1
EXHIBIT 4.4
EXECUTION COPY
WARRANT
REGISTRATION RIGHTS AGREEMENT
Dated as of February 23, 1998
Between
DTI HOLDINGS, INC.,
KLT TELECOM INC.,
XXXXXXX X. XXXXXXXXX
and
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED,
TD SECURITIES (USA) INC.
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TABLE OF CONTENTS
Page
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Section 1. Definitions........................................... 1
Section 2. Registration Rights................................... 7
2.1 (a) Demand Registration............................... 7
(b) Effective Registration................................ 8
(c) Restrictions on Sale by Holders....................... 8
(d) Selection of Underwriter.............................. 9
(e) Expenses.............................................. 9
2.2 (a) Piggy-Back Registration........................... 9
(b) Priority in Piggy-Back Registration............... 10
(c) Restrictions on Sale by Holders................... 11
2.3 Limitations, Conditions and Qualifications to
Obligations Under Registration Covenants............ 12
2.4 Restrictions on Sale by the Company and Others........ 14
2.5 Rule 144 and Rule 144A................................ 14
2.6 Underwritten Registrations............................ 14
Section 3. Transfers............................................. 15
3.1 Generally............................................. 15
3.2 Tag-Along Rights...................................... 15
3.3 Drag-Along Rights..................................... 17
Section 4. Registration Procedures............................... 18
Section 5. Indemnification and Contribution...................... 24
Section 6. Miscellaneous......................................... 28
(a) Remedies.............................................. 28
(b) No Inconsistent Agreements............................ 28
(c) No Piggy-Back on Demand Registrations................. 28
(d) Amendments and Waivers................................ 28
(e) Notices............................................... 28
(f) Successors and Assigns................................ 29
(g) Counterparts.......................................... 29
(h) Governing Law......................................... 29
(j) Severability.......................................... 29
(k) Headings.............................................. 30
(l) Entire Agreement...................................... 30
(m) Securities Held by the Company or Its Affiliates...... 30
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WARRANT REGISTRATION RIGHTS AGREEMENT
This WARRANT REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of February 23, 1998, between DTI HOLDINGS, INC., (the
"Company") a Missouri corporation, KLT TELECOM INC., XXXXXXX X. XXXXXXXXX
(together with KLT Telecom Inc. referred to herein as the "Permitted Holders")
XXXXXXX XXXXX & CO., XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
("Xxxxxxx Xxxxx") and TD SECURITIES (USA) INC. (together with Xxxxxxx Xxxxx,
the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated as of
February 13, 1998, between the Company and the Initial Purchasers (the
"Purchase Agreement"), with respect to the issue and sale by the Company and
the purchase by the Initial Purchasers, severally, of the respective number of
the Company's Units (the "Units"), each Unit consisting of $1,000 aggregate
principal amount at maturity of the Company's Senior Discount Notes due 2008
(the "Notes") and five warrants (the "Warrants"), each initially entitling the
holder thereof to purchase 1.552 shares of common stock, par value $0.01 per
share (the "Common Stock"), of the Company, set forth opposite such Initial
Purchaser's name on Schedule I to the Purchase Agreement. The execution of
this Agreement is a condition to the obligations of the Initial Purchasers
under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
Section 1. Definitions. As used in this Agreement, the following defined
terms shall have the following meanings:
"Advice" has the meaning ascribed to such term in Section 4 hereof.
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or (ii) any
other Person that owns, directly or indirectly, 5% or more of such
specified Person's Voting Stock (as defined in the Indenture) or any
executive officer or director of any such specified Person or other Person
or, with respect to any natural Person, any Person having a relationship
with such Person by blood, marriage or adoption not more remote than first
cousin. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under
common control with") of any specified Person means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by agreement or
otherwise.
"Agreement" shall have the meaning ascribed to such term in the
preamble hereto.
"Business Day" shall mean a day that is not a Legal Holiday.
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"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, partnership interests, participations, rights in or
other equivalents (however designated and whether voting or non-voting) of
such person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock whether outstanding on the Issue Date
or issued after the Issue Date.
"Change of Control" shall have the meaning ascribed to such term in
the Indenture.
"Company" shall have the meaning ascribed to such term in the
preamble of this Agreement and shall also include the Company's permitted
successors and assigns.
"Common Stock" shall have the meaning ascribed to such term in the
preamble of this Agreement.
"Convertible Preferred Stock" shall mean any securities convertible
or exercisable or exchangeable into Common Stock of the Company, whether
outstanding on the date hereof or thereafter issued.
"Current Market Value" shall have the meaning ascribed to such term
in the Warrant Agreement.
"Demand Registration" shall have the meaning ascribed to such term in
Section 2.1(a) hereof.
"Drag-Along Right" shall have the meaning ascribed to such term in
Section 3.3(a) hereof.
"DTC" shall have the meaning ascribed to such term in Section 4(i)
hereof.
"Effectiveness Period" shall have the meaning ascribed to such term
in Section 2.1(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" shall mean the value of any securities as
determined (without any discount for lack of liquidity, the amount of such
securities proposed to be sold or the fact that such securities held by
any Holder of such security may represent a minority
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interest in a private company) by a nationally or regionally recognized
investment banking firm selected by the Company for the determination of
such value.
"Holder" shall mean each holder (including the Initial Purchasers) of
any Warrants, Warrant Shares or Registrable Securities, and each of their
successors, assigns and direct and indirect transferees who become
registered owners of such Warrants, Warrant Shares or Registrable
Securities.
"Included Securities" shall have the meaning ascribed to such term in
Section 2.1(a) hereof.
"Indemnified Person" shall have the meaning ascribed to such term in
Section 5(a).
"Indenture" shall mean the Indenture, dated as of the date hereof,
between the Company and The Bank of New York, Trustee, pursuant to which
the Notes are issued.
"Initial Public Equity Offering" shall mean a primary public offering
(whether or not underwritten, but excluding any offering pursuant to Form
S-8 or F-8 under the Securities Act or any other publicly registered
offering pursuant to the Securities Act pertaining to an issuance of
shares of Common Stock or securities exercisable therefor under any
benefit plan, employee compensation plan, or employee or director stock
purchase plan) of Common Stock of the Company pursuant to an effective
registration statement under the Securities Act.
