Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of February 15,
2001, by and among Cross Media Marketing Corporation, a Delaware corporation
(the "Company"), and the Investors listed on Schedule A hereto (each of whom is
herein called individually, a "Investor" and all of whom are herein called,
collectively, the "Investors"), with reference to the following facts:
The Investors are parties to the Subscription Agreement, dated as
of February 15, 2001 (the "Subscription Agreement"), by and among the Company
and the Investors, which provides that as a condition to the closing of the
transactions contemplated therein, pursuant to which the Company will issue and
sell a total of 600,000 shares of the Company's Common Stock, par value $.001
per share (the "Common Stock"), to the Investors, this Agreement must be
executed and delivered by the Investors and the Company.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein and for other consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto further agree as
follows:
SECTION 1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) "Form S-3" means such form under the 1933 Act as in effect on
the date hereof or any registration form under the 1933 Act subsequently adopted
by the SEC that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(b) "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.11 hereof.
(c) "1933 Act" means the Securities Act of 1933, as amended.
(d) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(e) "register", "registered", and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) "Registrable Securities" means (i) the shares of the
Company's Common Stock issued pursuant to the Subscription Agreement, (ii)
shares of the Company's Common Stock issuable on exercise of the Registration
Warrants (as defined in Section 1.3(c)), and (iii) any Common Stock of the
Company issued as (or issuable on the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the shares referenced in
clauses (i) - (ii) above; provided that there shall be excluded any Registrable
Securities sold by a person in a transaction in which that person's rights under
this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities" outstanding
shall be determined by the number of shares of Common Stock outstanding that
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities that are, Registrable Securities.
(h) "SEC" means the Securities and Exchange Commission.
(i) Any other capitalized term not defined herein shall
have the meaning set forth in the Subscription Agreement.
1.2 [Intentionally Omitted].
1.3 Request for Registration.
(a) Within forty-five (45) days after the Closing Date, the
Company shall prepare and file with the SEC a registration statement on Form S-3
(or, if Form S-3 is not then available, on such form of registration statement
that is then available to effect a registration of all Registrable Securities,
subject to consent of the Investors holding at least a majority of the
Registrable Securities) covering the registration of all of the Registrable
Securities. The Company shall use best efforts to obtain the effectiveness of
the Registration Statement as soon as possible after the Closing Date. The
Company shall keep such registration statement effective at all times until the
earlier of the date on which all the Registrable Securities (i) are sold and
(ii) can be sold by the Holders (and any affiliate of the Holder with whom such
Holder must aggregate its sales under Rule 144) in any three-month period
without volume limitation and without registration in compliance with Rule 144
under the 0000 Xxx.
(b) If the Holders intend to distribute the Registrable
Securities by means of an underwriting, they shall so advise the Company. The
underwriter will be selected by a majority in interest (as determined by the
number of Registrable Securities held) of the Holders and shall be reasonably
acceptable to the Company. In such event, the right of any Holder to include
his, her or its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Holders) to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall (together with the Company as provided in Section 1.6(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.3, if the underwriter advises the Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Holders shall so advise all Holders of Registrable Securities that would
otherwise be underwritten pursuant hereto, provided that the number of shares of
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the underwriting.
(c) If on the date one hundred thirty-five (135) days after the
Closing Date either (i) the registration statement described in Section 1.3(a)
is not declared effective or (ii) the registration statement described in
Section 1.3(a) is no longer deemed to be effective after initial effectiveness
(except under the circumstances described in the last two sentences of Section
1.6(f) hereof), the Company, unless waived by the Investors who purchased at
least 10% of the Common Stock, shall issue to each Investor a warrant in the
form attached hereto as Exhibit A (each, a "Registration Warrant" and,
collectively, the "Registration Warrants") to acquire the number of shares of
Common Stock equal to (i) 5% multiplied by (ii) the aggregate number of shares
of Common Stock sold to such Investor under the Subscription Agreement. The
exercise price of each such Registration Warrant per share of Common Stock
issuable on exercise of the Registration Warrant will be, as determined on the
date of issuance of such Registration Warrant: (i) if any Series A Preferred
Stock or associated warrants of the Company are outstanding on such date, the
lowest price per share that will not trigger any economic anti-dilution
adjustment under the Series A Preferred Stock or associated warrants; and (ii)
otherwise, $1.00 per share.
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(d) If on the end of the first thirty (30) day period after the
initial one hundred thirty-five (135) day period referred to in Section 1.3(c)
either (i) the registration statement described in Section 1.3(a) is not
declared effective or (ii) the registration statement described in Section
1.3(a) is no longer deemed to be effective after initial effectiveness (except
under the circumstances described in the last two sentences of Section 1.6(f)
hereof), the Company shall, unless waived by the Investors who purchased at
least 10% of the Common Stock, issue to each Investor an additional Registration
Warrant to acquire the number of shares of Common Stock equal to (i) 5%
multiplied by (ii) the aggregate number of shares of Common Stock sold to such
Investor pursuant to the Subscription Agreement. The exercise price of each such
Registration Warrant will be $1.00 per share of Common Stock issuable on
exercise of the Registration Warrant.
