain
in full force and effect regardless of any investigation made by or on behalf of
the Investor Indemnified Persons and will survive the transfer of the
Registrable Securities by the Investors under Article IX of this Agreement.
6.2 Indemnification of the Company and Certain Stockholders. In
connection with any Registration Statement in which an Investor is
participating, each such Investor will indemnify and hold harmless, severally
and not jointly, to the same extent and in the same manner set forth in Section
6.1 above, the Company, each of its directors, each of its officers who signs
the Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement and any of its
directors and officers and any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (each, a "Company Indemnified
Person") against any Claim to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out
of or is based upon any of the following: (a) any matter of the type referred to
clause (a) or (b) in Section 6.1 above in each case to the extent (and only to
the extent) that such violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement or (b) any failure by such
Investor to comply with prospectus delivery requirements (or the Securities Act,
the Exchange Act or any other law or legal requirement applicable to sales under
the Registration Statement) or any covenant or agreement contained in the
Purchase Agreement or this Agreement with respect to sales under the
Registration Statement. Subject to the restrictions set forth in Section 6.3,
such Investor will promptly reimburse any legal or other expenses, promptly as
such expenses are incurred and due and payable, reasonably incurred by them in
connection with investigating or defending any such Claim. However, the
indemnity agreement contained in this Section 6.2 does not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent will not be unreasonably
withheld, and no Investor will be liable under this Agreement (including this
Section 6.2 and Article VII) for the amount of any Claim that exceeds the net
proceeds actually received by such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. This indemnity
will remain in full force and effect regardless of any investigation made by or
on behalf of a Company Indemnified Person and will survive the transfer of the
Registrable Securities by the Investors under Article IX of this Agreement.
6.3 Notification and Other Indemnification Procedures. Promptly after
receipt by either an Investor Indemnified Person or a Company Indemnified Person
(as the case may be, the "Indemnified Person") under this Article VI of notice
of the commencement of any action (including any governmental action), such
Indemnified Person will, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof. The indemnifying party may
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party
similarly given notice, assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties and the Indemnified Person. In
that case, the indemnifying party will diligently pursue such defense. If, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest
between the Indemnified Person and any other party represented by such counsel
in such proceeding or the actual or potential defendants in, or targets of, any
such action including the Indemnified Person and such Indemnified Person
reasonably determines that there may be legal defenses available to such
Indemnified Person that are different from or in addition to those available to
the indemnifying party, then the Indemnified Person is entitled to assume such
defense and may retain its own counsel, with the fees and expenses to be paid by
the indemnifying party (subject to the restrictions on settlement under Section
6.1 or 6.2, as applicable). The Company will pay for only one separate legal
counsel for the Investors collectively, and such legal counsel will be selected
by the Investors holding a majority in interest of the Registrable Securities.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action does not relieve an
indemnifying party of any liability to an Indemnified Person under this Article
VI, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Article VI
will be made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
ARTICLE VII
CONTRIBUTION
To the extent that any indemnification provided for herein is
prohibited or limited by law, the indemnifying party will make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article VI to the fullest extent permitted by law. However, (a) no
contribution will be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Article
VI, (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation, and (c) contribution
(together with any indemnification or other obligations under this Agreement) by
any seller of Registrable Securities will be limited in amount to the net amount
of proceeds received by such seller from the sale of such Registrable
Securities.