"Initial Purchasers" shall have the meaning ascribed to such term in
the preamble hereof.
"Inspectors" shall have the meaning ascribed to such term in Section
4(m) hereof.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which (i)
banking institutions in The City of New York are required or authorized by
law or other government action to be closed and (ii) the principal U.S.
securities exchange or market, if any, on which any Common Stock is listed
or admitted to trading and the principal U.S. securities exchange or
market, if any, on which the Warrants are listed or admitted to trading
are closed for business.
"Xxxxxxx Xxxxx" shall have the meaning ascribed to such term in the
preamble hereto.
"Notes" shall have the meaning ascribed to such term in the preamble
hereto.
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"Participating Holder" shall have the meaning ascribed to such term
in Section 3.2(c).
"Permitted Holder" shall have the meaning ascribed to such term in
the Indenture.
"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof or any other entity, including any
predecessor of any such entity.
"Piggy-Back Registration" shall have the meaning ascribed to such
term in Section 2.2(a) hereof.
"Proposed Purchaser" shall have the meaning ascribed to such term in
Section 3.2(a) hereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities
Act), as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" shall have the meaning ascribed to such term in
the preamble hereof.
"Registrable Securities" shall mean any of (i) the Common Stock
issued and issuable upon exercise of the Warrants and (ii) any other
securities issued or issuable with respect to the Warrants or Warrant
Shares by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the offering of such securities by
the holder thereof shall have been declared effective under the Securities
Act and such securities shall have been disposed of by such holder
pursuant to such registration statement, (b) such securities have been
sold to the public pursuant to, or are eligible for sale to the public
without volume or manner of sale restrictions under, Rule 144(k) (or any
similar provision then in force, but not Rule 144A) promulgated under the
Securities Act, (c) such securities shall have been otherwise transferred
and new certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company or its transfer
agent and subsequent disposition of such
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securities shall not require registration or qualification under the
Securities Act or any similar state law then in force, or (d) such
securities shall have ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees and expenses, fees
and expenses of compliance with securities or blue sky laws (including,
without limitation, reasonable fees and disbursements of counsel for the
underwriters and the Holders in connection with blue sky qualifications of
the Registrable Securities), printing expenses, messenger, telephone and
delivery expenses, fees and disbursements of counsel for the Company and
all independent certified public accountants, and other reasonable
out-of-pocket expenses of Holders (it being understood that Registration
Expenses shall not include, as to the fees and expenses of counsel, the
fees and expenses of more than one counsel for the Holders and one counsel
for the underwriters as to blue sky matters).
"Registration Statement" shall mean any appropriate registration
statement of the Company filed with the SEC pursuant to the Securities Act
which covers any of the Subject Equity pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting in
offers and sales by subsequent holders that are not affiliates of an issuer
of such securities being free of the registration and prospectus delivery
requirements of the Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Selling Holder" shall mean a Holder who is selling Subject Equity or
Registrable Securities in accordance with the provisions of Section 2.1 or
2.2, respectively.
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"Subject Equity" shall have the meaning ascribed to such term in
Section 2.1(a) hereof.
"Suspension Period" shall have the meaning ascribed to such term in
Section 2.3(a).
"Tag-Along Notice" shall have the meaning ascribed to such term in
Section 3.2(c) hereof.
"Tag-Along Right" shall have the meaning ascribed to such term in
Section 3.2(a) hereof.
"Transfer" shall have the meaning ascribed to such term in Section
3.2(a) hereof.
"Transfer Notice" shall have the meaning ascribed to such term in
Section 3.2(c) hereof.
"Triggering Date" shall mean the date of the consummation of a bona
fide underwritten public offering of Common Stock, as a result of which at
least 20% of the outstanding shares of Common Stock are listed on a U.S.
national securities exchange or the Nasdaq National Market.
"Units" shall have the meaning ascribed to such term in the preamble
of this Agreement.
"Warrant Agent" shall mean The Bank of New York and any successor
warrant agent for the Warrants pursuant to the Warrant Agreement.
"Warrant Agreement" shall mean the Warrant Agreement dated as of the
date hereof, between the Company and the Warrant Agent, as amended or
supplemented from time to time in accordance with the terms thereof.
"Warrant Shares" shall mean shares of Common Stock issuable upon
exercise of the Warrants at an exercise price of $0.01 per share.
"Warrants" shall have the meaning ascribed to such term in the
preamble hereto.
Section 2. Registration Rights.
2.1 (a) Demand Registration. After the occurrence of an Exercise Event
(as such term is defined in the Warrant Agreement), the holders of a number of
Warrants, Warrant Shares
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and Registrable Securities (the "Subject Equity") equivalent to at least a
majority of the outstanding Subject Equity, from time to time, may make a
written request to the Company to effect up to two registrations (each, a
"Demand Registration") under the Securities Act of the Subject Equity. Within
20 days after the receipt of such written request for a Demand Registration,
the Company shall (i) notify the Holders of all Subject Equity that a Demand
Registration has been requested, (ii) prepare, file with the SEC and use its
best efforts to cause to become effective under the Securities Act within 150
days of such demand a Registration Statement with respect to such Subject
Equity and (iii) keep such registration statement continuously effective until
the earlier to occur of (A) the date that is 60 days after such effectiveness
(the "Effectiveness Period") and (B) such period of time as all of the Subject
Equity included in such registration statement shall have been sold thereunder.
Any such request will specify the number of shares of Subject Equity proposed
to be sold and will also specify the intended method of disposition thereof.
Within 30 days after receipt by any Holder of Subject Equity of such notice
from the Company, such Holder may request in writing that such Holder's Subject
Equity be included in such Registration Statement and the Company shall include
in such Registration Statement the Subject Equity of any such Holder requested
to be so included (the "Included Securities"). Each such request by such other
Holders shall specify the number of Included Securities proposed to be sold and
the intended method of disposition thereof. Subject to Sections 2.1(b) and
2.1(f) hereof, the Company shall be required to effect a Demand Registration of
Subject Equity pursuant to this Section 2.1(a) up to a maximum of two
occasions.
If such demand occurs during the "lock up" or "black out" period (not to
exceed 180 days) imposed on the Company pursuant to or in connection with any
underwriting or purchase agreement relating to an underwritten Rule 144A or
registered public offering of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock, the Company shall not be required
to so notify holders of Subject Equity and file such Demand Registration
Statement prior to the end of such "lock up" or "black out" period, in which
event the Company will use its best efforts to cause such Demand Registration
statement to become effective no later than the later of (i) 150 days after
such demand or (ii) 30 days after the end of such "lock up" or "black out"
period. In the event of any "lock up" or "black out" period or any
underwriting or other purchase agreement, the Company shall so notify the
holders of Registrable Securities.
Notwithstanding the foregoing, in lieu of filing and causing to become
effective a Demand Registration, the Company may satisfy its obligation with
respect to such Demand Registration by making and consummating (or having its
designee make and consummate) an offer to purchase all Subject Equity at a
price at least equal to Current Market Value (as defined in the Warrant
Agreement, but without the inclusion of clause (i)(a) thereof), less any
applicable Exercise Price.
(b) Effective Registration. A Registration Statement shall not be deemed
to have been effected as a Demand Registration unless it shall have been
declared effective by
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the SEC, no later than the later of (i) 150 days after the request for a Demand
Registration or (ii) 30 days after the end of any "lock up" or "black out"
period described in Section 2.1(a) hereof and the Company has complied in all
material respects with all of its obligations under this Agreement with respect
thereto; provided, however, that if, after such Registration Statement has
become effective, the offering of Subject Equity pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction or other
order or requirement of the SEC or any other governmental, judicial or
administrative order or requirement that prevents, restrains or otherwise
limits the sale of Subject Equity pursuant to such Registration Statement for
any reason not attributable to any Holder participating in such registration,
and such Registration Statement has not become effective within a reasonable
time period thereafter, such Registration Statement shall be deemed not to have
been effected. If (i) a registration requested pursuant to this Section 2.1 is
deemed not to have been effected or (ii) a Demand Registration does not remain
effective under the Securities Act until at least the earlier of (A) an
aggregate of 60 days (subject to Section 2.3 herein) after the effective date
thereof or (B) the consummation of the distribution by the Holders of all of
the Subject Equity covered thereby, then such Demand Registration shall not
count towards determining if the Company has satisfied its obligation to effect
Demand Registrations pursuant to this Section 2.1. For purposes of calculating
the 60-day period referred to in the preceding sentence, any period of time
during which such Registration Statement was not in effect shall be excluded.
The Holders of Subject Equity shall be permitted to withdraw all or any part of
the Registrable Securities from a Demand Registration. Notwithstanding any
such withdrawal by a Holder of Subject Equity, if the Company has complied with
all of its obligations hereunder and has effected a Demand Registration within
150 days after the request for a Demand Registration, such withdrawal shall not
require the Company to effect any additional Demand Registrations.
(c) Restrictions on Sale by Holders. Each Holder of Warrants and
Registrable Securities whose Warrants and Registrable Securities are covered by
a Registration Statement filed pursuant to this Section 2.1 and are to be sold
thereunder agrees, if and to the extent reasonably requested by the managing
underwriter or underwriters in an underwritten public offering, not to effect
any public sale or distribution of Warrants and Registrable Securities or of
securities of the Company of the same class as any securities included in such
Registration Statement, including a sale pursuant to Rule 144 (except as part
of such underwritten offering), during the 30-day period prior to, and during
the 180-day period beginning on, the closing date of each underwritten offering
made pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.1(c) shall not apply to any Holders
of Warrants and Registrable Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement;
provided, however, that any such Holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of any Warrants and Registrable Securities commencing on the date
of sale of such
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Warrants and Registrable Securities unless it has provided 45 days' prior
written notice of such sale or distribution to the managing underwriter or
underwriters.
(d) Selection of Underwriter. If the Holders so elect, the offering of
such Subject Equity pursuant to such Demand Registration shall be in the form
of an underwritten offering. The Holders making such Demand Registration shall
select one or more nationally recognized firms of investment bankers, who shall
be reasonably acceptable to the Company, to act as the managing underwriter or
underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
(e) Expenses. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to Section 2.1(a) hereof.
Each Holder of Subject Equity shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder's Subject Equity pursuant to a Registration Statement requested
pursuant to this Section 2.1.
2.2 (a) Piggy-Back Registration. If at any time the Company proposes to
file a Registration Statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
securityholders of any class of its common equity securities (other than (i) a
registration statement on Form S-4 or S-8 (or F-4 or F-8) (or any substitute
form that may be adopted by the SEC) or any other publicly registered offering
pursuant to the Securities Act pertaining to the issuance of shares of Capital
Stock or securities exercisable therefor under any benefit plan, employee
compensation plan, or employee or director stock purchase plan, (ii) a
registration statement filed in connection with an offer of securities solely
to the Company's existing securityholders or (iii) a Demand Registration), then
the Company shall give written notice of such proposed filing to the Holders of
Registrable Securities as soon as practicable (but in no event fewer than 15
days before the anticipated filing date or 10 days if the Company is subject to
filing reports under the Exchange Act and able to use Form S-3 (or F-3) under
the Securities Act), and such notice shall offer such Holders the opportunity
to register such number of shares of Registrable Securities as each such Holder
may request in writing within 12 days (or eight days if the Company is subject
to filing reports under the Exchange Act and able to use Form S-3 (or F-3)
under the Securities Act) after receipt of such written notice from the Company
(which request shall specify the Registrable Securities intended to be disposed
of by such Selling Holder and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use its best efforts to keep
such Piggy-Back Registration continuously effective under the Securities Act in
the qualifying jurisdictions until at least the earlier of (A) 60 days after
the effective date thereof or (B) the consummation of the distribution by the
Holders of all of the Registrable Securities covered thereby. The Company
shall use its best efforts to cause the managing underwriter or underwriters,
if any, of such proposed offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration to be included on the
same terms and conditions as any similar securities of the Company or any other
securityholder included
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therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof. Any
Selling Holder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any Registration Statement pursuant to this Section
2.2 by giving written notice to the Company of its request to withdraw. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective or the Company may elect to delay the registration; provided,
however, that the Company shall give prompt written notice thereof to
participating Selling Holders. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities requested
pursuant to this Section 2.2, and each Holder of Registrable Securities shall
pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to a Registration Statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to effect
a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders of Registrable
Securities pursuant to Section 2.1 hereof, and no failure to effect a
registration under this Section 2.2 and to complete the sale of securities
registered thereunder in connection therewith shall relieve the Company of any
other obligation under this Agreement.