(e) If at the end of each subsequent thirty (30) day period after
the first thirty (30) day period after the initial one hundred thirty-five (135)
day period referred to in Section 1.3(c) either (i) the registration statement
described in Section 1.3(a) is not declared effective or (ii) the registration
statement described in Section 1.3(a) is no longer deemed to be effective after
initial effectiveness (except under the circumstances described in the last two
sentences of Section 1.6(f) hereof), the Company shall, unless waived by the
Investors who purchased at least 10% of the Common Stock, issue to each Investor
an additional Registration Warrant to acquire the number of shares of Common
Stock equal to (i) 2.5% multiplied by (ii) the aggregate number of shares of
Common Stock sold to such Investor pursuant to the Subscription Agreement. The
exercise price of each such Registration Warrant will be $1.00 per share of
Common Stock issuable on exercise of the Registration Warrant.
(f) The Company shall execute such other and further
certificates, instruments and other documents as may be reasonably requested by
the Investors or reasonably necessary or proper to implement, complete and
perfect the Investors' rights under this Section 1.3 and, upon effective of a
registration statement with respect to the Registrable Securities, to freely
trade the Registrable Securities without limitation or restriction imposed or
created by the Company or securities law.
(g) The terms and covenants set forth in this Section 1.3 shall
terminate as to each Holder and be of no further force and effect on the earlier
of the date on which all the Registrable Securities beneficially owned by that
Holder (i) are registered pursuant to this Section 1.3 and sold by that Holder
in an open market transaction or (ii) can be sold by that Holder (and any
affiliate of the Holder with whom such Holder must aggregate its sales under
Rule 144) in any three-month period without volume limitation and without
registration in compliance with Rule 144 under the 1933 Act.
1.4 Company Registration.
(a) If (but without any obligation to do so) the Company proposes
to register any of its stock (including a registration effected by the Company
for stockholders other than the Holders) or other securities under the 1933 Act
in connection with the public offering of such securities, the Company shall, at
such time, promptly give each Holder notice of such registration. On the request
of each Holder given within thirty (30) days after such notice by the Company,
the Company shall, subject to the provisions of Section 1.4(c), cause to be
registered under the 1933 Act all of the Registrable Securities that each such
Holder has requested to be registered.
(b) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 1.4 prior to the effectiveness
of such registration, whether or not any Holder shall have elected to include
securities in such registration. The expenses of such withdrawn registration
shall be borne by the Company in accordance with Section 1.8 hereof.
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(c) In connection with any offering involving an underwriting of
shares of the Company's capital stock, the Company shall not be required under
this Section 1.4 to include any requesting Holder's securities in such
underwriting, unless such Holder accepts the terms of the underwriting as agreed
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters) and enters into an underwriting agreement
in customary form with the underwriter or underwriters selected by the Company,
and then only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the Company. If
the total amount of securities, including Registrable Securities, requested to
be included in such offering by the Company, the Holders and other
securityholders to whom registration rights have been granted exceeds the amount
of Registrable Securities that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of securities
(including Registrable Securities) that the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the Registrable
Securities so included to be apportioned pro rata among the selling Holders
according to the total amount of Registrable Securities requested to be included
therein owned by each selling Holder or in such other proportions as shall
mutually be agreed to by such selling Holders); provided, that the number of
shares of Registrable Securities requested by the Holders to be included in such
offering pursuant to this Section 1.4 and all other securities requested by
other holders to be included in such offering pursuant to other "piggyback"
registration rights shall be reduced first (the Registrable Securities and other
securities so reduced to be apportioned pro rata among the selling Holders and
other holders according to the total amount of Registrable Securities and other
securities requested to be included therein by each selling Holder and other
holder) before any reduction of any (i) securities requested to be included in
such offering by any holders exercising "demand" registration rights or (ii) any
securities sold by the Company to be included in such offering. For purposes of
such apportionment among Holders, for any selling stockholder that is a Holder
of Registrable Securities and that is a partnership or corporation, the
partners, retired partners and stockholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
Holder", and any pro rata reduction with respect to such "selling Holder" shall
be based on the aggregate amount of Registrable Securities requested to be
included in such offering by all such related entities and individuals.
1.5 Form S-3 Registration. If the Company shall receive from one or
more Holders a request or requests that the Company effect a registration on
Form S-3 and any related blue sky or similar qualification or compliance with
respect to at least 25% (or a lesser percentage if the requirements of Section
1.5(b)(i) are met) of the Registrable Securities owned by such Holder or
Holders, the Company shall:
(a) promptly give notice of the proposed registration, and any
related blue sky or similar qualification or compliance, to all other Holders;
and
(b) cause, as soon as practicable, such Registrable Securities to
be registered for offering and sale on Form S-3 and cause such Registrable
Securities to be qualified in such jurisdictions as such Holders may reasonable
request, together with all or such portion of the Registrable Securities of any
other Holders joining in such request as are specified in a request given within
fifteen (15) days after receipt of such notice from the Company; provided that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.5:
(i) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion
in such registration, propose to sell Registrable
Securities
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and such other securities (if any) at an aggregate
price to the public of less than $500,000;
(ii) if the Company has, within the twelve month period
preceding the date of such request, already effected
two registrations on Form S-3 for the Holders
pursuant to this Section 1.5;
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be
effected at such time, in which event the Company
shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more
than sixty (60) days after receipt of the request of
the Holder or Holders under this Section 1.5;
provided that the Company shall not utilize this
right more than once in any twelve (12) month period;
provided, further, that the Company shall not
register shares for its own account during such sixty
(60) day period, but such prohibition shall not apply
to the registration of Company shares in connection
with (x) a merger or (y) registration of shares
relating to a stock option, stock purchase or similar
plan; or
(iv) in any particular jurisdiction in which the Company
would be required to qualify to do business or to
execute a general consent to service of process in
effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities
and other securities so requested to be registered as soon
as practicable after receipt of the request or requests of
the Holders.
1.6 Obligations of the Company. Whenever required under this Section
1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) except as otherwise provided in Section 1.3, prepare and
file with the SEC a registration statement with respect to
such Registrable Securities and use best efforts to cause
such registration statement to become effective, and keep
such registration statement effective for a period of up
to two hundred seventy (270) days or, if earlier, until
the distribution contemplated in the Registration
Statement has been completed; provided that (i) such two
hundred seventy (270) day period shall be extended for a
period of time equal to the period the Holder refrains
from selling any securities included in such registration
at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 (or any
other Form, to the extent permitted by law) that are
intended to be offered on a continuous or delayed basis,
such two hundred seventy (270) day period shall be
extended, if necessary, to keep the Registration Statement
effective until all such Registrable Securities are sold,
except to the extent that the Holders (and any affiliate
of the Holder with whom such Holder must aggregate its
sales under Rule 144) of such Registrable Securities may
sell those Registrable Securities in any three-month
period without regard to the volume limitation and without
registration in compliance with Rule 144 under the 1933
Act;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the 1933 Act
with respect to the disposition of all securities covered
by such registration statement during the period of time
such registration statement remains effective;
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(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such
other documents as they may reasonably request to
facilitate the disposition of Registrable Securities owned
by them;
(d) use best efforts to register and qualify the securities
covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders; provided that the
Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to
file a general consent to service of process in any such
states or jurisdictions;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter of such offering;
(f) during the period of time such registration statement
remains effective, notify each Holder of Registrable
Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be
delivered under the 1933 Act or the happening of any event
as a result of which the 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 not misleading in the light
of the circumstances then existing. Notwithstanding the
provisions of this Section 1.6, the Company may, during
the period a registration statement is required to remain
effective hereunder, suspend the use of the prospectus for
a period not to exceed thirty (30) days (whether or not
consecutive) in any 12-month period if the Board of
Directors of the Company determines in good faith that
because of valid business reasons, including pending
mergers or other business combination transactions, the
planned acquisition or divestiture of assets, pending
material corporate developments and similar events, it is
in the best interests of the Company to suspend such use,
and prior to or contemporaneously with suspending such use
the Company provides the Holders of Registrable Securities
with written notice of such suspension, which notice need
not specify the nature of the event giving rise to such
suspension. At the end of any such suspension period, the
Company shall provide the Holders with written notice of
the termination of such suspension.
(g) cause all such Registrable Securities registered hereunder
to be listed on each securities exchange on which
securities of the same class issued by the Company are
then listed;
(h) provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than
the effective date of such registration; and
(i) (i) furnish, at the request of any Holder, on the date
that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being
sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the
registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily
given to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities, and
(ii) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial
statements included in the registration statement,
covering substantially the same matters with respect to
the registration statement (and the prospectus included
therein) and with respect to events subsequent to the date
of the financial statements, as are customarily covered in
accountants' letters delivered to the underwriters in
underwritten public offerings of
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securities addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable
Securities.
1.7 Information from Holder. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Company such
information regarding such Holder, the Registrable Securities
held by such Holder, and the intended method of disposition of
such securities as shall be required to effect the registration
of such Registrable Securities.
1.8 Expenses of Registration. All expenses incurred in connection
with registrations, filings or qualifications pursuant to this
Section 1, including (without limitation) all registration,
filing and qualification fees, printing fees and expenses,
accounting fees and expenses, fees and disbursements of counsel
for the Company and the reasonable fees and disbursements of one
counsel for the selling Holders selected by the Holders, shall be
borne by the Company. Notwithstanding the foregoing, the Company
shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Sections 1.3 and 1.5 if the
registration request is subsequently withdrawn at the request of
the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear
such expenses pro rata based on the number of Registrable
Securities that were requested to be included in the withdrawn
registration); provided that, if at the time of such withdrawal,
the Holders shall have learned of a material adverse change in
the condition, business, or prospects of the Company from that
known to the Holders at the time of their request and shall have
withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then
the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant to Sections 1.3 and 1.5.
Anything herein to the contrary notwithstanding, all underwriting
discounts and commissions incurred in connection with a sale of
Registrable Securities shall be borne and paid by the Holder
thereof, and the Company shall have no responsibility therefor.
