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EXHIBIT 10.3
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COMMON STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of June 17, 1997
among
VERIO INC.,
XXXXXX FIBER PROPERTIES, INC.,
NORWEST EQUITY PARTNERS V,
PROVIDENCE EQUITY PARTNERS,
CENTENNIAL FUND V, L.P.,
CENTENNIAL FUND IV, L.P.
AND
XXXXXXX XXXXX & CO., XXXXXXX LYNCH,
PIERCE, XXXXXX & XXXXX INCORPORATED AND
LAZARD FRERES & CO. LLC,
as Initial Purchasers
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THIS COMMON STOCK REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into as of June 17, 1997, among Verio Inc., a Delaware
corporation (the "Company"), Xxxxxx Fiber Properties, Inc., Norwest Equity
Partners V, Providence Equity Partners, Centennial Fund V, L.P. and Centennial
Fund IV, L.P. (collectively, the "Investors") Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and Xxxxxx Freres &
Co. LLC (together with Xxxxxxx Xxxxx, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated as
of June 17, 1997, among the Company and the Initial Purchasers (the "Purchase
Agreement"), relating to the sale by the Company to the Initial Purchasers of an
aggregate of 150,000 Units, each Unit consisting of $1,000 principal amount 13
1/2% Senior Notes due 2004 (the "Notes") and 8 Warrants (collectively,
"Warrants") to purchase initially 1.76 shares of common stock, par value $0.001
per share, of the Company. In order to induce the Initial Purchasers to enter
into the Purchase Agreement, the Company has agreed to provide to the Holders
(as defined herein) the registration rights for the Registrable Securities (as
defined herein) set forth in this Agreement and the Investors (as defined
herein) have agreed to provide the Holders, among other things, the tag-along
rights for the Warrants and the Registrable Securities set forth herein. The
execution of this Agreement is a condition to the obligations of the Initial
Purchasers to purchase the Units under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Advice" shall have the meaning ascribed to that term in the last
paragraph of Section 4.
"Affiliate" of any specified Person shall mean any other Person
which, directly or indirectly, controls, is controlled by, or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall have the meaning ascribed to that term in the
preamble hereto.
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"Business Day" shall mean a day that is not a Legal Holiday.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated and whether voting and/or non-voting) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into or exercisable or exchangeable for any of the foregoing.
"Common Stock" shall mean the common stock, par value $0.001 per
share, of the Company and any options, warrants or security convertible into or
exercisable or exchangeable for such common stock.
"Company" shall have the meaning ascribed to that term in the
preamble hereto and shall also include the Company's successors.
"Convertible Preferred Stock" will include the outstanding Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock of the Company and any other securities convertible
or exercisable or exchangeable into Common Stock of the Company, whether
outstanding on the Issue Date or thereafter issued.
"Current Market Value" per share of Common Stock of the Company or
any other security at any date shall mean (i) if the security is not registered
under the Exchange Act, the fair market value of the security as determined by a
nationally or regionally recognized independent financial expert or (ii) (a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the security for the 20 consecutive days immediately
preceding such date, or (b) if the security has been registered under the
Exchange Act for less than 20 consecutive trading days before such date, then
the average of the daily closing sales prices for all of the trading days before
such date for which closing sales prices are available, in the case of each of
(ii)(a) and (ii)(b), as certified to the Warrant Agent (as specified in the
Warrant) by the President, any Vice President or the Chief Financial Officer of
the Company. The closing sales price for each such trading day shall be: (A) in
the case of a security listed or admitted to trading on any United States
national securities exchange or quotation system, the closing sales price,
regular way, on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) in the case of a security not
then listed or admitted to trading on any national securities exchange or
quotation system, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on such day,
as reported by a reputable quotation source designated by the Company, (C) in
the case of a security not then listed or admitted to trading on any national
securities exchange or quotation system and as to which no such reported sale
price or bid and asked prices are available, the av-
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erage of the reported high bid and low asked prices on such day, as reported by
a reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City and State of New York, customarily published on each
Business Day, designated by the Company, or, if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are no bid and
asked prices reported during the 30 days prior to the date in question, the
Current Market Value shall be determined as if the securities were not
registered under the Exchange Act.
"Demand Registration" shall have the meaning ascribed to that term
in Section 2.1.
"Effectiveness Period" shall have the meaning ascribed to that term
in Section 2.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" shall mean the value of any securities as
determined (without any discount for lack of liquidity, the amount of such
securities proposed to be sold or the fact that such securities held by any
Holder of such security may represent a minority interest in a private company)
by a nationally or regionally recognized investment banking firm selected by the
Company for the determination of such value.
"Holder" shall mean the Initial Purchasers, for so long as each
Initial Purchaser owns any Warrants or Registrable Securities, and each of their
successors, assigns and direct and indirect transferees who become registered
owners of Warrants or Registrable Securities.
"Initial Public Equity Offering" shall mean a primary public
offering (whether or not underwritten, but excluding any offering pursuant to
Form S-8 under the Securities Act or any other publicly registered offering
pursuant to the Securities Act pertaining to an issuance of shares of Common
Stock or securities exercisable therefor under any benefit plan, employee
compensation plan, or employee or director stock purchase plan) of Common Stock
of the Company pursuant to an effective registration statement under the
Securities Act.
"Initial Purchasers" shall have the meaning ascribed to that term in
the preamble hereto.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed.
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"Xxxxxxx Xxxxx" shall have the meaning ascribed to that term in the
preamble hereto.
"Notes" shall have the meaning ascribed to that term in the preamble
hereto.
"Participating Holder" shall have the meaning ascribed to that term
in Section 3.2(a).
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Piggy-Back Registration" shall have the meaning ascribed to that
term in Section 2.2.
"Proposed Purchaser" shall have the meaning ascribed to that term in
Section 3.2(a).
"Prospectus" the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement, and all other amendments and supplements to any
such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
"Purchase Agreement" shall have the meaning ascribed to that term in
the preamble hereto.
"Registrable Securities" shall mean any of (i) the Common Stock
issued and issuable upon exercise of the Warrants and (ii) any other securities
issued or issuable with respect to the Warrants or Warrant Shares by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
offering of such securities by the holder thereof shall have been declared
effective under the Securities Act and such securities shall have been disposed
of by such holder pursuant to such registration statement, (b) such securities
have been sold to the public pursuant to, or are eligible for sale to the public
without volume or manner of sale restrictions under, Rule 144(k) (or any similar
provision then in force, but not Rule 144A) promulgated under the Securities
Act, (c) such securities shall have been otherwise transferred and new
certificates for such securi-
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ties not bearing a legend restricting further transfer shall have been delivered
by the Company or its transfer agent and subsequent disposition of such
securities shall not require registration or qualification under the Securities
Act or any similar state law then in force or (d) such securities shall have
ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, all SEC and stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), rating agency fees, printing
expenses, messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public accountants and any
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts or commissions, fees of
counsel to the Holders or transfer taxes, if any, attributable to the sale of
Subject Equity by Holders of such Subject Equity).
"Registration Statement" shall mean any registration statement of
the Company which covers any of the Subject Equity pursuant to the provisions of
this Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Requisite Shares" shall mean a number of Warrants, Warrant Shares
and Registrable Securities equivalent to a majority of the Warrant Shares
subject to the originally issued Warrants.
"Rule 144" shall mean Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such
Rule may be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
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"Stockholder" shall mean, collectively, each Holder, each Investor
and the Affiliates of any Investor owning Common Stock or other securities
convertible or exercisable or exchangeable into Common Stock.
"Subject Equity" shall have the meaning ascribed to that term in
Section 2.1.
"Suspension Period" shall have the meaning ascribed to that term in
Section 2.1.
"Tag-Along Notice" shall have the meaning ascribed to that term in
Section 3.2(a).
"Tag-Along Right" shall have the meaning ascribed to that term in
Section 3.2(a).
"Transfer" shall have the meaning ascribed to that the term in
Section 3.2(a).
"Transfer Notice" shall have the meaning ascribed to that term in
Section 3.2(a).
"Triggering Date" shall mean the date of the consummation of a bona
fide underwritten public offering of Common Stock as a result of which at least
20% of the outstanding shares of Common Stock are listed on a United States
national securities exchange or the Nasdaq National Market.
"Warrant Change of Control" shall mean the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total Voting Stock of the Company; or (b) the Company
consolidates with, or merges with or into, another person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any person, or any person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into or exchanged for (1)
Voting Stock of the surviving or transferee corporation or its parent
corporation and/or (2) cash, securities and other property and (ii) immediately
after such transaction no "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to
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have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total Voting Stock of
the surviving or transferee corporation or its parent corporation, as
applicable; or (c) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board (together with any new
directors whose election by the Board or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board then in
office. The good faith determination by the Board, based upon advice of outside
counsel, of the beneficial ownership of securities of the Company within the
meaning of Rules 13d-3 and 13d-5 under the Exchange Act shall be conclusive,
absent contrary controlling judicial precedent or contrary written
interpretation published by the SEC.
"Warrants" shall have the meaning ascribed to that term in the
preamble hereto.
"Warrant Shares" shall mean the shares of Common Stock issued and
issuable upon exercise of the Warrants and any other securities issued or
issuable with respect to the Warrants by way of stock dividend, stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Withdrawal Election" shall have the meaning ascribed to that term
in Section 2.3(c).
2. Registration Rights.
2.1. Demand Registration. (a) Request for Registration. At any time
and from time to time on or after the earliest of: (i) immediately prior to a
Warrant Change of Control (as defined in the Registration Rights Agreement),
(ii) (a) the 90th day (or such fewer number of days as determined by the Company
in its sole discretion) after the consummation of an Initial Public Equity
Offering or (iii) a class of equity securities of the Company is listed on a
United States national securities exchange or authorized for quotation on the
Nasdaq National Market or is otherwise subject to registration under the
Exchange Act or (iv) December 15, 1999, Holders owning, individually or in the
aggregate, at least the Requisite Shares may require the Company to effect one
registration (a "Demand Registration") under the Securities Act of the Warrants,
Warrant Shares and Registrable Securities (the "Subject Equity"). Any such
request will specify the Subject Equity proposed to be sold and will also
specify the intended method of disposition thereof. The Company shall give
written notice of such registration request within 10 days after the receipt
thereof to all other Holders. Within 20 days after receipt of such notice by any
Holder,
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such Holder may request in writing that its Registrable Securities be included
in such registration and the Company shall include in the Demand Registration
the Registrable Securities of any such selling Holder requested to be so
included. Each such request by such other selling Holders shall specify the
number of Registrable Securities proposed to be sold and the intended method of
disposition thereof. Upon a demand, the Company will prepare, file and cause to
become effective within 150 days of such demand a Registration Statement in
respect of all the Subject Equity which Holders request, no later than 30 days
after the date of such notice, for inclusion therein and keep such Registration
Statement continuously effective for the shorter of (a) 180 days or (b) such
period of time as all of the Subject Equity included in such Registration
Statement shall have been sold thereunder (the "Effectiveness Period");
provided, however, that if such demand occurs during the "lock up" or "black
out" period (not to exceed 180 days) imposed on the Company pursuant to or in
connection with any underwriting or purchase agreement relating to an
underwritten Rule 144A or registered public offering of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock, the
Company shall not be required to so notify Holders of Subject Equity and file
such demand registration statement prior to the end of such "lock up" or black
out" period, in which event the Company will use its best efforts to cause such
Demand Registration statement to become effective no later than the later of (i)
150 days after such demand or (ii) 30 days after the end of such "lock up" or
"black out" period; provided, further, that the Company may postpone the filing
of, or suspend the effectiveness of, any registration statement or amendment
thereto, suspend the use of any Prospectus and shall not be required to amend or
supplement the Registration Statement, any related Prospectus or any document
incorporated therein by reference (other than an effective registration
statement being used for an underwritten offering) in the event that, and for a
period (a "Suspension Period") not to exceed an aggregate of 60 days with
respect to the Demand Registration if, (i) an event or circumstance occurs and
is continuing as a result of which the Registration Statement, any related
Prospectus or any document incorporated therein by reference as then amended or
supplemented or proposed to be filed would, in the Company's good faith
judgment, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and (ii)(A) the
Company determines in its good faith judgment that the disclosure of such event
at such time would have a material adverse effect on the business, operations or
prospects of the Company or (B) the disclosure otherwise relates to a material
business transaction which has not yet been publicly disclosed; provided,
further that the Effectiveness Period shall be extended by the number of days in
any Suspension Period. In the event of any "lock up" or "black out" period in
any underwriting or purchase agreement, the Company will so notify the Holders
of Registrable Securities. Notwithstanding the foregoing, in lieu of filing and
causing to become effective a Demand Registration, the Company may satisfy its
obligation with respect to such Demand
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Registration by making (or having its designee make) an offer to purchase all
Subject Equity at a price at least equal to Current Market Value less any
applicable Exercise Price and consummating (or having its designee consummate)
the purchase of Subject Equity as to which Holders accept such offer within 60
days of such offer; provided that if through the exercise of reasonable efforts
the Company is unable to consummate such purchase within 60 days, such period
may be extended for such reasonable period of time as may be necessary to
consummate.
(b) Effective Registration. A registration will not be deemed to
have been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in all material respects with
its obligations under this Agreement with respect thereto; provided that if,
after it has become effective, the offering of Subject Equity pursuant to such
registration is or becomes the subject of any stop order, injunction or other
order or requirement of the SEC or any other governmental or administrative
agency, or if any court prevents or otherwise limits the sale of Subject Equity
pursuant to the registration (for any reason other than the act or omissions of
the Holders) for the period of time contemplated hereby, such registration will
be deemed not to have been effected. If (i) a registration requested pursuant to
this Section 2.1 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2.1 does not remain effective for the
Effectiveness Period, then the Company shall continue to be obligated to effect
an additional registration pursuant to this Section 2.1. The Holders of Subject
Equity shall be permitted to withdraw all or any part of the Subject Equity from
a Demand Registration at any time prior to the effective date of such Demand
Registration. If at any time a Registration Statement is filed pursuant to a
Demand Registration, and subsequently a sufficient amount of the Subject Equity
is withdrawn from the Demand Registration so that such Registration Statement
does not cover at least the amount of Requisite Shares, the Holders who have not
withdrawn their Subject Equity shall have the opportunity to include an
additional amount of Subject Equity in the Demand Registration so that such
Registration Statement covers at the Requisite Shares. If an additional amount
of Subject Equity is not so included, the Company may withdraw the Registration
Statement. Such withdrawn Registration Statement will not count as a Demand
Registration and the Company shall continue to be obligated to effect a
registration pursuant to this Section 2.1.
(c) Priority in Demand Registrations Pursuant to Section 2.1. If a
Demand Registration pursuant to this Section 2.1 involves an underwritten
offering and the lead managing underwriter advises the Company in writing that,
in its view, the number of securities requested to be included in such
registration (including securities of the Company which are not Subject Equity)
exceeds the number which can be sold in such offering, the Company will include
in such registration only the Subject Equity requested to be included in such
registration. In the event that the amount
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of Subject Equity requested to be included in such registration exceeds the
number which, in the view of such lead managing underwriter, can be sold, the
amount of such Subject Equity to be included in such registration shall be
allocated pro rata among all requesting Holders on the basis of the relative
number of shares of Subject Equity then held by each such Holder (provided that
any Subject Equity thereby allocated to any such Holder that exceed such
Holder's request shall be reallocated among the remaining requesting Holders in
like manner). In the event that the number of Subject Equity requested to be
included in such registration is less than the number which, in the view of the
lead managing underwriter, can be sold, the Company may include in such
registration the securities the Company proposes to sell up to the number of
securities that, in the view of the lead managing underwriter, can be sold.
(d) Selection of Underwriter. If the Holders so elect, the offering
of such Subject Equity pursuant to such Demand Registration shall be in the form
of an underwritten offering. The Holders making such Demand Registration shall
select one or more nationally recognized firms of investment bankers, who shall
be reasonably acceptable to the Company, to act as the managing underwriter or
underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
(e) Expenses. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to Section 2.1(a). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to a registration statement requested pursuant to this
Section 2.1.
2.2. Piggy-Back Registration. If at any time the Company proposes to
file a Registration Statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
respective securityholders covering the sale of Common Stock (other than (a) a
registration statement on Form S-4 or S-8, (b) a registration statement filed in
connection with an offer of securities solely to the Company's existing
securityholders, or (c) a Demand Registration) for sale on the same terms and
conditions as the securities of the Company or any other selling securityholder
included therein, then the Company shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event less than 10 Business Days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to register such number of
Registrable Securities as each such Holder may request (which request shall
specify the Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its best efforts to cause the managing underwriter or
underwriters of such proposed underwritten offering to permit the Registrable
Secu-
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rities requested to be included in a Piggy-Back Registration to be included on
the same terms and conditions as any similar securities of the Company or any
other securityholder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw. The Company may withdraw a Piggy-Back Registration
at any time prior to the time it becomes effective; provided that the Company
shall give prompt notice thereof to participating Holders. The Company will pay
all Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.2, and each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to a
registration statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders pursuant to
Section 2.1, and no failure to effect a registration under this Section 2.2 and
to complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement.
2.3. Reduction of Piggy-Back Registration. (a) If the lead managing
underwriter of any underwritten offering described in Section 2.2 has informed,
in writing, the Holders of the Registrable Securities requesting inclusion in
such offering that it is its view that the total number of securities which the
Company, the Holders and any other Persons desiring to participate in such
registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, including the price at which such
securities can be sold, then the number of Registrable Securities to be offered
for the account of such Holders and the number of such securities to be offered
for the account of all such other Persons (other than the Company) participating
in such registration shall be reduced or limited pro rata in proportion to the
respective number of securities requested to be registered to the extent
necessary to reduce the total number of securities requested to be included in
such offering to the number of securities, if any, recommended by such lead
managing underwriter; provided that if such offering is effected for the account
of any securityholder of the Company other than the Holders, pursuant to the
demand registration rights of any such securityholder, then the number of
securities to be offered for the account of the Company (if any) and the Holders
(but not such securityholders who have exercised their demand registration
rights) shall be reduced or limited pro rata in proportion to the respective
number of securities requested to be registered to the extent necessary to
reduce the total number of securities requested to
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be included in such offering to the number of securities, if any, recommended by
such lead managing underwriter.
(b) If the lead managing underwriter of any underwritten offering
described in Section 2.2 notifies the Holders requesting inclusion of
Registrable Securities in such offering, that the kind of securities that such
Holders, the Company and any other Persons desiring to participate in such
registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, (x) the Registrable Securities to
be included in such offering shall be reduced as described in clause (a) above
or (y) if a reduction in the Registrable Securities pursuant to clause (a) above
would, in the judgment of the lead managing underwriter, be insufficient to
substantially eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering, such
Registrable Securities will be excluded from such offering.
(c) If, as a result of the proration provisions of this Section 2.3,
any Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Holder has requested to be included, such
Holder may elect to withdraw his request to include Registrable Securities in
such registration (a "Withdrawal Election"); provided that a Withdrawal Election
shall be irrevocable and, after making a Withdrawal Election, a Holder shall no
longer have any right to include Registrable Securities in the registration as
to which such Withdrawal Election was made.
3. Transfers.
3.1. Generally. All Subject Equity at any time and from time to time
outstanding shall be held subject to the conditions and restrictions set forth
in this Section 3. All shares of Capital Stock now or hereafter held by the
Investors shall be held subject to the conditions and restrictions set forth in
this Section 3. Each Holder of Subject Equity and the Investors by executing
this Agreement or by accepting a certificate representing Capital Stock or other
indicia of ownership therefor from the Company agree with the Company and with
each other Stockholder to such conditions and restrictions.
3.2. Tag-Along Rights. (a) Prior to the Triggering Date, each of the
Holders of Subject Equity shall have the right (the "Tag-Along Right") to
require the Proposed Purchaser to purchase from each of them all Subject Equity
owned by such Holder in the event of any proposed direct or indirect sale or
other disposition (collectively, a "Transfer") of Common Stock or Convertible
Preferred Stock (whether now or hereafter issued) to any Person or Persons (such
other Person or Persons being hereinafter referred to as the "Proposed
Purchaser") by any Investor or Investors or any of their Affiliates in any
transaction or series of related transactions
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resulting in a Warrant Change of Control. Each Investor shall notify, or cause
to be notified, each Holder of Subject Equity in writing (a "Transfer Notice")
of each such proposed Transfer at least 30 days prior to the date thereof. Such
notice shall set forth: (a) the name of the Proposed Purchaser and the number of
shares of Common Stock and other securities, if any, proposed to be transferred,
(b) the name and address of the Proposed Purchaser, (c) the proposed amount of
consideration and terms and conditions of payment offered by such Proposed
Purchaser (if the proposed consideration is not cash, the Transfer Notice shall
describe the terms of the proposed consideration) and (d) that either the
Proposed Purchaser has been informed of the "Tag-Along Right" and has agreed to
purchase Subject Equity in accordance with the terms hereof or that the
Investors or any of their Affiliates will make such purchase. The Tag-Along
Right may be exercised by any Holder of Subject Equity by delivery of a written
notice to the Company ("Tag-Along Notice"), within 10 days of receipt of the
Transfer Notice, indicating its election to exercise the Tag-Along Right (the
"Participating Holders"). The Tag-Along Notice shall state the amounts of
Subject Equity that such Holder proposes to include in such Transfer to the
Proposed Purchaser. Failure by any Holder to provide a Tag-Along Notice within
the 10-day notice period shall be deemed to constitute an election by such
Holder not to exercise its Tag-Along Right. The closing with respect to any sale
to a Proposed Purchaser pursuant to this Section shall be held at the time and
place specified in the Transfer Notice but in any event within 60 days of the
date such Transfer Notice is given; provided that if through the exercise of
reasonable efforts the Company is unable to cause such transaction to close
within 60 days, such period may be extended for such reasonable period of time
as may be necessary to close such transaction. Consummation of the sale of
Common Stock by any Investor or any of its Affiliates to a Proposed Purchaser
shall be conditioned upon consummation of the sale by each Participating Holder
to such Proposed Purchaser (or the Investor) of the Subject Equity entitled to
be transferred as described above, if any. Additionally:
(b) In the event that the Proposed Purchaser does not purchase
Subject Equity entitled to be transferred as described above on the same terms
and conditions as purchased from the Investors or any of their Affiliates, then
the Investors or their Affiliates shall purchase such Subject Equity if the
Transfer occurs.
(c) Each Holder shall have the right to require the Proposed
Purchaser to purchase from such Holder up to a percentage of the number of
Warrants, Warrant Shares and each class and series of Registrable Securities
owned by such Holder equaling the percentage derived by dividing the total
number of shares of Common Stock that the Investors and their Affiliates propose
to Transfer by the total number of shares of Common Stock owned by the Investors
and their Affiliates; provided that in the event of any proposed Transfer by the
Investors or any of their Affiliates in any transaction or series of related
transactions pursuant to which the Inves-
15
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tors and their Affiliates would, after giving effect to such Transfer,
beneficially own less than a majority of the outstanding Common Stock, each
Holder shall have the right to require the Proposed Purchaser to purchase all of
the Warrants, Warrant Shares and Registrable Securities owned by such Holder.
(d) Any Subject Equity purchased from the Participating Holders
pursuant to this Section 3.2 shall be paid for in the same type of consideration
and at the same price per share of Common Stock and upon the same terms and
conditions of such proposed Transfer of Common Stock by the Investors and/or any
of their Affiliates. Notwithstanding the foregoing, shares of Convertible
Preferred Stock being Transferred shall be entitled to receive the Fair Market
Value of consideration, up to but not in excess of the aggregate liquidation
preference of, plus accrued and unpaid dividends on, such shares of Convertible
Preferred Stock prior to any payment of consideration in respect of that Subject
Equity which is to be sold pursuant to the exercise of a tag-along right
relating to such Convertible Preferred Stock. In the event that the Fair Market
Value of consideration that is paid in respect of any shares of Convertible
Preferred Stock being Transferred is in excess of its aggregate liquidation
preference plus accrued and unpaid dividends, such shares of Convertible
Preferred Stock shall be deemed for all purposes of this provision to have been
converted into Common Stock immediately prior to such Transfer. The price per
Warrant to be paid by the Proposed Purchaser shall be less the exercise price of
such Warrant per share. If the Subject Equity to be purchased includes
securities or property other than Common Stock, the price to be paid for such
securities or property shall be the same price per share or other denomination
paid by the Proposed Purchaser for like securities purchased from any Investor
or any of its Affiliates or, if like securities are not purchased from any
Investor or any of its Affiliates by the Proposed Purchaser, the Fair Market
Value of such securities. The Investor shall arrange for payment directly by the
Proposed Purchaser to each Participating Holder, upon delivery of the
certificate or certificates representing the Warrants and/or Registrable
Securities duly endorsed for transfer, together with such other documents as the
Proposed Purchaser may reasonably request.
(e) If at the end of 60 days following the date on which a Transfer
Notice was given, or as otherwise extended pursuant to the provisions of Section
3.2(a), the sale of Common Stock by the Investors or their Affiliates and the
sale of the Subject Equity entitled to be transferred as provided above have not
been completed in accordance with the terms of the Proposed Purchaser's offer,
all certificates representing such Subject Equity shall be returned to the
Participating Holders, and all the restrictions on Transfer contained in this
Agreement with respect to Common Stock owned by the Investors and their
Affiliates shall remain in effect.