ARTICLE VIII
EXCHANGE ACT REPORTING
In order to make available to the Investors the benefits of Rule 144 or
any similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration,
the Company will, until the end of the Registration Period:
(a) File with the SEC in a timely manner, and make and keep
available, all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being agreed that nothing herein limits the Company's
obligations under Section 4.3 of the Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) Furnish to each Investor, so long as such Investor holds
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents filed by the Company
with the SEC and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable by each Investor to any permitted transferee or assignee of the
Registrable Securities (i) in the case of either an assignment of Registrable
Securities to an affiliate of such Investor or an assignment of all Registrable
Securities held by such Investor without the consent of the Company and (ii) in
the case of an assignment of less than all of the Registrable Securities held by
such Investor with the consent of the Company (which consent shall not be
unreasonably withheld), if (a) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (b) 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, (c) such transfer or assignment was not made
under the Registration Statement or Rule 144, (d) at or before the time the
Company received the written notice contemplated by clause (b) of this sentence,
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, (e) such transfer is made in accordance with
the applicable requirements of the Purchase Agreement and (f) the transferee is
an "accredited investor" as that term is defined in Rule 501 of Regulation D.
Any transferee or assignee of an Investor under Article IX shall be deemed an
"INVESTOR" for all purposes of this Agreement, and shall be entitled to all
rights of, and subject to all obligations (including indemnification
obligations) of, an Investor hereunder.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
This Agreement may be amended and the obligations hereunder may be
waived (either generally or in a particular instance, and either retroactively
or prospectively) only with the written consent of the Company and of the
Investors who then hold a majority in interest of the Registrable Securities
(but not including any Investor who is not affected by such amendment or
waiver). Any amendment or waiver effected in accordance with this Article X is
binding upon each Investor and the Company. Notwithstanding the foregoing, no
amendment or waiver will retroactively affect any Investor without its consent,
or will prospectively adversely affect any Investor who no longer owns any
Registrable Securities without its consent. Neither Article II, Article VI nor
Article VII hereof may be amended or waived in a manner adverse to an Investor
without its consent.
ARTICLE XI
MISCELLANEOUS
11.1 Conflicting Instructions. A person or entity is deemed to be a
holder of Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company will act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
11.2 Notices. Except as set forth in Sections 3.3 and 3.6 hereof, any
notices required or permitted to be given under the terms of this Agreement will
be given and deemed received as set forth in the Purchase Agreement.
11.3 Waiver. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, does not operate as a waiver thereof.
11.4 Governing Law. This Agreement will be governed by and interpreted
in accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of Delaware with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby or thereby.
11.5 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
11.6 Entire Agreement. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
11.7 Successors and Assigns. Subject to the requirements of Article IX
hereof, this Agreement inures to the benefit of and is binding upon the
successors and assigns of each of the parties hereto. Notwithstanding anything
to the contrary herein, including, without limitation, Article IX, the rights of
an Investor hereunder are assignable to and exercisable by a bona fide pledgee
of the Registrable Securities in connection with an Investor's margin or
brokerage accounts.
11.8 Use of Pronouns. All pronouns refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
11.9 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission, and facsimile
signatures are binding on the parties hereto.
11.11 Further Assurances. Each party will do and perform, or cause to
be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
11.12 Consents. All consents and other determinations to be made by the
Investors pursuant to this Agreement will be made by the Investors holding a
majority in interest of the Registrable Securities.
11.13 No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
11.14 Termination. Notwithstanding anything to the contrary herein, the
Company's obligations shall terminate as of the date which is two years from the
date hereof.
11.15 Force Majeure. The Company shall not be deemed in breach of its
commitments under this Agreement and no payments by the Company as set forth in
Article II shall be required in the event that the Company is unable to fulfill
its obligations hereunder in a timely fashion if the SEC and/or the Nasdaq are
closed or operating on a limited basis as a result of the occurrence of a Force
Majeure. As used herein, "Force Majeure" means war or armed hostilities or other
national or international calamity, or one or more acts of terrorism, which are
having a material adverse effect on the financial markets in the United States.
Furthermore, any payments owed as a result of Article II shall not accrue during
any period during which the Company's performance hereunder has been delayed
and/or the Company's ability to fulfill its obligations hereunder has been
impaired by a Force Majeure.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
DAISYTEK INTERNATIONAL CORPORATION
By:
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Name:
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Title:
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[INVESTOR]
Sign Name:
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Print Name:
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Title:
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Address:
Telephone:
Facsimile:
