XXX-XXXX.XXX, INC.
EXHIBIT 10.42
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of January 5, 1999 by and among XXX-XXXX.XXX, INC., a Delaware corporation
(the "Company"), and AMERICA ONLINE, INC., a Delaware corporation ("Investor").
RECITALS
WHEREAS, the Company and the Investor have entered into an Investment
Agreement of even date herewith (the "Investment Agreement"), pursuant to which
the Investor has agreed to purchase 2,894,737 shares (the "Purchased Shares") of
common stock, par value $.01 per share, of the Company ("Common Stock"), upon
the terms and conditions set forth therein;
WHEREAS, pursuant to the Investment Agreement, Investor shall exchange
5,076,016 warrants for 1,226,635 shares of Common Stock (the "Warrant Exchange
Shares");
WHEREAS, following the Closing of the Investment Agreement, Investor
will own warrants (the "Remaining Warrants") for a total of 2,721,984 shares of
Common Stock;
WHEREAS, pursuant to the terms of the Investment Agreement, Investor
shall have the right to put certain warrants and shares to the Company and the
Company shall have the right to elect to purchase such warrants and shares for
cash or shares of Common Stock (the "Additional Shares");
WHEREAS, in order to induce the Investor to enter into the Investment
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement for the benefit of Investor and its direct and indirect
transferees upon the terms and conditions set forth herein; and
WHEREAS, the execution and delivery of this Agreement is a condition to
the Investor's obligations pursuant to the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
conditions set forth herein, the parties hereby agree as follows:
1. Definitions. For the purposes of this Agreement:
"Affiliate" means any individual or entity directly or indirectly
controlling, controlled by or under common control with, a party to this
Agreement. Without limiting the foregoing, the direct or indirect ownership of
50% or more of the outstanding voting securities of an entity, or the right to
receive 50% or more of the profits or earnings of an entity, shall be deemed to
constitute control.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required to close.
"Commission" means the U.S. Securities and Exchange Commission or any
other governmental authority from time to time administering the Securities Act.
"Common Stock" means the common stock, par value $.01 per share, of
the Company.
"DTC" means the Depository Trust Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute and the rules and the regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Holder" means any person owning or having the right to acquire
Registrable Securities, including an Affiliate or any successor, assignee or
transferee of Investor or a Holder that has received Registrable Securities in
accordance with Section 12 hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, government entity, limited
liability company or other entity.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering or any portion of the Registrable Securities
covered by such Registration Statement 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.
"Registrable Securities" means (a) the Purchased Shares, Warrant
Exchange Shares, the Warrant Shares and the Additional Shares, whenever
acquired, and (b) any capital stock or other securities of the Company issued or
issuable with respect to such shares (i) upon any conversion or exchange
thereof, (ii) by way of stock dividend or other distribution, stock split or
reverse stock split, or (iii) in connection with a combination of shares,
recapitalization, merger, consolidation, exchange offer or other reorganization.
As to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (A) a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such Registration Statement, (B) such securities shall have been
distributed to the public in reliance upon Rule 144 (or any successor provision)
under the Securities Act, provided that at the time such securities
are proposed to be disposed of, they may be sold under Rule 144 without any
limitation on the amount of such securities which may be sold or (c) they shall
have ceased to be outstanding.
"Registration Expenses" means all fees and expenses incident to the
performance of or compliance with the provisions of this Agreement, whether or
not any Registration Statement is filed or becomes effective, including, without
limitation, all (a) registration and filing fees (including, without limitation,
(i) fees with respect to filings required to be made and other expenses
associated with the NASD and any other applicable exchange in connection with an
underwritten offering, and (ii) fees and expenses of compliance with state
securities or blue sky laws (including, without limitation, fees and
distributions of counsel for the underwriter or underwriters in connection with
blue sky qualifications of the Registrable Securities and determination of
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as are provided in Section 4(e)), (b) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with DTC and expenses of
printing prospectuses), (c) fees and disbursements of all independent certified
public accountants referred to in Sections 4 and 5 (including, without
limitation, the reasonable expenses of any special audit and "cold comfort"
letters required by or incident to such performance), (d) the fees and expenses
of any "qualified independent underwriter" or other independent appraiser
participating in an offering pursuant to the NASD Rules of Conduct and the
corresponding rules of any other applicable exchange, (e) liability insurance
under the Securities Act or any other securities laws, if the Company desires
such insurance, (f) fees and expenses of all attorneys, advisers, appraisers and
other persons retained by the Company or any Subsidiary of the Company, (g)
internal expenses of the Company and its Subsidiaries (including, without
limitation, all salaries and expenses of officers and employees of the Company
and its Subsidiaries, other general overhead expenses of the Company and its
Subsidiaries, and other expenses for the performance of legal or accounting
duties), (h) the expense of any annual audit and the preparation of historical
and pro forma financial statements or other data normally prepared by the
Company in the ordinary course of business, (i) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, and any other documents
necessary in order to comply with this Agreement, and (j) any fees and
disbursements of any other underwriters and broker-dealers customarily paid by
issuers or sellers of securities; provided, however, that in all cases in which
the Company is required to pay Registration Expenses hereunder, Registration
Expenses shall exclude any underwriting discounts, selling commissions or any
transfer taxes payable in respect of the sale of the Registrable Securities by
the Holders thereof.
"Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities 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, all exhibits and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 (or any successor provision) under the
Securities Act.
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"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Underwritten registration" or "underwritten offering" means a
registration in which Registrable Securities are sold to an underwriter for
reoffering to the public.
"Warrant Shares" means any shares issuable upon exercise of the
Remaining Warrants.
2. Registration.
(a) Immediate Registration. The Company shall as promptly as
practicable, but in no event later than forty-five (45) calendar days from the
date hereof, file a "shelf" Registration Statement pursuant to Rule 415 under
the Securities Act to permit the resale of the Purchased Shares, the Warrant
Exchange Shares, the Warrant Shares and an additional Six Million (6,000,000)
shares of Common Stock that may be issued from time to time pursuant to the
Investment Agreement. The Company shall use its best efforts to cause such
Registration Statement to become effective as promptly as practicable, but in no
event later than ninety (90) days from the date of this Agreement; provided,
however, that the Company shall not be required to file its report on Form 10-K
for the year ended December 31, 1998 prior to March 31, 1999. In any event and
notwithstanding anything to the contrary in this Agreement, the Company shall
file the Registration Statement no later than the date it files any registration
statement with respect to the sale of shares on its own behalf or on behalf of
any other Person and shall seek effectiveness of the Registration Statement
concurrent with any other registration statement.
(b) Registration Statement Form. Registrations under this
Section 2 shall be on such appropriate form of Registration Statement of the
Commission as shall be selected by the Company and available to it under the
Securities Act. The Company agrees to include in any such Registration Statement
all information which, in the opinion of counsel chosen by the Holders of a
majority of the Registrable Securities to be included in such Registration
Statement and counsel to the Company, is required to be included therein under
the Securities Act.
(c) Suspension. If the Board of Directors of the Company, in
its good faith judgment, determines that any registration under the Securities
Act of Registrable Securities should not be made or continued because it would
materially interfere with any material financing, acquisition, corporation
reorganization, merger, or other transaction involving the Company or any of its
subsidiaries (a "Valid Business Reason"), (i) the Company may postpone filing a
Registration Statement until such Valid Business Reason no longer exists, but in
no event for more than sixty (60) days, and (ii) in case a Registration
Statement has been filed, if the Valid Business Reason has not resulted from
actions taken by the Company, the Company may postpone amending or supplementing
such Registration Statement until such Valid Business Reason no longer exists,
but in no event for more than sixty (60) days (the "Postponement Period");
provided, however, that in no event shall the Company be permitted to postpone
filing, amending or supplementing a Registration Statement within one hundred
twenty (120) days after the
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expiration of any Postponement Period; and provided, further, that the Company
must comply with the provisions of Section 5.1(e) of the Investment Agreement in
connection with any such postponement.