1.9 Indemnification. If any Registrable Securities are included in a
registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners or officers,
directors and stockholders of such Holder, legal counsel and
accountants for such Holder, any underwriter (as defined in
the 0000 Xxx) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of
the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which they may
become subject under the 1933 Act, the 1934 Act or any other
federal or state securities law, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on any of the following
statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated
therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by
the Company of the 1933 Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under
the 1933 Act, the 1934 Act or any state securities law; and
the Company will reimburse such Holder, underwriter or
controlling person for any legal or other expenses incurred,
as incurred, in connection with investigating or defending
any such loss, claim, damage, liability or action; provided
that the indemnity agreement in this Section 1.9(a) shall
not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent
shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it
arises out of or is based on a Violation that occurs in
reliance on and in conformity with written
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information furnished expressly for use in connection with such
registration by such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the
registration statement, each person, if any, who controls
the Company within the meaning of the 1933 Act, legal
counsel and accountants for the Company, any underwriter,
any other Holder selling securities in such registration
statement and any controlling person of any such underwriter
or other Holder, against any losses, claims, damages or
liabilities to which any of the foregoing persons may become
subject, under the 1933 Act, the 1934 Act or any other
federal or state securities law, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on any Violation, in each
case to the extent (and only to the extent) that such
Violation occurs in reliance on and in conformity with
written information furnished by such Holder expressly for
use in connection with such registration; and each such
Holder will reimburse any person intended to be indemnified
pursuant to this Section 1.9(b), for any legal or other
expenses reasonably incurred, as incurred, by such person in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided that the
indemnity agreement in this Section 1.9(b) shall not apply
to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not
be unreasonably withheld or delayed); and provided further
that in no event shall any indemnity by such Holder under
this Section 1.9(b), when aggregated with amounts
contributed, if any, pursuant to Section 1.9(d), exceed the
net proceeds from the sale of Registrable Securities
hereunder received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1.9, deliver to
the indemnifying party notice of the commencement thereof
and the indemnifying party shall have the right to
participate in, and, to the extent that the indemnifying
party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided that
an indemnified party (together with all other indemnified
parties that may be represented without conflict by one
counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure
to notify the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party
under this Section 1.9, but the omission so to notify the
indemnifying party will not relieve it of any liability that
it may have to any indemnified party otherwise than under
this Section 1.9.
(d) If the indemnification provided in this Section 1.9 is held
by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability,
claim, damage or expense referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or
omissions that shall have resulted in such loss, liability,
claim, damage or expense, as well as any other relevant
equitable considerations; provided that in no event shall
any contribution by a Holder under this Section 1.9(d), when
aggregate with amounts paid, if any, pursuant to Section
1.9(b), exceed the net
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proceeds from the sale of Registrable Securities hereunder
received by such Holder. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in
the underwriting agreement entered into in connection with
the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of
Registrable Securities in a registration statement under
this Section 1, and otherwise.
1.10 Reports under 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the 1933 Act
and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration statement
(including, without limitation, Form S-3), the Company agrees to:
(a) make and keep public information available, as those terms
are used in SEC Rule 144, at all times;
(b) take such commercially reasonable action as is necessary to
enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the
1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith on request, (i) a written
statement by the Company that it has complied with the
reporting requirements of SEC Rule 144, the 1933 Act and the
1934 Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (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 SEC that permits the selling of any such
securities without registration or pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this
Section 1 may be assigned (but only with all related obligations)
by a Holder to a transferee or assignee of such Registrable
Securities that (i) is a subsidiary, parent, current or former
partner, current or former limited partner, current or former
member, current or former manager or stockholder of a Holder,
(ii) is an entity controlling, controlled by or under common
control with a Holder, including without limitation a corporation
or limited liability company that is a direct or indirect parent
or subsidiary of the Holder, (iii) is a transferee or assignee of
a Holder and the number of shares transferred or assigned
constitute at least 100,000 shares of or warrants to purchase
100,000 shares of Registrable Securities held by such Holder (as
adjusted for stock split, combinations, dividends and the like);
provided that: (a) the Company is, within a reasonable time after
such transfer, notified of the name and address of such
transferee or assignee and the Registrable Securities with
respect to which such registration rights are being assigned; (b)
such transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement; (c) such
assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the
transferee or assignee is
9
restricted under the 1933 Act; and (d) such assignment is not
made pursuant to a registration statement effected pursuant to
this Agreement.
1.12 Duplicative Registration Rights. The rights of the Investors
under Section 1.4 or Section 1.5 shall not apply to the extent
that Registrable Securities then held by the Investors are
already covered by an effective registration statement under
another Section.
1.13 Termination of Registration Rights. No Holder shall be entitled
to exercise any right provided in this Section 1 with respect to
a Registrable Security (i) after the date on which that
Registrable Security has been sold under a registration statement
filed in accordance with this Agreement or (ii) if all
Registrable Securities held by such Holder (and any affiliate of
the Holder with whom such Holder must aggregate its sales under
Rule 144) can be sold in any three-month period without volume
limitation and without registration in compliance with Rule 144
under the 1933 Act.
Section 2. Covenants.
