EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as
of December 21, 2009, by and among Bluefly, Inc., a Delaware corporation (the
"Company"), Quantum Industrial Partners LDC ("QIP"), SFM Domestic Investments,
LLC ("SFM" and, together with QIP, "Xxxxx"), Maverick Fund USA, Ltd. ("Maverick
USA"), Maverick Fund, L.D.C. ("Maverick Fund"), Maverick Fund II, Ltd.
("Maverick Fund II" and, together with Maverick USA and Maverick Fund,
"Maverick"), Prentice Capital Partners, LP ("PCP"), Prentice Capital Partners
QP, LP ("PCP QP"), Prentice Capital Offshore, Ltd. ("PC Offshore"), GPC XL III,
LLC ("GPC"), PEC I, LLC ("PEC"), and S.A.C. Capital Associates, LLC ("SAC" and,
together with PCP, PCP QP, PC Offshore, GPC and PEC, "Prentice"; Xxxxx, Maverick
and Prentice are referred to collectively herein as the "Existing Holders"), and
Rho Ventures VI, L.P. ("Rho"; Xxxxx, Maverick, Prentice and Rho are referred to
collectively herein as the "Investors").
WHEREAS, the Existing Holders have been granted certain registration
rights pursuant to various purchase agreements, investment agreements and
standby commitment agreements (collectively, the "Prior Agreements");
WHEREAS, the Existing Holders desire to terminate the registration rights
granted pursuant to the Prior Agreements and to accept the registration rights
created pursuant hereto in lieu of the rights granted to them under the Prior
Agreements;
WHEREAS, the Company and Rho have entered into a Securities Purchase
Agreement, dated as of December 21, 2009 (the "2009 Securities Purchase
Agreement"), pursuant to which Rho has agreed to purchase, and the Company has
agreed to sell, an aggregate of 8,823,529 shares (the "Shares") of the Company's
common stock, par value $.01 per share (the "Common Stock"), upon the terms and
subject to the conditions set forth therein; and
WHEREAS, the Company desires to grant to Rho the registration rights set
forth herein with respect to the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
1.1 Defined Terms. The following capitalized terms used herein have
the following meanings:
"2008 Note Purchase Agreement" means the Note Purchase Agreement, dated as
of July 23, 2008, by and among the Company, Xxxxx and Maverick.
"2008 Standby Commitment" means the Standby Commitment Agreement, dated as
of March 26, 2008, by and among the Company, Xxxxx and Maverick.
"2009 Securities Purchase Agreement" has the meaning set forth in the
recitals to this Agreement.
"Additional Shelf Registration Statement" has the meaning set forth in
Section 2.2.3.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.
"Agreement" has the meaning set forth in the preamble to this Agreement.
"Approved Underwriter" has the meaning set forth in Section 2.5.2.
"Blackout Period" has the meaning set forth in Section 2.6.
"Board Restructuring" has the meaning set forth in the Voting Agreement.
"Commission" means the Securities and Exchange Commission, or any other
federal agency then administering the Securities Act or the Exchange Act.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Underwriter" has the meaning set forth in Section 2.4.1.
"Cut Back Shares" has the meaning set forth in 2.2.3.
"Deferral Notice" has the meaning set forth in Section 2.5.5.
"Deferral Period" has the meaning set forth in Section 2.5.5.
"Demand Registrable Securities" means, collectively, the Xxxxx Registrable
Securities and the Rho Registrable Securities.
"Demand Registration" has the meaning set forth in Section 2.5.1.
"Demand Registration Statement" has the meaning set forth in Section
2.5.1.
"Demanding Holders" has the meaning set forth in Section 2.5.1.
"Event" has the meaning set forth in Section 2.2.4.
"Event Date" has the meaning set forth in Section 2.2.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder, all as the
same shall be in effect from time to time.
"Existing Holders" has the meaning set forth in the preamble to this
Agreement.
"Existing Holders Registration Statement" has the meaning set forth in
Section 2.3.
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"Existing Shelf Registrable Securities" means the shares of Common Stock
and the shares of Common Stock underlying securities exercisable for or
convertible into shares of Common Stock, the resale of which was registered by
the Existing Holders Registration Statement.
"Filing Deadline" has the meaning set forth in Section 2.2.1.
"FINRA" has the meaning set forth in Section 3.1.13.
"GPC" has the meaning set forth in the preamble to this Agreement.
"Holders' Counsel" has the meaning set forth in Section 3.1.1.
"Indemnified Party" has the meaning set forth in Section 4.3.
"Indemnifying Party" has the meaning set forth in Section 4.3.
"Inspector" has the meaning set forth in Section 3.1.9.
"Investors" has the meaning set forth in the preamble to this Agreement.
"Maverick" has the meaning set forth in the preamble to this Agreement.
"Maverick 2008 Registrable Securities" means (i) the 19,797.9 shares of
Common Stock issuable upon exercise of warrants issued to Maverick pursuant to
the 2008 Standby Commitment Agreement, (ii) the shares of Common Stock issuable
upon conversion of the convertible notes issued to Maverick pursuant to the 2008
Note Purchase Agreement and (iii) any shares of Common Stock that may be issued
upon any stock split, dividend or other distribution, recapitalization or
similar event with respect to the Common Stock described in the foregoing
clauses (i) and (ii).
"Maverick Fund" has the meaning set forth in the preamble to this
Agreement.
"Maverick Fund II" has the meaning set forth in the preamble to this
Agreement.
"Maverick Registrable Securities" means the shares of Common Stock, and
the shares of Common Stock underlying securities exercisable for or convertible
into shares of Common Stock, acquired by Maverick directly from the Company on
or prior to the date hereof.
"Maverick USA" has the meaning set forth in the preamble to this
Agreement.
"No Second Closing Notice Date" has the meaning set forth in Section
2.2.1.
"PC Offshore" has the meaning set forth in the preamble to this Agreement.
"PCP" has the meaning set forth in the preamble to this Agreement.
"PCP QP" has the meaning set forth in the preamble to this Agreement.
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"PEC" has the meaning set forth in the preamble to this Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity or enterprise of whatever
nature.
"Piggy-Back Registrable Securities" means, collectively, the Xxxxx
Registrable Securities, the Maverick Registrable Securities, the Prentice
Registrable Securities and the Rho Registrable Securities.
"Piggy-Back Registration" has the meaning set forth in Section 2.4.1.
"Potential Material Event" has the meaning set forth in Section 2.6.
"Prentice" has the meaning set forth in the preamble to this Agreement.
"Prentice Registrable Securities" means the shares of Common Stock, and
the shares of Common Stock underlying securities exercisable for or convertible
into shares of Common Stock, acquired by Prentice directly from the Company on
or prior to the date hereof.
"Prior Agreements" has the meaning set forth in the recitals to this
Agreement.
"QIP" has the meaning set forth in the preamble to this Agreement.
"Records" has the meaning set forth in Section 3.1.9.
"Registrable Securities" means, collectively, the Xxxxx Registrable
Securities, the Maverick Registrable Securities, the Prentice Registrable
Securities and the Rho Registrable Securities.
"Registration Expenses" has the meaning set forth in Section 3.3.
"Requesting Holders" has the meaning set forth in Section 2.4.1.
"Required Effectiveness Deadline" has the meaning set forth in Section
2.2.1.
"Rho" has the meaning set forth in the preamble to this Agreement.
"Rho Notice" means a notice, if any, delivered by Rho to the Company
stating that the Second Closing will not occur as a result of the failure to (x)
satisfy the Stockholder Approval Condition, or (y) effect the Board
Restructuring.
"Rho Registrable Securities" means (i) the 8,823,529 shares of Common
Stock acquired by Rho pursuant to the 2009 Stock Purchase Agreement and (ii) any
shares of Common Stock that may be issued upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the Common
Stock described in the foregoing clause (i).
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"Rule 144" means Rule 144 promulgated under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.
"Rule 415" means Rule 415 promulgated under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.
"SAC" has the meaning set forth in the preamble to this Agreement.
"Second Closing" has the meaning set forth in the 2009 Securities Purchase
Agreement.
"Second Closing Date" has the meaning set forth in the 2009 Securities
Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect from time to time.
"SFM" has the meaning set forth in the preamble to this Agreement.
"Shares" has the meaning set forth in the recitals to this Agreement.
"Shelf Holders" means, collectively, Xxxxx, Maverick and Rho.
"Shelf Registrable Securities" means, collectively, the Rho Registrable
Securities, the Xxxxx 2008 Registrable Securities and the Maverick 2008
Registrable Securities.
"Shelf Registration Statement" has the meaning set forth in Section 2.2.1.
"Xxxxx" has the meaning set forth in the preamble to this Agreement.
"Xxxxx 2008 Registrable Securities" means (i) the 32,701 shares of Common
Stock issuable upon exercise of warrants issued to Xxxxx pursuant to the 2008
Standby Commitment Agreement, (ii) the shares of Common Stock issuable upon
conversion of the convertible notes issued to Xxxxx pursuant to the 2008 Note
Purchase Agreement and (iii) any shares of Common Stock that may be issued upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the Common Stock described in the foregoing clauses (i)
through (ii).
"Xxxxx Registrable Securities" mean the shares of Common Stock, and the
shares of Common Stock underlying securities exercisable for or convertible into
shares of Common Stock, acquired by Xxxxx directly from the Company on or prior
to the date hereof.
"Stockholder Approval Condition" has the meaning set forth in the 2009
Securities Purchase Agreement.
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"Voting Agreement" means the Amended and Restated Voting Agreement, dated
as of December 21, 2009, by and among the Company and the Investors.
"Withdrawal Period" has the meaning set forth in Section 2.5.5.
1.2 General Interpretive Principles.
1.2.1. All share information in this Agreement reflects the 1 for 10
reverse stock split effected by the Company on April 3, 2008.
1.2.2. Whenever used in this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, any noun or pronoun
shall be deemed to include the plural as well as the singular and to cover all
genders. The name assigned to this Agreement and the section captions used
herein are for convenience of reference only and shall not be construed to
affect the meaning, construction or effect hereof. Unless otherwise specified,
the terms "hereof," "herein," hereunder" and similar terms refer to this
Agreement as a whole (including exhibits, schedules and disclosure statements
hereto), and references herein to Sections refer to Sections of this Agreement.