3.3. Drag-Along Rights. If at any time prior to an Initial Public
Equity Offering, any Investor or Investors and/or any of their re-
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spective Affiliates determines to sell all of the Capital Stock of the Company
owned by them to a Person other than an Investor or an Affiliate of an Investor
in a transaction resulting in a Warrant Change of Control, the transferring
Investor or Investors (whether directly or through an Affiliate) shall have the
right to require the Holders of Subject Equity to sell such Subject Equity to
such transferee; provided that (a) the consideration to be received by the
Holders of Subject Equity shall be the same type of consideration received by
the Investors and their Affiliates and, in any event, shall be cash or freely
transferable marketable securities, and (b) after giving effect to such
transaction, the Investors and their Affiliates shall not own, directly or
indirectly, any Capital Stock or rights to purchase Capital Stock of the
Company. Any Warrants and/or Registrable Securities purchased from the Holders
thereof pursuant to this Section 3.3 shall be paid for at the same price per
share of Common Stock and upon the same terms and conditions of such proposed
transfer of Common Stock by the Investors and their Affiliates. Notwithstanding
the foregoing, shares of Convertible Preferred Stock being transferred by an
Investor or its Affiliates shall be entitled to receive the Fair Market Value of
consideration, up to but not in excess of the aggregate liquidation preference
of, plus accrued and unpaid dividends on, such shares of Convertible Preferred
Stock prior to any payment of consideration in respect of that Subject Equity
which the holder thereof is obligated to sell. In the event that the Fair Market
Value of consideration that is paid in respect of any shares of Convertible
Preferred Stock being transferred by an Investor or its Affiliates is in excess
of its aggregate liquidation preference plus accrued and unpaid dividends, such
shares of Convertible Preferred Stock shall be deemed for all purposes of this
provision to have been converted into Common Stock immediately prior to such
transfer. The price per Warrant to be paid by the proposed purchaser shall be
less the exercise price of such Warrant per share. If the Subject Equity to be
purchased includes securities other than Common Stock, the price to be paid for
such securities shall be the same price per share or other denomination paid by
the proposed purchaser for like securities purchased from the Investors and
their Affiliates or, if like securities are not purchased from the Investors and
their Affiliates, the Fair Market Value of such securities.
4. Registration Procedures.
In connection with the obligations of the Company with respect to
any Registration Statement pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) A reasonable period of time prior to the initial filing of a
Registration Statement or Prospectus and a reasonable period of time prior to
the filing of any amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by reference),
furnish to the Initial Purchasers and the managing underwriters, if any, copies
of all such documents proposed to be filed, which docu-
17
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ments (other than those incorporated or deemed to be incorporated by reference)
will be subject to the review of such Holders, and such underwriters, if any,
and cause the officers and directors of the Company, counsel to the Company and
independent certified public accountants to the Company to respond to such
reasonable inquiries as shall be necessary, in the opinion of counsel to such
underwriters, to conduct a reasonable investigation within the meaning of the
Securities Act; provided that the foregoing inspection and information gathering
shall be coordinated on behalf of the Initial Purchasers by Xxxxxxx Xxxxx. The
Company shall not file any such Registration Statement or related Prospectus or
any amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities included in such Registration Statement shall reasonably
object on a timely basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period required hereunder; cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented;
(c) Notify the holders of Registrable Securities to be sold and the
managing underwriters, if any, promptly, and (if requested by any such person),
confirm such notice in writing, (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment is proposed to be filed, and (B) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other Federal
or state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC, any state securities commission, any other governmental
agency or any court of any stop order, order or injunction suspending or
enjoining the use of a Prospectus or the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, and (v) of the happening of any event or
information becoming known that makes any statement made in a Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that it will not contain any untrue statement of a material fact
18
-17-
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, not misleading, and that in the case of a
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(d) Use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of a
Prospectus or the effectiveness of a Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the managing underwriters, if any, or if none,
by the Holders of a majority of the Registrable Securities being sold pursuant
to such Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, or if none, such Holders, reasonably believe should be
included therein, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment under the Securities Act as soon as
practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any action
pursuant to this Section 4(e) that would, in the opinion of counsel for the
Company, violate applicable law;
(f) Upon written request to the Company, furnish to each Holder of
Registrable Securities to be sold pursuant to a Registration Statement and each
managing underwriter, if any, without charge, at least one conformed copy of
such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested
(including those previously furnished or incorporated by reference) as soon as
practicable after the filing of such documents with the SEC;
(g) Deliver to each Holder of Registrable Securities to be sold
pursuant to a Registration Statement, and the underwriters, if any, without
charge, as many copies of the Prospectus (including each form of prospectus) and
each amendment or supplement thereto as such persons reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Securities and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto;
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(h) Prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the Holders of Registrable
Securities to be sold, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as any such Holder
or underwriter reasonably requests in writing; keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective hereunder and do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where they are not so
subject;
(i) In connection with any sale or transfer of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the Holders thereof and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall not
bear any restrictive legends and shall be in a form eligible for deposit with
The Depository Trust Company and to enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters, if
any, or such Holders may request at least two Business Days prior to any sale of
Registrable Securities;
(j) Upon the occurrence of any event contemplated by Section
4(c)(v), as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(k) Enter into such agreements (including an underwriting agreement
in form, scope and substance as is customary in underwritten offerings) and take
all such other reasonable actions in connection therewith (including those
reasonably requested by the managing underwriters, if any, or the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities, and, whether or not
an underwriting agreement is entered into and whether or not the registration is
an underwritten registration, (i) make such representations and warranties to
the Holders of such Registrable Se-
20
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curities and the underwriters, if any, with respect to the business of the
Company and its subsidiaries (including with respect to businesses or assets
acquired or to be acquired by any of them), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings, and confirm the same
if and when requested; (ii) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, addressed to
each selling Holder of Registrable Securities and each of the underwriters, if
any), covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such underwriters; (iii) use their best efforts to obtain customary "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed (where
reasonably possible) to each selling Holder of Registrable Securities and each
of the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings; (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no less
favorable to the selling Holders and the underwriters, if any, than those set
forth in Section 5 hereof (or such other provisions and procedures acceptable to
Holders of a majority of Registrable Securities covered by such Registration
Statement and the managing underwriters, if any); and (v) deliver such documents
and certificates as may be reasonably requested by the Holders of a majority of
the Registrable Securities being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company;
(l) Make available for inspection by a representative of the Initial
Purchasers selling Registrable Securities, any underwriter participating in any
such disposition of Registrable Securities, and any attorney, consultant or
accountant retained by such selling Holders or underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries (including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the Company), and
cause the officers, directors, agents and employees of the Company and its
subsidiaries (including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the Company) to
supply all information in each case reasonably requested by any such
representative, underwriter, attor-
21
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ney, consultant or accountant in connection with such Registration Statement;
provided, however, that such persons shall first agree in writing with the
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such Persons, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to Federal securities laws in connection with the filing of the Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard such information by such Person or (iv) such information
becomes available to such Person from a source other than the Company and its
subsidiaries and such source is not bound by a confidentiality agreement; and
provided, further, that the foregoing inspection and information gathering shall
be coordinated on behalf of the Initial Purchasers by Xxxxxxx Xxxxx;
(m) Comply with all applicable rules and regulations of the SEC and
make generally available to their securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 under the
Securities Act, no later than 60 days after the end of any 12-month period (or
135 days after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm commitment or reasonable efforts underwritten
offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter after the effective date of a
Registration Statement, which statement shall cover said period, consistent with
the requirements of Rule 158 under the Securities Act; and
(n) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc.