2.1 Delivery of SEC Reports. Unless and until the registration rights
granted hereunder have terminated pursuant to Section 1.13
hereof, the Company shall deliver to each Holder holding
Registrable Securities all reports and other documents of the
Company that the Company is required to file with the SEC under
the 1933 Act or the 1934 Act within twenty-four hours of the time
such reports or other documents are filed with the SEC.
2.2 Reserve for Exercise Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued
shares of Common Stock such number of shares of Common Stock (the
"Exercise Shares") as shall be sufficient to enable it to comply
with its exercise obligations under the Registration Warrants. If
at any time the number of Exercise Shares shall not be sufficient
to effect the exercise of the Registration Warrants, the Company
will forthwith take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to
such number as will be sufficient for such purposes. The Company
will obtain authorization, consent, approval or other action by,
or make any filing with, any administrative body that may be
required under applicable state securities laws in connection
with the issuance of Exercise Shares.
2.3 Termination of Covenants. The covenants set forth in Sections 2.2
and 2.3 shall terminate as to each Investor and be of no further
force and effect at the time the Investors no longer hold any
Registrable Securities.
Section 3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and bind the respective
successors and assigns of the parties (including transferees of
any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer on any party other than
the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as expressly provided in this
Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of
Washington, without giving effect to its conflicts of law
principles. All disputes between the parties hereto, whether
sounding in contract, tort, equity or otherwise, shall be
resolved only by state and federal courts located in Spokane,
Washington, and the courts to which an appeal therefrom may be
taken. All parties hereto waive any objections to the location of
the above referenced courts, including but not limited to any
objection based on lack of jurisdiction, improper venue or forum
non conveniens.
10
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
3.4 Headings. The headings of sections and subsections in this
Agreement are used for convenience of reference only and are not
to be considered in construing or interpreting this Agreement.
3.5 Notices. Any request, consent, notice or other communication
required or permitted under this Agreement shall be in writing
and shall be deemed duly given and received when delivered
personally or transmitted by facsimile, one business day after
being deposited for next-day delivery with a nationally
recognized overnight delivery service, or three days after being
deposited as first class mail with the United States Postal
Service, all charges or postage prepaid, and properly addressed
to the party to receive the same at the address indicated for
such party on the applicable signature page hereof, or at such
other address as such party may designate by ten days' advance
notice to the other parties.
3.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret any of the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief
to which such party may be entitled.
3.7 Entire Agreement: Amendments and Waivers. This Agreement
(including the Schedule hereto) constitutes the full and entire
understanding and agreement among the parties with regard to the
subjects hereof and thereof. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively) only with the consent of the
Company and the holders of more than 50% of the Registrable
Securities; provided that no amendment shall be effective unless
approved by the holder or holders of Registrable Securities that
shall be affected adversely, or affected differently from the
Holders generally, by such amendment. Any amendment or waiver
effected in accordance with this paragraph shall be binding on
the Company, each holder of any Registrable Securities and each
future holder of all such Registrable Securities.
3.8 Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable under
applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in
accordance with its terms.
[Signatures appear on the following page]
11
IN WITNESS WHEREOF, this Registration Rights Agreement has been
duly executed by or on behalf of the parties hereto as of the date first above
written.
"Company"
CROSS MEDIA MARKETING CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
"Investor"
KOYAH LEVERAGE PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By: /s/
------------------------------
Name:
----------------------------
Title:
---------------------------
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxx, Esq.
SCHEDULE A TO REGISTRATION RIGHTS AGREEMENT
Schedule of Investors
Name
Koyah Leverage Partners, L.P.
EXHIBIT A
TO
REGISTRATION RIGHTS AGREEMENT
Form of Registration Warrant
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
Warrant To Purchase Common Stock
Of
CROSS MEDIA MARKETING CORPORATION
-------------, ---
No. W-__
This certifies that ____________________ (the "Holder") is
entitled, subject to the terms and conditions of this Warrant, to purchase from
Cross Media Marketing Corporation, a Delaware (the "Company"), all or any part
of an aggregate of _________ shares of the Company's authorized and unissued
Common Stock, par value $.001 (the "Warrant Stock"), at the Warrant Price (as
defined herein), upon surrender of this Warrant at the principal offices of the
Company, together with a duly executed subscription form in the form attached
hereto as Exhibit 1 and simultaneous payment of the Warrant Price for each share
of Warrant Stock so purchased in lawful money of the United States, unless
exercised in accordance with the provisions of Section 2.6 of this Warrant. The
Holder may exercise the Warrant at any time after the date of this Warrant and
prior to the second anniversary of the date hereof, subject to the provisions of
Section 2.5 hereof (the "Expiration Date").
This Warrant is issued pursuant to that certain Registration
Rights Agreement dated as of February 15, 2001 (the "Registration Rights
Agreement"), by and among the Company, the Holder and certain of the other
investors listed on the signature page of the Subscription Agreement
("Investors") by and among the Company, the Holder and certain other Investors
dated February 15, 2001 (the "Subscription Agreement").