2. REGISTRATION RIGHTS.
2.1 Termination of Prior Registration Rights; Securities Subject to
this Agreement.
2.1.1. Termination of Prior Registration Rights. The Company and the
Existing Holders hereby terminate all registration rights granted to the
Existing Holders under the Prior Agreements. The Existing Holders hereby agree
to accept the registration rights afforded by this Agreement in lieu of the
registration rights granted to them under the Prior Agreement. Following the
execution hereof, this Agreement shall embody all of the registration rights
granted to the Investors.
2.1.2. Securities Subject to this Agreement. For the purposes of
this Agreement, Registrable Securities will cease to be Registrable Securities
when such Registrable Securities are sold and otherwise transferred pursuant to
Rule 144 under the Securities Act or a registration statement covering such
Registrable Securities has been declared effective under the Securities Act by
the Commission and such Registrable Securities have been disposed of pursuant to
such effective registration statement or such Registrable Securities can be sold
under Rule 144 without volume limitations.
2.2 Shelf Registration.
2.2.1. The Company shall use its commercially reasonable best
efforts to: (i) prepare and file with the Commission a registration statement
under the Securities Act (as the same may be amended or supplemented from time
to time, the "Shelf Registration Statement") with respect to the offer and sale
of the Shelf Registrable Securities within thirty (30) days following the first
to occur of (x) the Second Closing Date or (y) the date of the Company's receipt
of the Rho Notice (such date of receipt being referred to herein as the "No
Second Closing Notice Date") (or forty-five (45) days following such date if
such thirty (30) day deadline falls within the period during which the Company
is preparing its audited financial
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statements) (the first to occur of subsections (x) and (y) of this Section 2.2.1
shall collectively be referred to as the "Filing Deadline") and (ii) cause the
Shelf Registration Statement to be declared effective by the Commission, subject
to receipt of necessary information from the Shelf Holders, within one hundred
and eighty (180) days following (x) the Second Closing Date or (y) the No Second
Closing Notice Date, as the case may be (the one hundred and eightieth (180th)
day following such date being referred to herein as the "Required Effectiveness
Deadline"). The Company shall use commercially reasonable best efforts to
maintain the effectiveness of such Shelf Registration Statement until the
earliest to occur of the following (x) all of the Shelf Registrable Securities
have been disposed of by Shelf Holders pursuant to the Shelf Registration
Statement, (y) all of the Shelf Registrable Securities can be resold, without
registration, pursuant to Rule 144 without volume limitations or (z) the Company
is no longer a public company subject to the rules and regulations of the
Exchange Act.
2.2.2. The Shelf Holders will promptly furnish to the Company in
writing all information reasonably requested by the Company for use in
connection with the preparation of the Shelf Registration Statement and
obtaining the effectiveness thereof. The Shelf Holders hereby severally and not
jointly represent and warrant that all such information furnished by it shall be
true, accurate and complete. In addition, each Investor covenants and agrees
that it will comply with all applicable securities laws when trading the
Company's Common Stock.
2.2.3. Notwithstanding anything to the contrary herein, if at any
time the Commission takes the position that the offering of some or all of the
Shelf Registrable Securities in the Shelf Registration Statement is not eligible
to be made on a delayed or continuous basis under the provisions of Rule 415 as
a result of a characterization by the Commission of the transaction described by
the Shelf Registration Statement as a primary offering by the Company, the
Company shall use its commercially reasonable best efforts to persuade the
Commission that the offering contemplated by the Registration Statement is a
valid secondary offering and not an offering "by or on behalf of the issuer" as
defined in Rule 415. In the event that, despite the Company's commercially
reasonable best efforts and compliance with the terms of this Section 2.2.3 the
Commission refuses to alter its position, the Company shall (i) remove from the
Shelf Registration Statement such portion of the Shelf Registrable Securities
(the "Cut Back Shares") and/or (ii) agree to such restrictions and limitations
on the registration and resale of the Shelf Registrable Securities as the
Commission may require to assure the Company's compliance with the requirements
of Rule 415; provided, however, that the Company shall have no liability to any
Investor pursuant to Section 2.2.4 or otherwise as a result of the failure to
register any Cut Back Shares as a result of the Commission's application of Rule
415 despite the Company's commercially reasonable best efforts to persuade the
Commission that the offering contemplated by the Shelf Registration Statement is
a valid secondary offering and not an offering "by or on behalf of the issuer"
as defined in Rule 415. Any Cut-Back Shares required to be removed from the
Shelf Registration Statement shall be removed (i) first, from the Xxxxx 2008
Registrable Securities and the Maverick 2008 Registrable Securities covered by
such Shelf Registration Statement until all of the Xxxxx 2008 Registrable
Securities and the Maverick 2008 Registrable Securities have been removed (and,
among them, on a pro rata basis based on the number of Xxxxx 2008 Registrable
Securities and Maverick 2008 Registrable Securities outstanding as of the date
of this Agreement) and (ii) second, from the Rho Registrable Securities covered