(b) Priority in Piggy-Back Registration. In a registration pursuant to
Section 2.2 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting inclusion in such
offering that in such underwriter's or underwriters' reasonable opinion the
total number of securities which the Company, the Selling Holders and any other
persons desiring to participate in such registration intend to include in such
offering is such as to materially and adversely affect the success of such
offering, including the price at which such securities can be sold, then the
Company will be required to include in such registration only the amount of
securities which it is so advised should be included in such registration. In
such event: (x) in cases only involving the registration for sale of
securities for the Company's own account (which may include securities included
pursuant to the exercise of piggy-back rights herein and in other contractual
commitments of the Company), securities shall be registered in such offering in
the following order of priority: (i) first, the securities which the Company
proposes to register, (ii) second, provided that no securities sought to be
included by the Company have been excluded from such registration, the
securities which have been requested to be included in such registration by the
Holders of Registrable Securities pursuant to this Agreement (such securities
for the account of the Holders to be allocated among the Holders pro rata based
on the amount of securities sought to be registered by the Holder) and (iii)
third, provided that no securities sought to be included by the Company or the
Holders have been excluded from such registration, the securities of other
Persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments of the Company (pro rata based on the amount of
securities sought to be registered by such Persons); and (y) in cases not
involving the registration for sale of securities for the Company's own account
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only, securities shall be registered in such offering in the following order of
priority: (i) first, securities to be sold for the account of the Company and
the securities of any Person whose exercise of a "demand" registration right
pursuant to a contractual commitment of the Company is the basis for the
registration (provided that if such Person is a Holder of Registrable
Securities, as among Holders of Registrable Securities there shall be no
priority and Registrable Securities sought to be included by Holders of
Registrable Securities shall be included pro rata based on the amount of
securities sought to be registered by such Persons), (ii) second, provided that
no securities of the Company or such Person referred to in the immediately
preceding clause (i) have been excluded from such registration, the securities
requested to be included in such registration by the Holders of Registrable
Securities pursuant to this Agreement (such securities for the account of the
Holders to be allocated among the Holders pro rata based on the total amount of
securities sought to be registered by the Holders) and (iii) third, provided
that no securities of such Person referred to in the immediately preceding
clause (i) or of the Holders have been excluded from such registration,
securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments (pro rata based on the amount of
securities sought to be registered by such Persons).
If, as a result of the provisions of this Section 2.2(b), any Selling
Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Selling Holder has requested to be included,
such Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration.
(c) Restrictions on Sale by Holders. Each Holder of Warrants and
Registrable Securities whose Warrants and Registrable Securities are covered by
a Registration Statement filed pursuant to this Section 2.2 and are to be sold
thereunder agrees, if and to the extent reasonably requested by the managing
underwriter or underwriters in an underwritten public offering, not to effect
any public sale or distribution of Warrants and Registrable Securities or of
securities of the Company of the same class as any securities included in such
Registration Statement, including a sale pursuant to Rule 144 (except as part
of such underwritten offering), during the 30-day period prior to, and during
the 180-day period beginning on, the closing date of each underwritten offering
made pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.2(c) shall not apply to any Holders
of Warrants and Registrable Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement;
provided, however, that any such Holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of any Warrants and Registrable Securities commencing on the date
of sale of such Warrants and Registrable Securities unless it has provided 45
days' prior written notice of such sale or distribution to the managing
underwriter or underwriters.
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2.3 Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants. The obligations of the Company set forth in Sections
2.1, 2.2 and 2.6 hereof are subject to each of the following limitations,
conditions and qualifications:
(a) Subject to the next sentence of this paragraph, the Company shall
be entitled to postpone, for a reasonable period of time, the filing of,
or suspend the effectiveness of, any registration statement or amendment
thereto, or suspend the use of any prospectus and shall not be required to
amend or supplement the registration statement, any related prospectus or
any document incorporated therein by reference (other than an effective
registration statement being used for an underwritten offering); provided
that the duration of such postponement or suspension (a "Suspension
Period") may not exceed an aggregate of 90 days after the event or
circumstance giving rise to such Suspension Period and the duration of
such Suspension Period shall be excluded from the calculation of the
60-day period described in Section 2.1(b) hereof. Such Suspension Period
may be effected only if (i) an event or circumstance occurs and is
continuing as a result of which the registration statement, any related
prospectus or any document incorporated therein by reference as then
amended or supplemented or proposed to be filed would, in the Company's
good faith judgement, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (ii) (A) the Company determines in its good faith
judgement that the disclosure of such an event at such time would have a
material adverse effect on the business, operations or prospects of the
Company or (B) the disclosure otherwise relates to a material business
transaction which has not yet been publicly disclosed; provided, that the
Effectiveness Period shall be extended by the number of days in any
Suspension Period; provided, further, that the Company shall not be
entitled to such postponement or suspension more than once in any 12-month
period; provided further that the Company may suspend the effectiveness
for a period not in excess of 5 Business Days to allow for the updating of
the financial statements included in a Registration Statement to the
extent required by law, not to exceed 45 days in aggregate in any 12-month
period. If the Company shall so postpone the filing of a Registration
Statement it shall, as promptly as possible, deliver a certificate signed
by the chief executive officer of the Company to the Selling Holders as to
such determination, and the Selling Holders shall (1) have the right, in
the case of a postponement of the filing or effectiveness of a
Registration Statement, upon the affirmative vote of the Holders of not
less than a majority of the Registrable Securities to be included in such
Registration Statement, to withdraw the request for registration by giving
written notice to the Company within 10 days after receipt of such notice
or (2) in the case of a suspension of the right to make sales, receive an
extension of the registration period equal to the number of days of the
suspension. Any Demand Registration as to which the withdrawal election
referred to in the preceding sentence has been effected shall not be
counted for purposes of the Demand Registration the Company is required to
effect pursuant to Section 2.1 hereof.
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(b) The Company's obligations shall be subject to the obligations of
the Selling Holders, which the Selling Holders acknowledge, to furnish all
information and materials and to take any and all actions as may be
required under applicable federal and state securities laws and
regulations to permit the Company to comply with all applicable
requirements of the SEC, if applicable, and to obtain any acceleration of
the effective date of such Registration Statement.