1. Definitions. The following definitions shall apply for purposes of
this Warrant:
1.1. "Acquisition" means any consolidation, merger or reorganization
of the Company with or into any other corporation or other entity or person, or
any other corporate reorganization, in which the stockholders of the Company
immediately prior to such consolidation, merger or reorganization, own less than
fifty percent of the Company's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions to which the Company is a party in which in excess of fifty percent
of the Company's voting power is transferred, excluding any consolidation,
merger or reorganization effected exclusively to change the domicile of the
Company.
1.2. "Asset Transfer" means a sale, lease or other disposition of
all or substantially all of the assets of the Company.
1.3. "Company" means the "Company" as defined above and includes any
corporation or other entity that succeeds to or assumes the obligations of the
Company under this Warrant.
1.4. "Fair Market Value" of a share of Warrant Stock means (i) if
the Common Stock is traded on a securities exchange, the average of the closing
price each trading day over the thirty consecutive day period ending three days
before the day the Fair Market Value of the securities is being determined, (ii)
if the Common Stock is actively traded over-the counter, the average of the
closing bid and asked prices quoted on the NASDAQ system (or similar system)
each trading day over the thirty consecutive day period ending three days before
the day the Fair Market Value of the securities is being determined, or (iii) if
at any time the Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, then the Fair Market Value
determined by the Company's Board of Directors in good faith.
1.5. "Holder" means the "Holder" as defined above and includes any
transferee who shall at the time be the registered holder of this Warrant.
1.6. "Warrant" means this Warrant and any warrant(s) delivered in
substitution or exchange therefor, as provided herein.
1.7. "Warrant Price" means $________ per share of Warrant Stock. The
Warrant Price is subject to adjustment as provided herein.
1.8. "Warrant Stock" means the Common Stock of the Company. The
number and character of shares of Warrant Stock are subject to adjustment as
provided herein and the term "Warrant Stock" shall include stock and other
securities and property at any time receivable or issuable upon exercise of this
Warrant in accordance with its terms.
2. Exercise.
2.1. Method of Exercise. Subject to the terms and conditions of this
Warrant, the Holder may exercise the purchase rights represented by this Warrant
in whole or in part, at any time or from time to time, on or after the date
hereof and before the Expiration Date, by surrendering this Warrant at the
principal offices of the Company, with the subscription form attached hereto
duly executed by the Holder, and payment of an amount equal to the product
obtained by multiplying (i) the number of shares of Warrant Stock so purchased
by (ii) the Warrant Price, as specified in Section 2.2 below.
2.2. Form of Payment. Except as provided in Section 2.6, payment may
be made by (i) a check payable to the Company's order, (ii) wire transfer of
funds to the Company, (iii) cancellation of indebtedness of the Company to the
Holder, or (iv) any combination of the foregoing.
2.3. Partial Exercise. Upon a partial exercise of this Warrant, this
Warrant shall be surrendered by the Holder and replaced with a new Warrant or
Warrants of like tenor for the balance of the shares of Warrant Stock
purchasable under the Warrant surrendered upon such purchase. The Warrant or
Warrants will be delivered to the Holder thereof within a reasonable time.
2.4. No Fractional Shares. No fractional shares may be issued upon
any exercise of this Warrant, and any fractions shall be rounded down to the
nearest whole number of shares. If upon any exercise of this Warrant a fraction
of a share results, the Company will pay an amount equal to the such fraction
multiplied by the Fair Market Value of a share of Warrant Stock.
2.5. [Intentionally omitted.]
2
2.6. Net Exercise Election. The Holder may elect to convert all or a
portion of this Warrant, without the payment by the Holder of any additional
consideration, by the surrender of this Warrant or such portion to the Company,
with the net exercise election selected in the subscription form attached hereto
duly executed by the Holder, into up to the number of shares of Warrant Stock
that is obtained under the following formula:
X = Y (A-B)
--------
A
where X = the number of shares of Warrant Stock to be issued
to the Holder pursuant to this Section 2.6.
Y = the number of shares of Warrant Stock purchasable
under this Warrant, or if only a portion of the Warrant is
being exercised, the number of shares of Warrant Stock
represented by the portion of the Warrant being exercised.
A = the Fair Market Value of one share of Warrant Stock
as at the time the net exercise election is made pursuant
to this Section 2.6.
B = the Warrant Price.
3. Issuance of Stock. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As soon as practicable, but in any event no later than three days
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
whole shares of Warrant Stock issuable upon such exercise. The Company covenants
and agrees that all shares of Warrant Stock that are issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder, free of all taxes, liens and charges with respect to the
issue thereof and free and clear of any restrictions on transfer (other than
under the Act and state securities laws).
4. Adjustment Provisions. The number and character of shares of
Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property at the time receivable or issuable upon exercise of
this Warrant) and the Warrant Price for the Common Stock are subject to
adjustment upon the occurrence of the following events between the date this
Warrant is issued and the date it is exercised:
4.1. Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, etc. The Warrant Price of this Warrant and the number of
shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities at the time issuable upon exercise of this Warrant)
shall each be appropriately and proportionally adjusted to reflect any stock
dividend, stock split, reverse stock split, combination of shares,
reclassification, recapitalization or other similar event affecting the number
of outstanding shares of Warrant Stock (or such other stock or securities).