(d) Incidental Registration. Each time that the Company shall
determine to engage in an underwritten offering (either for its own behalf or
for the behalf of any holder of any of the Company's Common Stock) of shares of
the Company's Common Stock, the Company shall give prompt written notice of its
determination to the Investor. Upon the written request of the Investor
delivered within thirty (30) days after its receipt of the Company's notice, the
Company shall use its best efforts to include the Registrable Securities that
the Investor has requested to be so included and registered, if necessary, in
such underwritten offering on the same terms and conditions as the shares
otherwise being sold through underwriters. If, in the good faith judgment of the
managing underwriter of such offering, the inclusion of all of the Registrable
Securities requested to be included and registered, if necessary, would
materially and adversely affect the successful marketing of the other shares
proposed to be offered, then the amount of the shares to be included in the
offering by each Person participating in the offering shall be reduced by
multiplying the number of shares each Person proposed to include in the offering
by a fraction, the numerator of which is the number of shares that the managing
underwriter, in its good faith judgment, determines can be included in such
offering without materially and adversely affecting the successful marketing of
the shares and the denominator of which is the total number of shares proposed
to be included in the offering.
3. Allocation of Expenses. The Company will pay all reasonable
Registration Expenses of all registrations under this Agreement; provided,
however, that in an underwritten offering in which the Holders receive net
proceeds of such offering in excess of $19.00 per share, the Holders
participating in such offering will pay the following fees and expenses: (a)
fees with respect to filings to be made and other expenses associated with the
NASD and any other applicable exchange, (b) fees and expenses of compliance with
state securities or blue sky laws, (c) fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating in an
offering pursuant to the NASD Rules of Conduct and the corresponding rules of
any other applicable exchange; (d) the expenses relating to printing, word
processing and distributing underwriting agreements and securities sales
agreements; and (e) any fees and disbursements of underwriters and
broker-dealers customarily paid by sellers of securities.
4. Obligations of the Company. If and whenever the Company is required
to use best efforts to effect the registration under the Securities Act of any
Registrable Securities pursuant to this Agreement, the Company shall:
(a) file with the Commission, as promptly as practicable, a
Registration Statement with respect to such Registrable Securities and make all
required filings with the NASD and any other applicable exchange;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith and such other
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documents as may be necessary to keep the Registration Statement continuously
effective until (i) the consummation of the disposition by the Holders of all
the Registrable Securities covered by such Registration Statement or (ii) the
date all Registrable Securities are freely salable by the Holders pursuant to
Rule 144(k);
(c) furnish to counsel (if any) selected by the Holders of a
majority of the Registrable Securities covered by such Registration Statement
and to counsel for the underwriters in any underwritten offering copies of all
documents proposed to be filed with the Commission in connection with such
registration (other than documents to be incorporated by reference) a reasonable
time prior to the proposed filing thereof and give reasonable consideration in
good faith to any comments of such Holders, counsel and underwriters;
(d) furnish to each Holder of such securities, without charge,
such number of conformed copies of such Registration Statement and of each such
amendment and supplement thereto (in each case, including all exhibits
(including all exhibits incorporated by reference), financial statements,
schedules, and all documents incorporated therein, deemed to be incorporated
therein by reference or filed therewith, except that the Company shall not be
obligated to furnish any Holder of securities with more than two copies of such
exhibits and documents), such numbers of copies of the Prospectus included in
such Registration Statement (including each preliminary prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder;
(e) use its best efforts to register or qualify and cooperate
with the Holders of Registrable Securities, the underwriters and their
respective counsels in connection with the registration or qualification (or
exemption from such registration or qualification) of the securities covered by
such Registration Statement under such other securities or blue sky laws of such
jurisdictions as each Holder shall request; provided, however, that where
Registrable Securities are offered other than through an underwritten offering,
the Company agrees to cause its counsel to perform blue sky investigations and
file registrations and qualification required to be filed pursuant to this
Section 4(e); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be effective hereunder and do any and all other acts and things which may be
necessary or advisable to enable such Holder to consummate the disposition in