by such Shelf Registration Statement. As soon as practicable following such
intervening period of time as shall be required by the Commission or Commission
guidance prior to the filing thereof, the
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Company shall file one or more additional registration statements covering the
resale of as many Cut Back Shares allowed by the Commission or Commission
guidance to be so registered while maintaining the Company's compliance with
Rule 415 (each, an "Additional Shelf Registration Statement"). Any such
Additional Shelf Registration Statement shall cover (i) first, the Rho
Registrable Securities until all of the Rho Registrable Securities are covered
and (ii) second, the Xxxxx 2008 Registrable Securities and the Maverick 2008
Registrable Securities (on a pro rata basis based on the number of Xxxxx 2008
Registrable Securities and Maverick 2008 Registrable Securities outstanding as
of the date of this Agreement). The Company shall use its commercially
reasonable best efforts to file each Additional Shelf Registration Statement on
or prior to 10 business days after such day that represents the first
opportunity that the Commission allows the Additional Registration Statement to
be filed without the offering of the shares registered thereunder being deemed a
primary offering and cause each Additional Shelf Registration Statement to be
declared effective no later than, as applicable (a) five business days after the
Company receives notice from the Commission that the Additional Shelf
Registration Statement will not become subject to review or (b) if the
Additional Shelf Registration Statement becomes subject to review by the
Commission, 90 days after the filing thereof. With regard to any such Additional
Shelf Registration Statement, all of the provisions of this Section 2.2.3 shall
again be applicable to the Cut Back Shares. The Company shall give Rho, Xxxxx
and Maverick prompt notice of the amount of Shelf Registrable Securities
excluded from each Additional Shelf Registration Statement. Each Additional
Shelf Registration Statement shall be on Form S-3 (except if the Company is not
then eligible to register for resale the Shares on Form S-3, in which case such
registration shall be on another appropriate form in accordance with the
Securities Act and the Exchange Act).
2.2.4. If: (i) the Shelf Registration Statement is not filed on or
prior to the Filing Deadline or (ii) the Shelf Registration Statement is not
declared effective by the Commission (or otherwise does not become effective) on
or prior to the Required Effectiveness Deadline (any such failure or breach
being referred to as an "Event," and the date on which such Event occurs being
referred to as "Event Date"), then, in addition to any other rights available to
Rho: (x) on such Event Date the Company shall issue to Rho warrants to purchase
shares of Common Stock equal to 1% of the fully diluted outstanding shares of
Common Stock for each full 30-day period following the Filing Deadline or the
Required Effectiveness Deadline (as applicable) until such time as the Shelf
Registration Statement is filed or declared effective by the Commission (or
otherwise becomes effective), as applicable; provided however, that such warrant
issuances shall not exceed, in the aggregate, 10% of the fully diluted
outstanding shares of Common Stock; provided further, however, if the
Stockholder Approval Condition shall not have been satisfied, in lieu of such
warrant issuances, the Company shall pay to Rho on such Event Date an amount in
cash, as partial liquidated damages and not as a penalty, equal to 1% of the
aggregate amount invested by Rho in the Company on each full 30-day period
following the Filing Deadline or the Required Effectiveness Deadline (as
applicable) until such time as the Shelf Registration Statement is filed or
declared effective by the Commission (or otherwise becomes effective), as
applicable, up to a maximum amount of 10% of such invested amount. If the
Company fails to pay any partial liquidated damages pursuant to this Section
2.2.4 in full within seven days after the date payable, the Company will pay
interest thereon at the rate of 10% per annum (or such lesser amount that is
permitted to be paid by applicable law) to Rho, accruing daily from the date
such partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The partial liquidated damages pursuant to
the terms hereof shall apply on a daily
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pro rata basis prior to the time such Shelf Registration Statement is declared
effective by the Commission (or otherwise becomes effective).
2.2.5. In the event that any warrants are issued pursuant to Section
2.2.4, the Company's Board of Directors shall adopt a resolution in accordance
with the procedures set forth in Rule 16b-3 promulgated under the Exchange Act
so that the acquisition by Rho and its affiliates (and any directors designated
by Rho in accordance with the terms of Voting Agreement) of the securities
pursuant to this Agreement shall be an exempt transaction for purposes of
Section 16 of the Exchange Act.
2.3 Maintenance of Effectiveness of Existing Registration Statement. The
Company has on file an effective registration statement on Form S-3 (File No.
333-136866) registering the resale of the Existing Shelf Registrable Securities
(the "Existing Holders Registration Statement"). The Company shall use
commercially reasonable best efforts to maintain the effectiveness of the
Existing Holders Registration Statement until the earliest to occur of the
following (x) all of the Existing Shelf Registrable Securities have been
disposed of by the Existing Holders pursuant to the Existing Holder Registration
Statement or otherwise, (y) all of the Existing Holder Registrable Securities
can be resold, without registration, pursuant to Rule 144 without volume
limitations or (z) the Company is no longer a public company subject to the
rules and regulations of the Exchange Act.