4.2. Adjustment for Other Dividends and Distributions. In case the
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution payable
with respect to the Warrant Stock that is payable in (a) securities of the
Company (other than issuances with respect to which adjustment is made under
Section 4.1), or (b) assets (other than cash dividends paid or payable solely
out of retained earnings), then, and in each such case, the Holder, upon
exercise of this Warrant at any time after the consummation, effective date or
record date of such event, shall receive, in addition to the shares of Warrant
Stock issuable upon such exercise prior to such date, the securities or such
other assets of the Company to which the Holder would have been entitled upon
such date if the Holder had exercised this Warrant immediately prior thereto
(all subject to further adjustment as provided in this Warrant).
4.3. Adjustment for Reorganization, Consolidation, Merger. In case
of any reorganization of the Company (or of any other corporation or entity, the
stock or other securities of which are at the time receivable on
3
the exercise of this Warrant), after the date of this Warrant, or in case, after
such date, the Company (or any such corporation or entity) shall consolidate
with or merge into another corporation or entity or convey all or substantially
all of its assets to another corporation or entity, then, and in each such case,
the Holder, upon the exercise of this Warrant (as provided in Section 2), at any
time after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of this Warrant prior to
such consummation, the stock or other securities or property to which the Holder
would have been entitled upon the consummation of such reorganization,
consolidation, merger or conveyance if the Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in this
Warrant, and the successor or purchasing corporation or entity in such
reorganization, consolidation, merger or conveyance (if other than the Company)
shall duly execute and deliver to the Holder a supplement hereto acknowledging
such corporation's or entity's obligations under this Warrant; and in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
the consummation of such reorganization, consolidation, merger or conveyance.
4.4. Notice of Certain Events and Adjustments. The Company shall
give thirty days prior written notice of the record date fixed for any
Acquisition, Asset Transfer or event referred to in Section 4.2 or 4.3. The
Company shall promptly give written notice of (i) each adjustment or
readjustment of the Warrant Price or the number of shares of Warrant Stock or
other securities issuable upon exercise of this Warrant and (ii) each adjustment
or readjustment of the price per share of Common Stock triggering the call
provisions set forth in Section 2.5. The notice shall describe the adjustment or
readjustment and show in reasonable detail the facts on which the adjustment or
readjustment is based.
4.5. No Change Necessary. The form of this Warrant need not be
changed because of any adjustment in the Warrant Price or in the number of
shares of Warrant Stock issuable upon its exercise.
5. No Rights or Liabilities as Stockholder. This Warrant does not by
itself entitle the Holder to any voting rights or other rights as a stockholder
of the Company. In the absence of affirmative action by the Holder to purchase
Warrant Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall cause the
Holder to be a stockholder of the Company for any purpose.
6. Attorneys' Fees. In the event any party is required to engage the
services of any attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Warrant, including attorneys'
fees.
7. Transfer. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, if, on the Company's reasonable request, the
Holder provides an opinion of counsel reasonably satisfactory to the Company
that such transfer does not require registration under the Act and the
applicable state securities law, except that this Warrant may be transferred by
a Holder which is a partnership or limited liability company to a partner,
former partner, member, former member or other affiliate of such partnership or
limited liability company, as the case may be, if (a) the transferee agrees in
writing to be subject to the terms of this Warrant; and (b) the Holder delivers
notice of such transfer to the Company. The rights and obligations of the
Company and the Holder under this Warrant shall be binding upon and benefit
their respective permitted successors, assigns, heirs, administrators and
transferees.
8. Loss or Mutilation. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership and the loss, theft, destruction
or mutilation of this Warrant, and of indemnity reasonably satisfactory to it,
and (in the case of mutilation) upon surrender and cancellation of this Warrant,
the Company will execute and deliver in lieu thereof a new Warrant of like
tenor.
9. Reservation of Warrant Stock. If at any time the number of
authorized but unissued shares of the Warrant Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will take all such corporate
action as may be necessary to increase its authorized but unissued shares of
Warrant Stock to such number of shares of Warrant Stock as shall be sufficient
for such purpose.
10. Governing Law. This Warrant shall be governed by and construed
and interpreted in accordance with the laws of the State of Washington, without
giving effect to its conflicts of law principles. All disputes
4
between the parties hereto, whether sounding in contract, tort, equity or
otherwise, shall be resolved only by state and federal courts located in
Spokane, Washington, and the courts to which an appeal therefrom may be taken.
All parties hereto waive any objections to the location of the above referenced
courts, including but not limited to any objection based on lack of
jurisdiction, improper venue or forum non conveniens.
11. Headings. The headings and captions used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant. All references in this Warrant to sections and
exhibits shall, unless otherwise provided, refer to sections hereof and exhibits
attached hereto, all of which exhibits are incorporated herein by this
reference.
12. Notices. Any request, consent, notice or other communication
required or permitted under this Warrant shall be in writing and shall be deemed
duly given and received when delivered personally or transmitted by facsimile,
one business day after being deposited for next-day delivery with a nationally
recognized overnight delivery service, or three days after being deposited as
first class mail with the United States Postal Service, all charges or postage
prepaid, and properly addressed to the party to receive the same at the address
indicated for such party on the signature pages of the Subscription Agreement.