such jurisdictions of the securities owned by such Holder, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, subject itself to taxation in any jurisdiction wherein it is not so
subject, or take any action which would subject it to general service of process
in any jurisdiction wherein it is not so subject;
(f) notify each Holder of Registrable Securities subject to
such Registration Statement if a Prospectus included in such 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 upon discovery by the Company of such material misstatement
or omission
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or upon the discovery by the Company of the happening of any event as a result
of which the Company believes that there would be a material misstatement or
omission, and, as promptly as is practicable, prepare and furnish to such Holder
a reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such Prospectus shall not include an 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 under which they were made, not misleading;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement of
the Company complying with the provisions of Section 11(a) of the Securities Act
and Rule 158 under the Securities Act (or any similar rule promulgated under the
Securities Act);
(h) promptly notify each Holder of Registrable Securities
covered by such Registration Statement, their counsel and the underwriters (i)
when such Registration Statement, or any post-effective amendment to such
Registration Statement, shall have become effective, or any amendment of or
supplement to the Prospectus used in connection therewith shall be filed, (ii)
of any request by the Commission to amend such Registration Statement or to
amend or supplement such Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
such Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation or threatening of any proceedings
for any of such purposes, (iv) of the suspension of the qualification of such
securities for offering or sale in any jurisdiction, or of the institution of
any proceedings for any of such purposes and (v) if, at any time when a
Prospectus is to be required by the Securities Act to be delivered in connection
with the sale of the Registrable Securities, the representations and warranties
of the Company contained in any the underwriting agreement contemplated in
Section 5(b) below, to the knowledge of the Company, cease to be true and
correct in any material respect;
(i) use its best efforts to prevent the issuance of any order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities covered
thereby for sale in any jurisdiction, and, if any such order is issued, to
obtain the withdrawal of any such order at the earliest possible moment;
(j) if requested by the managing underwriter, if any, or the
Holders of a majority of the Registrable Securities being sold in connection
with an underwritten offering, (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriter, if any, or such Holders reasonably request to be included therein
to comply with applicable law, and (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment;
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(k) use its best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with, and to obtain the
consent or approval of, each governmental agency or authority, whether federal,
state, local or foreign, which may be required to effect such registration or
the offering or sale in connection therewith or to enable the Holders to offer,
or to consummate the disposition of, the Registrable Securities subject to such
Registration Statement, except as may be required solely as a consequence of the
nature of such Holder's business, in which case the Company will cooperate with
all reasonable respects with the filing of the Registration Statement and the
granting of such approvals;
(l) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to the Registration Statement and not bearing any Securities
Act legend, and cause certificates for such Registrable Securities to be issued
for such numbers of shares and registered in such names as the Holders may
reasonably request at least two (2) Business Days prior to any sale of
Registrable Securities;
(m) agree not to file or make any amendment to any
Registration Statement with respect to any Registrable Securities, or any
amendment of or supplement to the Prospectus used in connection therewith, which
refers to any Holder of any securities covered thereby by name, or otherwise
identifies such Holder as the holder of any securities of the Company, without
the consent of such Holder, such consent not to be unreasonably withheld, except
that no such consent shall be required for (i) any disclosure that is necessary
to comply with federal and state securities laws, (ii) any disclosure that is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or Prospectus, (iii) the release of information that is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction, or (iv) such other information as has been made
generally available to the public other than by violation of this agreement.
5. Underwritten Offerings. The provisions of this Section 5 do not
establish additional registration rights or give the Holders any right to
participate in any Company-initiated offering, underwritten or otherwise, but
instead set forth procedures applicable, in addition to those set forth in
Sections 2 and 4, to any registration that is an underwritten offering.