2.4 Piggy-Back Registration.
2.4.1. Participation. If the Company proposes to file a registration
statement under the Securities Act with respect to an underwritten offering by
the Company for its own account or for the account of any stockholder of any
class of the Company's securities (other than a registration statement on Form
S-4 or S-8 or any successor forms thereto) (a "Piggy-Back Registration"), then
the Company shall, at such time, give prompt written notice of such proposed
filing to each of the holders of Piggy-Back Registrable Securities, and such
notice shall describe in detail the proposed registration and distribution and
shall offer such holders the opportunity to register the number of Piggy-Back
Registrable Securities as each such holder may request. The Company shall, and
shall use commercially reasonable best efforts (within ten (10) days of the
notice provided for in the preceding sentence) to cause the managing underwriter
or underwriters of a proposed underwritten offering (the "Company Underwriter")
to, permit the holders of Piggy-Back Registrable Securities who have requested
in writing (within ten (10) days of the giving of the notice of the proposed
filing by the Company) to participate in the registration for such offering (the
"Requesting Holders") to include such Piggy-Back Registrable Securities in such
offering on the same terms and conditions as the securities of the Company
included therein.
2.4.2. Priority for Piggy-Back Registration. In connection with any
Piggy-Back Registration by the Company for its own account, the Company shall
not be required to include any Piggy-Back Registrable Securities therein unless
the holders thereof accept the terms of the underwriting as agreed upon between
the Company and the Company Underwriter. If, in the written opinion of the
Company Underwriter, the registration of all, or part, of the Piggy-Back
Registrable Securities which the Requesting Holders have requested to be
included in the Piggy-Back Registration is likely to have a significant adverse
effect on such Piggy-Back Registration,
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then the Company shall be required to include in such Piggy-Back Registration
only that number of Piggy-Back Registrable Securities, if any, which the Company
Underwriter believes may be sold without causing such adverse effect, and the
amount of securities to be offered in such Piggy-Back Registration shall be (i)
first, 100% of the securities that the Company proposes to sell (ii) second, and
only if all the securities referred to in clause (i) have been included, the
number of Piggy-Back Registrable Securities that, in the opinion of the Company
Underwriter, can be sold without having such adverse effect, with such number to
be allocated pro rata among the Requesting Holders based on the relative number
of Piggy-Back Registrable Securities then held by each such Requesting Holder.
If any Requesting Holder would thus be entitled to include more shares than such
holder requested to be registered, the excess shall be allocated among other
Requesting Holders pro rata based upon their total ownership of Registrable
Securities and such other shares of capital stock. In connection with any Demand
Registration by the Company for the account of any stockholder of any class of
the Company's securities, the priority of the securities to be registered for
the benefit of any holder exercising its Piggy-Back Registration rights shall be
as set forth in Section 2.5.3.
2.5 Demand Registration.
2.5.1. Request for Registration. At any time after the date hereof,
either Rho or Xxxxx (the "Demanding Holders") may make a written demand
requiring the Company to effect the registration under the Securities Act of all
or part of its Demand Registrable Securities in the form of an underwritten
offering (a "Demand Registration"), and, subject to the limitations set forth in
Section 2.5.2, the Company shall be required to effect such Demand Registration
pursuant to and subject to the terms herein. Any demand for a Demand
Registration shall specify the number of Demand Registrable Securities proposed
to be sold and the intended methods of disposition thereof. Subject to the
limitations set forth in Section 2.5.2., within forty-five (45) days of a
request for a Demand Registration, the Company shall file a registration
statement relating to such Demand Registration (the "Demand Registration
Statement"), and shall use its commercially reasonable best efforts to cause
such Demand Registration Statement to be declared by the Commission.
2.5.2. Limitations on Demand Registrations. The Company shall not be
obligated to (i) effect more than two (2) Demand Registrations in respect of the
Demand Registrable Securities held by Xxxxx, (ii) effect more than two (2)
Demand Registrations in respect of the Demand Registrable Securities held by
Rho, (iii) effect more than one (1) Demand Registration in any six (6) month
period or (iv) effect any Demand Registration where the aggregate price to the
public of the Demand Registrable Securities proposed to be sold is less than $10
million. The managing underwriter or underwriters of a Demand Registration shall
be a nationally recognized investment banking firm selected by the Company with
the consent of the Demanding Holders, which consent will not be unreasonably
delayed or withheld (the "Approved Underwriter"). If Xxxxx and/or Rho
participates in an offering pursuant to Section 2.4.1, Xxxxx and/or Rho, as
applicable, will be deemed to have used one (1) of its Demand Registrations to
the extent the conditions set forth in Section 2.5.4 are satisfied and Xxxxx
and/or Rho, as applicable, was permitted by the Company Underwriter, in writing,
to include in such offering at least 50% of the Registrable Securities owned by
Xxxxx and/or Rho, as applicable, as of the date of this Agreement, or such
lesser number as was requested by Xxxxx and/or Rho to be included in such
offering.
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2.5.3. Priority of Securities Registered Pursuant to Demand
Registrations. If the Approved Underwriter advises the Company in writing that
in its opinion the number of securities requested to be included in a Demand
Registration exceeds the number which can be sold in such Demand Registration
without being likely to have a significant adverse effect on such Demand
Registration, the securities to be included in such Demand Registration (i)
first, shall be allocated pro rata among the Demanding Holders who have
requested to participate in such Demand Registration based on the relative
number of Demand Registrable Securities then held by each such holder, (ii)
second, and only if all the securities referred to in clause (i) have been
included, the number of securities that the Company proposes to include in such
Demand Registration that, in the opinion of the Approved Underwriter, can be
sold without having such adverse effect and (iii) next, and only if all the
securities referred to in clause (ii) have been included, the number of
Piggy-Back Registrable Securities that, in the opinion of the Company
Underwriter, can be sold without having such adverse effect, with such number to
be allocated pro rata among the Requesting Holders based on the relative number
of Piggy-Back Registrable Securities then held by each such Requesting Holder.