Any party may, at any time, by providing ten days' advance notice to the other
party hereto, designate any other address in substitution of the an address
established pursuant to the foregoing.
13. Amendment; Waiver. Any term of this Warrant may be amended, and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder.
14. Severability. If one or more provisions of this Warrant are held
to be unenforceable under applicable law, such provision(s) shall be excluded
from this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
15. Terms Binding. By acceptance of this Warrant, the Holder accepts
and agrees to be bound by all the terms and conditions of this Warrant.
16. Valid Issuance; Taxes. All shares of Warrant Stock issued upon
the exercise of this Warrant shall be validly issued, fully paid and
non-assessable, and the Company shall pay all taxes and other governmental
charges that may be imposed in respect of the issue or delivery thereof. The
Company shall not be required to pay any transfer tax or other similar charge
imposed in connection with any transfer involved in the issuance of any
certificate for shares of Warrant Stock in any name other than that of the
Holder of this Warrant.
17. Registration Rights. All shares of Warrant Stock issuable upon
exercise of this Warrant shall be deemed to be "Registrable Securities" or such
other definition of securities entitled to registration rights pursuant to the
Registration Rights Agreement, and are entitled, subject to the terms and
conditions of that agreement, to all registration rights granted to holders of
Registrable Securities thereunder.
18. No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment. Without limiting the generality of
the foregoing, the Company (a) will not increase the par value of any shares of
stock issuable upon the exercise of this Warrant above the amount payable
therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Warrant Stock upon exercise of this
Warrant.
[Signature appears on the following page.]
5
IN WITNESS WHEREOF, the undersigned has executed this Warrant as
of the date and year set forth below.
Dated: _____________, ______ Cross Media Marketing Corporation
By: _____________________________
Name:
Title:
[Signature Page to Warrant]
(1) Exhibit 1
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Cross Media Marketing Corporation
(1) Check the box that applies and the provide the necessary
information:
|_| Cash Payment Election. The undersigned Holder hereby elects to
purchase shares of Common Stock of Cross Media Marketing Corporation (the
"Warrant Stock"), pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price for such shares in full.
|_| Net Exercise Election. The undersigned Holder elects to convert the
Warrant into shares of Warrant Stock by net exercise election pursuant to
Section 2.6 of the Warrant. This conversion is exercised with respect to
__________ shares of Common Stock of Cross Media Marketing Corporation (the
"Warrant Stock") covered by the Warrant.
(2) In exercising the Warrant, the undersigned Holder hereby makes
the representations and warranties set forth on Appendix A hereto
as of the date hereof.
(3) Please issue a certificate or certificates representing such
shares of Warrant Stock in the name or names specified below:
__________________________________ _________________________________
(Name) (Name)
__________________________________ _________________________________
(Address) (Address)
__________________________________ _________________________________
(City, State, Zip Code) (City, State, Zip Code)
__________________________________ _________________________________
(Federal Tax Identification Number) (Federal Tax Identification Number)
__________________________________ _________________________________
(Date) (Signature of Holder)
Appendix A
INVESTMENT REPRESENTATION
The undersigned, _____________________ (the "Holder"), intends to acquire shares
of Common Stock (the "Common Stock") of Cross Media Marketing Corporation (the
"Company") from the Company pursuant to the exercise or conversion of a Warrant
to purchase Common Stock held by the Holder. The Common Stock will be issued to
the Holder in a transaction not involving a public offering and pursuant to an
exemption from registration under the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws. In connection with such
purchase and in order to comply with the exemptions from registration relied
upon by the Company, the Holder represents, warrants and agrees as follows:
(a) The Holder is acquiring the Common Stock for its own account, to hold for
investment, and the Holder shall not make any sale, transfer or other
disposition of the Common Stock in violation of the Securities Act or the
General Rules and Regulations promulgated thereunder by the Securities and
Exchange Commission or in violation of any applicable state securities law. The
Holder is an "accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
(b) The Holder has been advised that the Common Stock has not been registered
under the Securities Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on the Holder's representations set forth
herein.
(c) The Holder has been informed that under the Securities Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the
Securities Act or unless an exemption from such registration (such as Rule 144)
is available with respect to any proposed transfer or disposition by the Holder
of the Common Stock. The Holder further agrees that the Company may refuse to
permit the Holder to sell, transfer or dispose of the Common Stock (except as
permitted under Rule 144) unless there is in effect a registration statement
under the Securities Act and any applicable state securities laws covering such
transfer, or unless the Holder furnishes an opinion of counsel reasonably
satisfactory to counsel for the Company to the effect that such registration-is
not required.
The Holder also understands and agrees that there will be placed on the
certificate(s) for the Common Stock or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
state securities laws. These shares have been acquired for investment purposes
and may not be sold or otherwise transferred in the absence of an effective
registration statement for these shares under the Securities Act and applicable
state securities laws or an opinion of counsel satisfactory to the Company that
registration is not required and that an applicable exemption is available."
3