(a) Underwriting Agreement. If requested by the underwriters
for any underwritten offering by Holders, the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Holders of a majority
of the Registrable Securities to be covered by such registration and to the
underwriters and to contain such representations and warranties by the Company
and such other terms and provisions as are customarily contained in agreements
of this type, including, but not limited to, indemnities to the effect and to
the extent provided in Section 9, provisions for the delivery of officers'
certificates, opinions of counsel and accountants' "cold comfort" letters, and
hold-back arrangements. The Holders of Registrable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement and may, at
their option, require that
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any or all of the representations and warranties by, and the agreements on the
part of, the Company to and for the benefit of such underwriters be made to and
for the benefit of such Holders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreements shall
also be conditions precedent to the obligations of such Holders. No such Holders
shall be required by the Company to make any representations or warranties to,
or agreements with, the Company or the underwriters other than representations,
warranties or agreements regarding such Holder and such Holder's intended method
of distribution.
(b) Selection of Underwriters. The Holders of a majority of
the Registrable Securities to be Registered pursuant to such offering shall have
the right to select one or more underwriters to administer the offering, subject
to the consent of the Company, which shall not be unreasonably withheld.
(c) Inclusion of Securities in an Underwritten Offering. No
securities of any selling stockholder (other than a Holder) shall be included in
an underwritten offering initiated by a Holder without the prior written consent
of Holders of not less than 75% of the Registrable Securities proposed to be
sold in such underwritten offering.
6. Preparation, Reasonable Investigation. In connection with the
preparation and filing of each Registration Statement registering Registrable
Securities under the Securities Act, upon receipt of reasonable assurances of
confidentiality, the Company shall give the Holders of Registrable Securities to
be so registered and their underwriters, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of such
Registration Statement, each Prospectus included therein (other than documents
to be incorporated by reference) or filed with the Commission, and each
amendment thereof or supplement thereto, and shall give each of them such access
to all pertinent financial, corporate, and other documents and properties of the
Company and its Subsidiaries, and such opportunities to discuss the business of
the Company with its officers, directors, employees and the independent public
accountants who have issued audit reports on its financial statements as shall
be necessary, in the opinion of such Holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
7. Certain Obligations of Holders.
(a) The Company may require each Holder of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such Holder and the intended method of
disposition of such securities as the Company may from time to time reasonably
request in writing and as shall be required to effect the registration of such
Holder's Registrable Securities. Each such Holder agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
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(b) Each Holder of Registrable Securities covered by a
Registration Statement agrees that, upon receipt of any notice from the Company
pursuant to Section 4(f), such Holder will promptly discontinue the disposition
of Registrable Securities pursuant to such Registration Statement until such
Holder shall have received either notice from the Company that (i) such
Registration Statement has been amended and has received copies of the
supplemented or amended Prospectus or (ii) use of the Prospectus or Prospectus
Supplement may be resumed. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, in such Holder's possession of the Prospectus covering
such Registrable Securities at the time of receipt of such notice.
8. Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Holder of such securities, its directors,
officers, and employees, each other Person who participates as an underwriter,
broker or dealer in the offering or sale of such securities, and each other
Person, if any, who controls such Holder, underwriter, broker, dealer or any
such participating Person within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities, joint or
several, to which such Holder or any such director, officer, employee,
underwriter, broker, dealer, participating Person, or controlling Person may
become subject, insofar as such losses, claims, damages, or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Securities Act or Prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company shall reimburse such Holder and each
such director, officer, employee, underwriter, broker, dealer, participating
Person, and controlling Person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon any untrue statement or omission made in such
Registration Statement or Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Holder, underwriter, participating Person or
controlling Person specifically for use in the preparation thereof; provided,
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or Prospectus contained therein or any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if (i) such untrue
statement or omission is corrected in an amendment or supplement to the
Prospectus or Prospectus supplement and the seller of the Registrable Securities
thereafter fails to deliver the Prospectus or Prospectus supplement as so
amended or supplemented prior to or concurrently with the sale of the
Registrable Securities to the person asserting such loss, claim, damage or
liability after the
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Company has furnished such seller with a sufficient number of copies of the same
or (ii) if the seller received written notice from the Company of the existence
of such an untrue statement or an omission and the seller continued to dispose
of Registrable Securities prior to the time of the receipt of either (A) an
amended or supplemented Prospectus or Prospectus supplement or (B) a notice from
the Company that the use of the existing Prospectus or Prospectus supplement may
be resumed.