2.5.4. Effective Registration. A registration will not count as a
Demand Registration until the registration statement filed with the Commission
with respect to such Demand Registration has been declared effective and the
Company has complied with all of its obligations under this Agreement with
respect thereto; provided, however, that if, after such registration statement
has been declared effective and during the period such registration statement is
effective the offering of Demand Registrable Securities pursuant to such Demand
Registration is interfered with by any stop order or injunction of the
Commission or any other governmental agency or court, such registration
statement with respect to such Demand Registration will be deemed not to have
been declared effective, unless and until, such stop order or injunction is
removed, rescinded or otherwise terminated; provided, further, that the Company
shall not be obligated to file a second registration statement until a
registration statement that has been filed is counted as a Demand Registration
or is terminated
2.5.5. Deferral of Registration. Notwithstanding the foregoing, if,
at any time prior to the effective date of the registration statement with
respect to a Demand Registration, the Company is (i) pursuing an underwritten
offering of shares of its capital stock for its own account, or engaged in or
proposes to engage in (A) a material financing, (B) an acquisition of the
capital stock or substantially all the assets of any other person (other than in
the ordinary course of business) or (C) any disposition of material assets
(other than in the ordinary course of business), any tender offer or any merger,
consolidation, corporate reorganization or restructuring or other similar
transaction; and (ii) the Board of Directors, using good faith, determines that
it would be detrimental to the Company for a registration statement to be filed
at such time, the Company may defer the filing of a registration statement with
respect to any Demand Registration required by this Section 2.5 until a date not
later than 120 days from the date of the Deferral Notice (as defined below) (the
"Deferral Period"). If the Board of Directors of the Company makes such
determination, the Company shall give written notice (the "Deferral Notice") of
such determination to the holders of Registrable Securities; provided, that, the
Company may exercise its right to delay a Demand Registration hereunder only
once in any twelve-month period. The Company shall notify the holders of the
expiration of the Deferral Period and shall cause the registration statement
with respect to the Demand Registration to be filed on the fifth business day
following the expiration of the Deferral Period (the "Withdrawal
11
Period") (or, if registration on such date is not practicable, as promptly as
possible thereafter) unless, prior to the expiration of the Withdrawal Period,
the holders holding a majority of Demand Registrable Securities to be included
in any such Demand Registration, by written notice to the Company, withdraw the
request made under this Section 2.5, in which case, such request shall not count
as one of the Demand Registrations permitted hereunder and the Company shall pay
all Registration Expenses in connection with such registration.
2.6 Blackout Period. If at any time or from time to time after the date of
effectiveness of any registration statement that the Company is required to
effect or maintain pursuant to this Section 2, the Company notifies the holders
of Registrable Securities in writing of the existence of a Potential Material
Event (as defined below), such holders shall not offer or sell any of the
Registrable Securities covered by any such registration statement, or engage in
any other transaction involving or relating to such Registrable Securities, from
the time of the giving of notice with respect to a Potential Material Event
until such holder receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event (such period of time hereinafter referred to as a
"Blackout Period"). As used herein, "Potential Material Event" means any of the
following (i) the possession by the Company of material information not ripe for
disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information. No Blackout Period shall exceed thirty (30)
consecutive days, and there shall be no more than sixty (60) days (which need
not be consecutive) during any twelve-month period in which a Blackout Period is
in effect.
3. REGISTRATION PROCEDURES.
3.1 Obligations of the Company. Subject to the registration procedures set
forth in Sections 2.2, 2.4 and 2.5, in connection with the Company's
registration obligations under Section 2, the Company shall use its commercially
reasonable best efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof as expeditiously as reasonably practicable, and in
connection therewith the Company shall:
3.1.1. prepare and file with the Commission a registration
statement, and use its commercially reasonable best efforts to cause such
registration statement to become effective under the Securities Act; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall (A) before the filing of
such registration statement and the prospectus included therein or any
amendments or supplements thereto, provide counsel selected by the holders of a
majority of the Registrable Securities being registered in such registration
("Holders' Counsel") copies of all such documents in substantially the form
proposed to be filed, to enable the Investors and Holders' Counsel to review
such documents prior to the filing thereof, and the Company shall make such
12
reasonable changes thereto as may be reasonably requested by the Investors and
(B) notify the Holders' Counsel and each seller of Registrable Securities of any
stop order issued or threatened by the Commission and take all reasonable action
required to prevent the entry of such stop order or to remove it if entered.