The Company may require a Holder of Registrable Securities to be
included in a Registration Statement to furnish to the Company such information
regarding (i) the intended method of distribution of such Registrable Securities
(ii) such Holder and (iii) the Registrable Securities held by such Holder as is
required by law to be disclosed in such Registration Statement and the Company
may exclude from such Registration Statement the Registrable Securities of any
Holder who unreasonably fails to furnish such information within a reasonable
time after receiving such request.
If any such Registration Statement refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such
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Holder shall have the right to require (i) the insertion therein of language, in
form and substance reasonably satisfactory to such Holder, to the effect that
the holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such Holder by name or otherwise is not
required by the Securities Act, the deletion of the reference to such Holder in
any amendment or supplement to the Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii),
4(c)(iv) or 4(c)(v) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by such Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. If the Company shall give any such
notice, the Effectiveness Period shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each Holder of Registrable Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof or (y) the Advice, and,
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus.
5. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the Initial
Purchasers, each Holder, each underwriter who participates in an offering of
Registrable Securities, their respective Affiliates, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act and each of their respective directors,
officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto), covering Registrable
Securities, including all documents incorporated therein by reference, or
the omission or alleged omission therefrom
23
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of a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
if such settlement is effected with the prior written consent of the
Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any court or
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section 5(a);
provided that this indemnity does not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or omission
or alleged untrue statement or omission (i) made in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchasers, such Holder or any underwriter in writing expressly for use in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) or (ii) contained in any preliminary
prospectus if the Initial Purchasers, such Holder or such underwriter failed to
send or deliver a copy of the Prospectus (in the form it was first provided to
such parties for confirmation of sales) to the Person asserting such losses,
claims, damages or liabilities on or prior to the delivery of written
confirmation of any sale of securities covered thereby to such Person in any
case where such delivery is required by the Securities Act and such Prospectus
would have corrected such untrue statement or omission. Any amounts advanced by
the Company to an indemnified party pursuant to this Section 5 as a result of
such losses shall be returned to the Company if it shall be finally determined
by such a court in a judgment not subject to appeal or final review that such
indemnified party was not entitled to indemnification by the Company.
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(b) By accepting the benefits of this Agreement, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, each
Initial Purchaser, each underwriter who participates in an offering of
Registrable Securities and the other selling Holders and each of their
respective directors, officers (including each officer of the Company who signed
the Registration Statement), employees and agents and each Person, if any, who
controls the Company, the Initial Purchasers, any underwriter or any other
selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity contained in Section
5(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such selling Holder expressly for use in the
Registration Statement (or any amendment thereto), or any such Prospectus (or
any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 5(a) above, counsel to the indemnified parties shall be selected by
Xxxxxxx Xxxxx and, in the case of parties indemnified pursuant to Section 5(b)
above, counsel to the indemnified parties shall be selected by the Company.
Notwithstanding the foregoing sentence, in case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent it may wish, jointly with any other indemnifying
party similarly notified, unless such indemnified party shall have one or more
legal defenses available to it which are not available to the indemnifying
party, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party. After notice from the indemnifying party to such
indemnified party of its election as aforesaid to assume the defense thereof and
approval by such indemnified party of counsel appointed to defend such action,
the indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event
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shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any Judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 5 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 5(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 5 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Initial
Purchasers and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, the Initial Purchasers and the
Holders, as incurred; provided that 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 that was not guilty of such
fraudulent misrepresentation. As between the Company, the Initial Purchasers and
the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company, on the one hand, and the Initial Purchasers and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Com-
26
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pany, on the one hand, and of the Initial Purchasers and the Holders, on the
other hand, 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, on the one hand, or by or on behalf of the Initial Purchasers or the
Holders, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Initial Purchasers and the Holders of the Registrable
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 5 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the relevant
equitable considerations. For purposes of this Section 5, each Affiliate of the
Initial Purchasers or a Holder, and each director, officer, employee, agent and
Person, if any, who controls a Initial Purchaser or Holder or such Affiliate
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Initial
Purchaser or Holder, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company.
6. Rules 144 and 144A.
The Company shall use its best efforts to file any reports required
to be filed by it under the Securities Act and the Exchange Act in a timely
manner and, if at any time it is not required to file such reports but in the
past had been required to or did file such reports, it will, upon the request of
any Holder of Warrants or Registrable Securities, make available other
information as required by, and so long as necessary to permit, sales of its
Warrants and Registrable Securities pursuant to Rule 144A. Notwithstanding the
foregoing, nothing in this Section 6 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.