(b) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, each Holder of
such securities, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities, joint or several, to which the Company, such directors
and officers, underwriters, or controlling Persons may become subject, insofar
as such losses, claims, damages, or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such securities were registered under the Securities Act or
Prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information relating to such Holder furnished in writing to the Company by or on
behalf of such Holder expressly for use in connection with the preparation of
such Registration Statement, Prospectus, amendment, or supplement; provided,
however, that the liability of each such Holder hereunder shall be in proportion
to and limited to the net amount received by such Holder (after deducting any
underwriting discount and expenses) from the sale of Registrable Securities sold
in connection with such registration.
(c) Promptly after receipt by a person entitled to
indemnification pursuant to this Section 8 ("Indemnitee") of notice of the
commencement of any action or the written assertion of any claim subject to
indemnification under this Section 8, the Indemnitee shall notify the Person
obligated to provide indemnification pursuant to this Agreement (the
"Indemnifying Person"), in writing of the commencement or the written assertion
thereof. Failure by an Indemnitee to so notify the Indemnifying Person shall
relieve the Indemnifying Person from the obligation to indemnify such Indemnitee
only to the extent that the Indemnifying Person suffers actual and material
prejudice as a result of such failure but in no event shall such failure to
notify the Indemnifying Person (i) constitute prejudice suffered by the
Indemnifying Person if it has otherwise received notice of the actions giving
rise to such obligation to indemnify or (ii) relieve it from any liability or
obligation that it may otherwise have to such Indemnitee. In case any such
action or claim shall be brought or asserted against any Indemnitee and it shall
notify the Indemnifying Person of the commencement or assertion thereof, the
Indemnifying Person shall assume the defense of such action or claim, including
employment of counsel to be chosen by the Indemnifying Party (which counsel
shall be reasonably satisfactory to the Indemnitee) and payment of expenses. The
Indemnitee shall be entitled to employ its own counsel in any such case, but the
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legal fees and expenses of such counsel shall be at the expense of the
Indemnitee, unless the employment of such counsel shall have been authorized in
writing by the Indemnifying Party in connection with the defense of such action,
or the Indemnifying Party shall not have employed counsel to take charge of the
defense of such action or the Indemnitee shall have reasonably concluded that
there may be defenses available to it or them which are different from or in
addition to those available to the Indemnifying Party, in any of which events
such fees and expenses shall be borne by the Indemnifying Party. Without the
prior consent of the Indemnitee, no Indemnifying Party shall enter into any
settlement of any such action or claim that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnitee of a
release from all liability in respect to such claim or litigation.
(d) If for any reason the foregoing indemnity is unavailable,
or is insufficient to hold harmless an Indemnitee, other than by reason of the
exceptions provided in this Section 8, then the Indemnifying Person shall
contribute to the amount paid or payable by the Indemnifying Person as a result
of such losses, claims, damages liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person on the one
hand and the Indemnitee on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, or liabilities, as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Holders of
Registrable Securities covered by the Registration Statement in question and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an Indemnitee as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnitee in connection with investigating or defending any such claim
or litigation. Notwithstanding anything to the contrary in this Section 8, (A)
no such Holder will be required to contribute any amount in excess of the
proceeds it received from the sale of its Registrable Securities pursuant to
such Registration Statement, (B) no Person guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Securities Act,
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation and (c) no party shall be liable for contribution
under this Section 8 except to the extent and under such circumstances as such
party would have been liable to indemnify under this Section 8 if such
indemnification were enforceable under applicable law.