Notwithstanding the foregoing, to the extent Rho Registrable Securities are
included on a registration statement, with respect to such registration
statement, Rho's counsel shall be promptly notified about any events described,
and afforded the rights set forth, in subsections (A) and (B) hereof;
3.1.2. prepare and file with the Commission such amendments,
including post-effective amendments, and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and in compliance with the provisions
of the Securities Act until all Registrable Securities and other securities
covered by such Registration Statement have been disposed of in accordance with
the intended method(s) of distribution set forth in such registration statement
(which period shall not exceed ninety (90) days (or until such earlier date on
which the Company Underwriter shall notify the Company that it is unable to sell
the balance of the Registrable Securities covered by such registration
statement) in the case of a registration statement filed with respect to and
used solely for an underwritten offering, and the applicable period set forth in
this Agreement in any other case;
3.1.3. furnish to each seller of Registrable Securities, prior to
filing a registration statement, copies of such registration statement as is
proposed to be filed, and thereafter such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as each such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
3.1.4. cause its counsel to issue to the Company's transfer agent,
within two business days of the effectiveness date of a registration statement
with respect to any of the Registrable Securities, an appropriate opinion or
opinions (or a letter from the Company acceptable to the transfer agent)
substantially to the effect that the Registrable Securities covered by such
registration statement are subject to an effective registration statement and
can be reissued free of restrictive legend, provided that the Company has not
advised the transfer agent orally or in writing that the opinion has been
withdrawn;
3.1.5. use reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Securities requests, and to continue
such qualification in effect in such jurisdiction for as long as is permissible
pursuant to the laws of such jurisdiction, or for as long as any such seller
requests or until all of such Registrable Securities are sold, whichever is
shortest, and do any and all other acts and things which may be reasonably
necessary or advisable to enable any such seller to consummate the disposition
in such jurisdictions of the Registrable Securities owned by such seller;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3.1.4, (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in any
such jurisdiction;
13
3.1.6. use reasonable efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
3.1.7. notify each seller of Registrable Securities at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and the Company shall
promptly prepare a supplement or amendment to such prospectus and furnish to
each seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, after delivery to the purchasers of
such Registrable Securities, such prospectus shall not contain an 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 not misleading in
light of the circumstances under which they were made;
3.1.8. enter into and perform customary agreements (including an
underwriting agreement in customary form with the underwriter, if any, selected
as provided herein) and take such other actions as are reasonably required in
order to facilitate the disposition of such Registrable Securities;
3.1.9. make available for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition pursuant
to such registration statement, Holders' Counsel and any attorney, accountant or
other agent retained by any such seller or any managing underwriter (each, an
"Inspector" and collectively, the "Inspectors"), during regular business hours
and upon reasonable advance notice, all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees, and
the independent public accountants of the Company, to supply all information
reasonably requested by any such Inspector in connection with such registration
statement;
3.1.10. if such sale is pursuant to an underwritten offering, obtain
a "cold comfort" letter from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
"cold comfort" letters as Holders' Counsel or the managing underwriter
reasonably requests;
3.1.11. furnish, at the request of any seller of Registrable
Securities on the date such securities are delivered to the underwriters for
sale pursuant to such registration or, if such securities are not being sold
through underwriters, on the date the registration statement with respect to
such securities becomes effective, an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and to the seller making such request, covering such legal
matters with respect to the registration in
14
respect of which such opinion is being given as such seller may reasonably
request and are customarily included in such opinions;
3.1.12. cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed, provided, that the applicable listing requirements are satisfied;
3.1.13. cooperate with each seller of Registrable Securities and
each underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be made
with the Financial Industry Regulatory Authority ("FINRA");
3.1.14. promptly notify each Investor whose shares of Common Stock
are covered by such registration statement, and promptly confirm such notice in
writing, if such notice was verbally given, (A) when the registration statement
covering the Registrable Securities has become effective and when any post
effective amendments thereto have become effective, (B) of the receipt of any
comments from the Commission with respect to any such document or a document
incorporated by reference therein, and (C) of any request by the Commission or
any other federal or state securities authority for amendments or supplements to
the registration statement or a prospectus or for additional information after
the registration statement has become effective, and
3.1.15. use reasonable efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
3.2 Notice to Discontinue. Each holder of Registrable Securities agrees
that, upon receipt of any written notice from the Company of the happening of
any event of the kind described in Section 3.1.7, such holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3.1.7 and, if so directed by the Company, such holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such holder's possession, of the prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such registration statement shall be maintained effective pursuant to this
Agreement (including without limitation the period referred to in Section 3.1.2)
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 3.1.7 to and including the date when
the holder shall have received the copies of the supplemented or amended
prospectus contemplated by and meeting the requirements of Section 3.1.7.
3.3 Registration Expenses. The Company shall pay all expenses (other than
underwriting discounts and commissions) arising from or incident to the
Company's performance of, or compliance with, this Agreement, including without
limitation, (i) Commission, stock exchange, NASDAQ and FINRA registration and
filing fees, (ii) all fees and expenses incurred by Company in complying with
securities or blue sky laws (including reasonable fees, charges and
disbursements of counsel in connection with blue sky qualifications
15
of the Registrable Securities), (iii) all printing, messenger and delivery
expenses, and (iv) the fees, charges and disbursements of counsel to the Company
and of its independent public accountants and any other accounting and legal
fees, charges and expenses incurred by the Company (including without limitation
any expenses arising from any special audits incident to or required by any
registration or qualification) in connection with any Demand Registration
pursuant to the terms of this Agreement, regardless of whether such registration
statement is declared effective. All of the expenses described in this Section
3.3 are referred to herein as "Registration Expenses."