2.4 Restrictions on Sale by the Company and Others. The Company
covenants and agrees that (i) it shall not, and that it shall not cause or
permit any of its subsidiaries to, effect any public sale or distribution of
any securities of the same class as any of the Warrants or Registrable
Securities or any securities convertible into or exchangeable or exercisable
for such securities (or any option or other right for such securities) during
the 30-day period prior to, and during the 90-day period beginning on, the
commencement of any underwritten offering of Warrants or Registrable Securities
pursuant to a Demand Registration which has been requested pursuant to this
Agreement, or a Piggy-Back Registration which has been scheduled, prior to the
Company or any of its subsidiaries publicly announcing its intention to effect
any such public sale or distribution; (ii) the Company will not, and the
Company will not cause or permit any subsidiary of the Company to, after the
date hereof, enter into any agreement or contract that conflicts with or limits
or prohibits the full and timely exercise by the Holders of Warrants or
Registrable Securities of the rights herein to request a Demand Registration or
to join in any Piggy-Back Registration subject to the other terms and
provisions hereof; and (iii) upon request of the Holders of not less than a
majority of the Warrants or Registrable Securities to be included in such
Registration Statement or any underwriter, it shall use its reasonable best
efforts to secure the written agreement of each of its officers and directors
to not effect any public sale or distribution of any securities of the same
class as the Warrants or Registrable Securities (or any securities convertible
into or exchangeable or exercisable for an such securities), or any option or
right for such securities during the period described in clause (i) of this
Section 2.4.
2.5 Rule 144 and Rule 144A. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner and, if at any time the Company is not required to file such reports, it
will, upon the request of any Holder or beneficial owner of Warrants or
Registrable Securities, make available such information necessary to permit
sales pursuant to Rule 144A under the Securities Act. The Company further
covenants that it will take such further action as any Holder of Warrants or
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Warrants or Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144(k) and Rule 144A under the Securities Act,
as such Rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder of
Warrants or Registrable Securities, the Company will in a timely
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manner deliver to such Holder a written statement as to whether it has complied
with such information requirements.
2.6 Underwritten Registrations. If any of the Registrable Securities
covered by any Registration Statement are to be sold in an underwritten public
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of not less
than a majority of the Registrable Securities to be sold thereunder and will be
reasonably acceptable to the Company.
No Holder of Registrable Securities may participate in any underwritten
registration pursuant to a Registration Statement filed under this Agreement
unless such Holder (a) agrees to (i) sell such Holder's Registrable Securities
on the basis provided in and in compliance with any underwriting arrangements
approved by the Holders of not less than a majority of the Registrable
Securities to be sold thereunder and (ii) comply with Rules 101, 102 and 104 of
Regulation M under the Exchange Act and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
If the Company has complied with all its obligations under this Agreement
with respect to a Demand Registration or a Piggy-Back Registration relating to
an underwritten public offering, all holders of Warrants and Registrable
Securities, upon request of the lead managing underwriter with respect to such
underwritten public offering, will be required to not sell or otherwise dispose
of any Warrant or Registrable Security owned by them for a period not to exceed
180 days from the consummation of such underwritten public offering.
Section 3. Transfers.
3.1 Generally. All Subject Equity at any time and from time to time
outstanding shall be held subject to the conditions and restrictions set forth
in this Section 3. All shares of Capital Stock now or hereafter held by the
Permitted Holders shall be held subject to the conditions and restrictions set
forth in this Section 3. Each Holder of Subject Equity and the Permitted
Holders by executing this Agreement or by accepting a certificate representing
Capital Stock or other indicia of ownership therefor from the Company agree
with the Company and with each other stockholder to such conditions and
restrictions.
3.2 Tag-Along Rights. (a) Prior to the Triggering Date, each of the
Holders of Subject Equity shall have the right (the "Tag-Along Right") to
require the Proposed Purchaser (as defined below) to purchase from each of them
all Subject Equity owned by such Holder in the event of any proposed direct or
indirect sale or other disposition (collectively, a "Transfer") of Common Stock
or Convertible Preferred Stock (whether now or hereafter issued) to any Person
or Persons (such other Person or Persons being hereinafter referred to as the
"Proposed Purchaser") by
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any Permitted Holders or any of their Affiliates in any transaction or a series
of related transactions resulting in a Change of Control.
(b) Any Subject Equity purchased from the Participating Holders pursuant
to this Section 3.2 shall be paid for in the same type of consideration and at
the same price per share of Common Stock and upon the same terms and conditions
of such proposed Transfer of Common Stock by any Permitted Holder or any of its
Affiliates; except that the price per Warrant to be paid by the Proposed
Purchaser shall be less the aggregate Exercise Price of such Warrant. If the
Subject Equity to be purchased includes securities or property other than
Common Stock, the price to be paid for such securities or property shall be the
same price per share or other denomination paid by the Proposed Purchaser for
like securities purchased from any Permitted Holder or any of its Affiliates
or, if like securities are not purchased from any Permitted Holder or any of
its Affiliates, the Fair Market Value of such securities determined by a
nationally or regionally recognized investment banking firm selected by the
Company.
(c) Each Permitted Holder shall notify, or cause to be notified, each
Holder of Subject Equity in writing (a "Transfer Notice") of each such proposed
Transfer at least 30 days prior to the date thereof. Such notice shall set
forth: (a) the name and address of the Proposed Purchaser and the number of
shares of Common Stock and other securities, if any, proposed to be
transferred, (b) the proposed amount of consideration and terms and conditions
of payment offered by such Proposed Purchaser (if the proposed consideration is
not cash, the Transfer Notice shall describe the terms of the proposed
consideration) and (c) that either the Proposed Purchaser has been informed of
the "Tag-Along Right" and has agreed to purchase Subject Equity in accordance
with the terms hereof or that the Permitted Holder or any of its Affiliates
will make such purchase. The Tag-Along Right may be exercised by any Holder of
Subject Equity by delivery of a written notice to the Company ("Tag-Along
Notice"), within 10 days of such Holder's receipt of the Transfer Notice,
indicating its election to exercise the Tag-Along Right (a "Participating
Holder"). The Tag-Along Notice shall state the amount of Subject Equity that
such Holder proposes to include in such Transfer to the Proposed Purchaser.