9. Indemnification with Respect to Underwritten Offering. In the event
that Registrable Securities are sold pursuant to a Registration Statement in an
underwritten offering, the Company agrees to enter into an underwriting
agreement containing customary representations
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and warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering.
10. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Holder to sell Registrable Securities of the Company to the
public without registration and to making Form S-3 under the Securities Act
available for the registration of Registrable Securities, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to any Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 under
the Securities Act, any other such applicable reporting requirements under the
Securities Act and all applicable reporting requirements under the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the Commission which permits the selling of any such securities
without Registration or pursuant to such form.
11. Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of each party hereto, and their
respective successors, assigns and transferees. The Investor or any other Holder
under this Agreement may assign its rights under this Agreement to any Affiliate
or to other successors, assigns and transferees of the Investor or any such
Holder; provided, however, that the Company is given written notice from the
Investor or any such Holder at the time of such transfer stating the name and
address of the transferee or assign and identifying the securities with respect
to which the rights hereunder are being transferred. As a condition to the
effectiveness of any transfer permitted hereunder (i) the transferee or assignee
shall agree, in writing, upon request of the Company, to be bound by the
provisions of this Agreement, and (ii) the Company shall be given written notice
at the time of or within a reasonable time after said transfer or assignment,
stating the name and address of said transferee or assign and identifying the
securities with respect to which such registration rights are being assigned.
This Agreement shall survive any transfer of Registrable Securities to and shall
inure to the benefit of an Affiliate or such other successors, assigns and
transferees of the Investor or any such Holder. In addition, and whether or not
any express transfer or assignment shall have been made, the provisions of this
Agreement which are for the benefits of the parties hereto other than the
Company shall also be for the benefit of and enforceable by any subsequent
Holder or Registrable Securities.
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12. Miscellaneous.
(a) Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with respect to its
securities that would adversely affect the ability of the Holders to include
such Registrable Securities in a registration undertaken pursuant to this
Agreement.
(b) No Waivers. No failure or delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
(c) Amendments. Any provision of this Agreement may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by the Company and the Investor.
(d) Severability. If any term or provision of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms and provisions shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(e) Notices. All notices, requests and other communications to
any party hereunder shall be given in writing (including on telecopier or
similar writing) and shall be given to such party at its address, or telecopier
number set forth on the signature pages hereof, or such other address, or
telecopier number as such party may hereafter specify for such purpose. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified on
the signature page hereto and the appropriate answer back (i.e., machine
confirmation or telephone confirmation) is received, (ii) if given by mail, by
registered mail only 72 hours after such communication is deposited in the mail
with first class postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when received at the address specified on the signature page
hereto.
(f) Entire Agreement. This Agreement constitutes the entire
agreement and understanding among the parties hereto with respect to the
transactions contemplated hereby and supersedes any and all prior agreements and
understandings, written or oral, relating to the subject matter hereof.
(g) Governing Law. The laws of the State of New York shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under applicable
principles of conflicts of laws.
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(h) Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
(i) No Third Party Beneficiaries. Except as provided by
Sections 8 and 11, nothing in this Agreement shall confer any rights upon any
Person other than the parties hereto, each such party's respective successors
and permitted assigns and transferees.
[Signature page follows]
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers or representatives,
as of the date first above written.
XXX-XXXX.XXX, INC.
By: _________________________ Address:
Name: Xxx-Xxxx.xxx, Inc.
Title: 0000 Xxxxx 000
Xxx Xxxx, Xxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Chief Financial Officer
AMERICA ONLINE, INC.
By: _________________________ Address:
Name: America Online, Inc.
Title: 00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Senior Vice President, Head of
Business Affairs
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