7. Underwritten Registrations.
If any of the Registrable Securities covered by any Registration
Statement are to be sold in an underwritten public offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the Holders of a majority of such Registrable
Securities included in such offering, subject to the consent of the Company
(which will not be unreasonably withheld or delayed).
No Person may participate in any underwritten public offering
hereunder unless such person (i) agrees to sell such Registrable Securities on
the basis reasonably provided in any underwriting arrangements approved
27
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by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
If the Company has complied with all its obligations under this
Agreement with respect to a Demand Registration (including the Company's option
to make and consummate an offer to purchase Subject Equity, if applicable) or a
Piggy-Back Registration relating to an underwritten public offering, all holders
of Warrants and Registrable Securities, upon request of the lead managing
underwriter with respect to such underwritten public offering, will be required
to not sell or otherwise dispose of any Warrant or Registrable Security owned by
them for a period not to exceed 180 days from the consummation of such
underwritten public offering.
8. Miscellaneous.
8.1. Remedies. In the event of a breach by the Company, the
Investors or by a Holder of any of its obligations under this Agreement, each
Holder, the Investors and the Company, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company, the
Investors and each Holder agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach of any of the
provisions of this Agreement and each hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
8.2. No Conflicting Agreements. The Company and the Investors will
not enter into any agreement that conflicts with the rights granted to the
Holders and indemnified persons in this Agreement or otherwise conflicts with
the provisions hereof. Without the written consent of the Holders of a majority
of the outstanding Warrants and each class and series of Registrable Securities,
the Company and the Investors shall not grant to any Person any rights which
conflict with the provisions of this Agreement.
8.3. No Piggy-back on Demand Registrations. The Company shall not
grant to any of its securityholders (other than the Holders in such capacity)
the right to include any of their securities in any Registration Statement filed
pursuant to a Demand Registration unless any such right expressly provides that
(i) such securityholders will agree to be cut-back if the lead managing
underwriter with respect to such Demand Registration has informed the Holders,
in writing, that it is its view that the total number of securities requested
for inclusion is such as to materially and adversely affect the success of any
offering relating to such Demand Registration, and (ii) Holders of Subject
Equity will in no event be required to cut-back Subject Equity proposed for
inclusion in such Demand Registration.
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8.4. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Holders
of not less than the Requisite Shares; provided, however, that, for the purposes
of this Agreement, Warrants, Warrant Shares and Registrable Securities that are
owned, directly or indirectly, by the Company, the Investors or any of their
Affiliates are not deemed outstanding. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a majority of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement; provided, however, that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. Notwithstanding the foregoing, no amendment,
modification, supplement, waiver or consent with respect to Section 5 shall be
made or given otherwise than with the prior written consent of each Person
affected thereby.
8.5. Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopier:
(a) if to the Company, as provided in the Purchase Agreement,
(b) if to the Investors,
Centennial Fund IV, L.P.
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Ph.: (000) 000-0000
Fax: (000) 000-0000
Norwest Equity Partners, V
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xxxxxx Still, Jr.
Ph.: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Fiber Properties, Inc.
000 Xxxxx Xxxx Xxxx Xxxxx
Xxxxx 000
Xxxx & Xxxxxxx, XX 00000
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Attn: Xxxxx X. Xxxxx
Ph.: (000) 000-0000
Fax: (000) 000-0000
30
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Providence Equity Partners L.P.
00 Xxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Ph.: (000) 000-0000
Fax: (000) 000-0000
(c) if to the Initial Purchasers, as provided in the Purchase
Agreement, or
(d) if to any other Person who is then the registered Holder of
Warrants or Registrable Securities, to the address of such Holder as it appears
in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
8.6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign any of its rights hereunder without the prior written consent of each
Holder and each indemnified party under Section 5(a). Notwithstanding the
foregoing, no successor or assignee of the Company shall have any of the rights
granted under this Agreement until such Person shall acknowledge its rights and
obligations hereunder by a signed written statement of such person's acceptance
of such rights and obligations.
8.7. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
8.8. Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
THE COMPANY AND THE INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
29
31
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8.9. Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
8.10. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
All references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
32
IN WITNESS WHEREOF, the parties have caused this Common Stock
Registration Rights Agreement to be duly executed as of the date first written
above.
VERIO INC.
By: /s/ Xxxxx Xxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxx Xxxxxxxx
Title: Vice President,
General Counsel and Secretary
XXXXXX FIBER PROPERTIES, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Title: CEO
NORWEST EQUITY PARTNERS V,
a Minnesota Limited Partnership
By: ITASCA Partners V, LLC,
Its General Partner
By: /s/ *
------------------------------------------
Name:
Title:
PROVIDENCE EQUITY PARTNERS LP
By Its General Partner,
Providence Equity Partners, LLC
By: /s/ Xxxx X. Xxxxx
------------------------------------------
Name: Xxxx X. Xxxxx
Title: Member
CENTENNIAL FUND V, L.P.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: General Partner
CENTENNIAL FUND IV, L.P.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: General Partner
* illegible
33
XXXXXXX XXXXX & CO.,
LAZARD FRERES & CO., LLC
By: XXXXXXX XXXXX & CO.,
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
By: /s/ X. Xxxxxx
------------------------------------------
Name: X. Xxxxxx
Title: Vice President