Failure by any Holder to provide a Tag-Along Notice within the 10-day notice
period shall be deemed to constitute an election by such Holder not to exercise
its Tag-Along Right. The closing with respect to any sale to a Proposed
Purchaser pursuant to this Section shall be held at the time and place
specified in the Transfer Notice but in any event within 60 days of the date
such Transfer Notice is given; provided that if through the exercise of
reasonable efforts the Company is unable to cause such transaction to close
within 60 days, such period may be extended for such reasonable period of time
as may be necessary to close such transaction. Consummation of the sale of
Common Stock or Convertible Preferred Stock by any Permitted Holder or any of
its Affiliates to a Proposed Purchaser shall be conditioned upon consummation
of the sale by each participating Holder to such Proposed Purchaser (or the
Permitted Holder) of the Subject Equity entitled to be transferred as described
above, if any.
(d) [reserved]
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(e) If the Proposed Purchaser does not purchase the Subject Equity
entitled to be transferred as described in this Section 3.2 on the same terms
and conditions as purchased from the Permitted Holders or any of their
Affiliates, then the Permitted Holders or their Affiliates shall purchase such
Subject Equity if the Transfer occurs. If any Subject Equity shall be sold by
a Holder pursuant to this Section 3.2 upon the occurrence of a Change of
Control triggered by the sale of Common Stock by a Permitted Holder, then the
other Permitted Holder shall have the right to purchase up to 50% of such
Subject Equity.
(f) If at the end of 60 days following the date on which a Transfer Notice
was given, or as otherwise extended pursuant to the provisions of Section
3.2(a), the sale of Common Stock by the Permitted Holders or their Affiliates
and the sale of the Subject Equity entitled to be transferred as provided above
have not been completed in accordance with the terms of the Proposed
Purchaser's offer, all certificates representing such Subject Equity shall be
returned to the Participating Holders, and all the restrictions on Transfer
contained in this Agreement with respect to Common Stock owned by the Permitted
Holders and their Affiliates shall remain in effect.
3.3 Drag-Along Rights. (a) If at any time prior to an Initial Public
Equity Offering, any Permitted Holders or any of their respective Affiliates
determines to sell all of the Capital Stock of the Company owned by them to a
Person other than a Permitted Holder or its Affiliate in a transaction
resulting in a Change of Control, the transferring Permitted Holder (whether
directly or through an Affiliate) shall have the right (the "Drag-Along Right")
to require the Holders of Subject Equity to sell such Subject Equity to such
transferee; provided that (i) the consideration to be received by the Holders
of Subject Equity shall be the same type of consideration received by the
Permitted Holders and their Affiliates and, in any event, shall be cash or
freely transferable marketable securities, and (ii) after giving effect to such
transaction, the Permitted Holders making the transfers and its Affiliates
shall not own, directly or indirectly, any Capital Stock or rights to purchase
Capital Stock of the Company. Any Warrants or Registrable Securities, or both,
purchased from the Holders thereof pursuant to this Section 3.3 shall be paid
for at the same price per share of Common Stock and upon the same terms and
conditions as such proposed transfer of Common Stock by the Permitted Holders
and their Affiliates. The price per Warrant to be paid by the Proposed
Purchaser shall be less the aggregate Exercise Price of such Warrant. If the
Subject Equity to be purchased includes securities other than Common Stock, the
price to be paid for such securities shall be the same price per share or other
denomination paid by the proposed purchaser for like securities purchased from
the Permitted Holders and their Affiliates or, if like securities are not
purchased from the Permitted Holders and their Affiliates, the Fair Market
Value of such securities determined by a nationally or regionally recognized
investment banking firm selected by the Company.
(b) If any Subject Equity shall be sold by a Holder thereof pursuant to
the Drag-Along Right under this Section 3.3 upon the occurrence of a Change of
Control triggered by the
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sale of Common Stock by a Permitted Holder, the other Permitted Holder shall
have the right to purchase up to 50% of such Subject Equity.
Section 4. Registration Procedures. In connection with the obligations
of the Company with respect to any Registration Statement pursuant to Sections
2.1, 2.2 and 2.6 hereof, the Company shall, except as otherwise provided:
(a) A reasonable period of time prior to the initial filing of a
Registration Statement or Prospectus and a reasonable period of time prior
to the filing of any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein
by reference), furnish to the Holders and the managing underwriters, if
any, copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference)
shall be subject to the review of such Holders, and such underwriters, if
any, and cause the officers and directors of the Company, counsel to the
Company and independent certified public accountants to the Company to
respond to such reasonable inquiries as shall be necessary, in the opinion
of counsel to such underwriters, to conduct a reasonable investigation
within the meaning of the Securities Act; provided that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Holders by Xxxxxxx Xxxxx. The Company shall not file any such
Registration Statement or related Prospectus or any amendments or
supplements thereto which the Holders of a majority of the Registrable
Securities included in such Registration Statement shall reasonably object
on a timely basis.
(b) Prepare and file with the SEC such amendments, including
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective for
the applicable time period required hereunder; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold and the
managing underwriters, if any, promptly, and (if requested by any such
person) confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed,
and (B) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for
additional information, (iii) of the
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issuance by the SEC, any state securities commission, any other
governmental agency or any court of any stop order suspending the
effectiveness of such Registration Statement or of any order or injunction
suspending or enjoining the use of a Prospectus or the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, and (v) of the happening of any event, the existence of any
information becoming known that makes any statement made in a Registration
Statement or related Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the
effectiveness of the Registration Statement or the use of a Prospectus or
the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities covered thereby for
sale in any jurisdiction described in Section 4(h) at the earliest
practicable moment.
(e) If requested by the managing underwriters, if any, or if none, by
the Holders of a majority of the Registrable Securities being sold
pursuant to such Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or if none, such Holders reasonably believe
should be included therein, and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment under the
Securities Act as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section
4(e) that would in the opinion of counsel for the Company, violate
applicable law.
(f) Upon written request to the Company, furnish to each Holder of
Registrable Securities to be sold pursuant to a Registration Statement and
each managing underwriter, if any, without charge, at least one conformed
copy of the Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed
to be incorporated therein by reference, and all exhibits to the extent
requested (including those previously furnished or incorporated by
reference) as soon as practicable after the filing of such documents with
the SEC.
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(g) Deliver to each Holder of Registrable Securities to be sold
pursuant to a Registration Statement and each managing underwriter, if
any, without charge, as many copies of each Prospectus (including each
form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to use of
such Prospectus and each amendment or supplement thereto and each document
supplemental thereto by each of the selling Holders of Registrable
Securities and the underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the Holders of
Registrable Securities to be sold, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as any such Holder or
underwriter reasonably requests in writing; keep each such registration
or qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective hereunder and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the applicable Registration Statement; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or to taxation in any
jurisdiction where it is not so subject.
(i) In connection with any sale or transfer of Registrable Securities
that will result in such securities no longer being Registrable
Securities, cooperate with the 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,
which certificates shall not bear any restrictive legends whatsoever and
shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and to enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or such Holders may reasonably request at least two
business days prior to any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section 4(c)(v)
above, as promptly as practicable prepare a supplement or amendment,
including if appropriate a post-effective amendment to each Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material
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fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(k) Prior to the effective date of a Registration Statement, (i)
provide the registrar for the Registrable Securities with certificates for
such securities in a form eligible for deposit with DTC and (ii) provide a
CUSIP number for such securities.
(l) Enter into such agreement (including an underwriting agreement in
such form, scope and substance as is customary in underwritten offerings)
and take all such other reasonable actions in connection therewith
(including those reasonably requested by the managing underwriters, if
any, or the Holders of a majority of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such
Registrable Securities, and, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Holders
of such Registrable Securities and the underwriter or underwriters, if
any, with respect to the business of the Company and the subsidiaries of
the Company (including with respect to businesses or assets acquired or to
be acquired by any of them), and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if any when requested; (ii) 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 managing
underwriters, if any, addressed to each selling Holder of Registrable
Securities and each of the underwriters, if any), covering the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such underwriters;
(iii) use their best efforts to obtain customary "cold comfort" letters
and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed
(where reasonably possible) to each Selling Holder of Registrable
Securities and each of the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings; (iv) if
an underwriting agreement is entered into, the same shall contain
customary indemnification provisions and procedures no less favorable to
the Selling Holder and the underwriters, if any, than those set forth in
Section 5 hereof (or such other provisions and procedures acceptable to
Holders of a majority of Registrable Securities covered by such
Registration Statement and the managing underwriter, if any); and (v)
deliver such documents and certificates as may be reasonably requested by
the Holders of a majority of the Registrable Securities being sold and the
managing underwriters or underwriters to evidence the continued validity
of the
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representations and warranties made pursuant to clause (i) above and
evidence compliance with any customary conditions contained in the
underwriting agreement or other agreements entered into by the Company.
(m) Make available for inspection by a representative of the selling
Holders of Registrable Securities, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
consultant or accountant retained by such representative of the selling
Holders of Registrable Securities or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during the reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and the subsidiaries of the
Company (including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the Company),
and cause the officers, directors, agents and employees of the Company and
its subsidiaries of the Company (including with respect to businesses and
assets acquired or to be acquired to the extent that such information is
available to the Company) to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement; provided, however, that such persons shall first
agree in writing with the Company that any information that is reasonably
and in good faith designated by the Company in writing as confidential at
the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries of
regulatory authorities, (ii) disclosure of such information is required by
law (including any disclosure requirements pursuant to U.S. securities
laws in connection with the filing of the Registration Statement or the
use of any Prospectus), (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to
safeguard such information by such person or (iv) such information becomes
available to such person from a source other than the Company and its
subsidiaries and such source is not bound by a confidentiality agreement;
provided, further that the foregoing investigation shall be coordinated on
behalf of the selling Holders of Registrable Securities by Xxxxxxx Xxxxx.
(n) Comply with all applicable rules, regulations and policies of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder no later than 60 days after the end of any
12-month period (or 135 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter
in which Registrable Securities are sold to an underwriter or to
underwriters in a firm commitment or reasonable efforts underwritten
offering and (ii) if not sold to an underwriter or to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of the relevant Registration
Statement, which statements shall cover said such period, consistent with
the requirements of Rule 158 under the Securities Act.
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(o) Use its best efforts to cause all Registrable Securities relating
to such Registration Statement to be listed on each securities exchange,
if any, on which similar securities issued by the Company are then listed.
(p) Cooperate with each seller of Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and registered in such names as the Selling Holders
may reasonably request at least two business days prior to the closing of
any sale of Registrable Securities.
(q) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and its respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc.
The Company may require a Holder of Registrable Securities to be included
in a Registration Statement to furnish to the Company such information
regarding (i) the intended method of distribution of such Registrable
Securities (ii) such Holder and (iii) the Registrable Securities held by such
Holder as is required by law to be disclosed in such Registrable Statement and
the Company may exclude from such Registration Statement the Registrable
Securities of any Holder who fails to furnish such information within a
reasonable time after receiving such request.
If any such Registration Statement refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such Holder
shall have the right to require (i) the insertion therein of language, in form
and substance reasonably satisfactory to such Holder, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the Company,
or (ii) in the event that such reference to such Holder by name or otherwise is
not required by the Securities Act, the deletion of the reference to such
Holder in such amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be required.
Each Holder of Registrable Securities agrees by acquisition of such
Subject Equity that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(ii), 4(c)(iv) or
4(c)(v) hereof, such Holder will forthwith discontinue disposition of such
Subject Equity covered by the Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and in either case has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such
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Prospectus. If the Company shall give any such notice, the Effectiveness
Period shall be extended by the number of days during such periods from and
including the date of the giving of such notice to and including the date when
each seller of Subject Equity covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 4(j) hereof or (y) the Advice, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus..
Holders of the Subject Equity shall be obligated to keep confidential the
existence of a Suspension Period or any confidential information communicated
by the Company to the Holder with respect thereto.
Section 5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, each Holder, each
underwriter, if any, who participates in an offering of Registrable Securities,
their respective affiliates, and their respective directors, officers,
employees, agents and each Person, if any, who controls any of such parties
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the 1933 Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, in each case, based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided that
(subject to Section 5(d) below) any such settlement is effected with the
written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred (including
the reasonable fees and disbursements of one counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation
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or proceeding by any court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii) of
this Section 5(a);
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent (i) arising out of an untrue
statement or omission or alleged untrue statement or omission (A) made in or
omitted from a preliminary Prospectus or Registration Statement and corrected
or included in a subsequent Prospectus or Registration Statement or any
amendment or supplement thereto made in reliance upon and in conformity with
written information furnished to the Company by the Selling Holders of
Registrable Securities, any Holder, or any underwriter expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) or (B) resulting from the use of the
Prospectus during a period when the use of the Prospectus has been suspended or
is otherwise unavailable for sales thereunder in accordance with Sections
2.1(b), 2.1(c), 2.2(c), 2.3, 2.4 or 2.6 hereof, provided, in each case, that
Holders received prior notice of such suspension or other unavailability.
(b) In the case of any registration of Registtable Securities, each Holder
agrees, severally and not jointly, to indemnify and hold harmless the Company,
each Initial Purchaser, each underwriter, if any, who participates in an
offering of Registrable Securities and the other Selling Holders and each of
their respective directors and officers (including each officer of the Company
who signed the Registration Statement) and each Person, if any, who controls
the Company, any Initial Purchaser, any underwriter or any other Selling Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 5(a) hereof, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use in the Registration Statement (or any amendment thereto), or the Prospectus
(or any amendment or supplement thereto); provided, however, that no such
Holder shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Registration Statement.
(c) In case any action shall be commenced involving any Person in respect
of which indemnity may be sought pursuant to either paragraph (a) or (b) above,
such Person (the "indemnified party") shall give notice as promptly as
reasonably practicable to each Person against whom such indemnity may be sought
(the "indemnifying party"), but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any
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liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 5 (whether or not the indemnified parties are
actual or potential parties thereof), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 5(a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in any of the indemnity provisions
set forth in this Section 5 is for any reason unavailable to or insufficient to
hold harmless an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, in such
proportion as is appropriate to reflect the relative fault of such indemnifying
party or parties on the one hand, and such indemnified party or parties on the
other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party or parties on the one hand, and such indemnified party or parties on the
other hand shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or parties or such indemnified party or parties and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Initial
Purchasers and the Holders of the Registrable Securities agree
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that it would not be just and equitable if contribution pursuant to this
Section 5 were determined by pro rata allocation (even if the Selling Holders
of Registrable Securities were treated as one entity, and the Holders were
treated as one entity, for such purpose) or by another method of allocation
which does not take account of the equitable considerations referred to above
in Section 5. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
5 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by an governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 5,
each Person, if any, who controls an Initial Purchaser or Holder within the
meaning of this Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as such Initial Purchaser or Holder, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each Person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company.
Section 6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder and Permitted Holders, in
addition to being entitled to exercise all rights provided herein, in the
Purchase Agreement or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement.
(b) No Inconsistent Agreements. The Company and the Permitted Holders
will not enter into any agreement which is inconsistent with the rights granted
to the Holders of Warrants and Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities, if any, under any such agreements.
(c) No Piggy-Back on Demand Registrations. The Company shall not grant to
any of its securityholders (other than the Holders in such capacity) the right
to include any of their securities in any Registration Statement filed pursuant
to a Demand Registration.
(d) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, otherwise than with the prior
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written consent of the Holders and Permitted Holders of not less than a
majority of the then outstanding Warrants and each class and series of
Registrable Securities; provided, however, that, for the purposes of this
Agreement, Warrants and Registrable Securities that are owned, directly or
indirectly, by the Company, the Permitted Holders or any of their Affiliates
are not deemed outstanding. Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of one or more Holders and Permitted Holders and that
does not directly or indirectly affect the rights of other Holders and other
Permitted Holders may be given by a majority of the Holders and Permitted
Holders so affected; provided, however, that the provisions of this sentence
may not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence. Notwithstanding the
foregoing, no amendment, modification, supplement, waiver or consent with
respect to Section 5 shall be made or given otherwise than the prior written
consent of each Person affected thereby.
(e) 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 any courier guaranteeing overnight delivery
(i) if to a Holder or a Permitted Holder, at the most current address of such
Holder or such Permitted Holder as set forth in the register for the Warrants
or the Registrable Securities, which address initially is, with respect to each
Initial Purchaser, the address set forth with respect to such Initial Purchaser
in the Purchase Agreement; and (ii) if to the Company, initially at the address
set forth below the Company's name on the signature pages hereto and thereafter
at such other address, notice of which is given in accordance with the
provisions of this Section 6(e), with a copy to Xxxxx Xxxx LLP, Xxx
Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000, Attention: J. Xxxx
Xxxxxx, Esq., and thereafter at such other address notice of which is given in
accordance with the provisions of this Section 6(e).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. If any transferee of any Holder
shall acquire Registrable Securities, in any manner, whether by operation of
law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof. The Company may not
assign any of its rights or obligations hereunder without the prior written
consent of each Holder of Registrable Securities. Notwithstanding the
foregoing, no successor or assignee of the Company shall have any rights
granted under the Agreement until such person shall
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28
acknowledge its rights and obligations hereunder by a signed written statement
of such person's acceptance of such rights and obligations.
(g) 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.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
(k) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Warrant 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 and therein. This Agreement, the
Purchase Agreement and the Warrant Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
(m) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities or Warrants is required hereunder, Registrable Securities or
Warrants held by the Company or by any of its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted (in either
the numerator or the denominator) in determining whether such consent or
approval was given by the Holders of such required percentage.
[SIGNATURE PAGE FOLLOWS]
31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
DTI HOLDINGS, INC.
00000 Xxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
By:/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
IN ITS CAPACITY AS A PERMITTED HOLDER, FOR
PURPOSES OF SECTION 3 AND 6 HEREOF ONLY
KLT TELECOM INC.
By:/s/ X.X. Xxxxxx
---------------------------------------
Name: X.X. Xxxxxx
Title: President
IN HIS CAPACITY AS A PERMITTED HOLDER, FOR
PURPOSES OF SECTION 3 AND 6 HEREOF ONLY
XXXXXXX X. XXXXXXXXX
By:/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
32
Confirmed and accepted as of
the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
TD SECURITIES (USA) INC.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:/s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