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. To the fullest extent permitted by
law, the Company will indemnify each holder of Registrable Securities, each of
its officers, directors, agents, partners, members, stockholders and employees
of each such Person, and each Person, if any, who controls such holder within
the meaning of the Securities Act or Exchange Act, with respect to each
registration which has been effected pursuant to this Agreement against all
claims, losses, damages and liabilities, including, without limitation, fees and
other expenses reasonably incurred in connection with any investigation relating
to, or defending, any such claims, losses, damages and liabilities (or actions
in respect thereof), arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement
filed with the Commission in connection with such registration, including any
preliminary prospectus or final prospectus contained therein, any amendments or
supplements thereto or any "issuer free writing prospectus" (as defined in Rule
433 under the Securities Act) related thereto, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based solely upon written information regarding such
holder furnished to the Company by such holder expressly for use in such
registration statement.
4.2 Indemnification by the Investors. To the fullest extent permitted by
law, each of the holders of Registrable Securities will, if Registrable
Securities held by it are included in the securities as to which any
registration pursuant to this Agreement is being effected, severally and not
jointly indemnify the Company, each of its directors and officers, each Person
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement
filed in connection with such registration, including any preliminary prospectus
or final prospectus contained therein, any amendments or supplements thereto or
any "issuer free writing prospectus" related thereto, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements by such holder therein not misleading, and
will reimburse the Company, its directors and officers and Persons who control
the company for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is actually made in such registration statement, including any
preliminary or final prospectus contained therein, any amendments or supplements
thereto or any
16
"issuer free writing prospectus" related thereto, in reliance upon and in
conformity with written information regarding such holder furnished to the
Company by such holder expressly for use in such registration statement.
Notwithstanding the provisions of this Section 4.2, the liability of each
Investor (including any transferee of the registration rights) under this
Section 4.2 shall not exceed the net proceeds actually received by such Investor
in connection with any sale of the Registrable Securities.
4.3 Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder unless, and only to the
extent that, such failure results in the Indemnifying Party's forfeiture of
substantial rights or defenses. If notice of commencement of any such action is
given to the Indemnifying Party as above provided, the Indemnifying Party shall
be entitled, after written notice to the Indemnified Party, to participate in
and, to the extent it may wish, jointly with any other Indemnifying Party
similarly notified, to assume the defense of such action at its own expense,
with counsel chosen by it and reasonably satisfactory to such Indemnified Party.
The Indemnified Party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be paid by the
Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii)
the Indemnifying Party fails to assume the defense of such action within a
reasonable period of time and with counsel satisfactory to the Indemnified Party
in its reasonable judgment, (iii) the Indemnified Party to any such action
(including any impleaded parties) have been advised by such counsel that either
(A) representation of such Indemnified Party and the Indemnifying Party by the
same counsel would be inappropriate under applicable standards of professional
conduct or (B) there may be one or more legal defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party. No Indemnifying Party shall, without the prior written
consent of each Indemnified Party, settle, compromise or consent to the entry of
any judgment unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party from all liability relating
thereto. All fees and expenses required to be paid to the Indemnified Party
pursuant to this Section 4.3 shall be advanced periodically during the course of
the Indemnified Party's investigation or defense; provided, however, that the
obligations of any Indemnified Party to advance fees and expenses to an
Indemnified Party shall be subject to the receipt by such Indemnified Party of
an undertaking by or on behalf of the Indemnified Party to repay the amounts so
advanced if (and to the extent) it is subsequently determined that the
Indemnified Party is not entitled to indemnification with respect to such
investigation or defense. In either of such cases the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party. No Indemnifying Party shall be liable for any settlement
entered into without its written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.
4.4 Contribution. If the indemnification provided for in this Section 4
from the Indemnifying Party is applicable by its terms but unavailable to an
Indemnified Party hereunder
17
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall severally and not jointly contribute to the amount paid or payable
by such Indemnified Party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
faults of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Sections 4.1, 4.2,
4.3, any legal or other fees, charges or expenses reasonably incurred by such
party in connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 4.4 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
this Section 4, no Investor (including any transferee of the registration
rights) shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Investor from
the sale of the Registrable Securities subject to the claim, loss, damage,
liability or action exceeds the amount of any damages that such Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that for so long as it is a public
company subject to the rules and regulations of the Exchange Act, it shall take
such action as each holder of Registrable Securities may reasonably request
(including providing any information necessary to comply with Rules 144 under
the Securities Act), all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such rules may be amended from time to time, or (b) any
similar rules or regulations hereafter adopted by the Commission. The Company
shall, upon the request of any holder of Registrable Securities, deliver to such
holder a written statement as to whether the Company has complied with such
requirements.
5.2 Holdback Agreements.
5.2.1. Restrictions on Public Sale by Holders of Registrable
Securities. To the extent not inconsistent with applicable law, and provided
that all of the Company's executive officers, directors and, to the extent they
are parties to this Agreement, holders of five percent or more of the
outstanding capital stock of the Company enter into substantially similar
agreements, the Investors agree that, in connection with a registered public
offering of the Company's equity
18
securities, they will not effect any public sale or distribution of any
Registrable Securities or of any securities convertible into or exchangeable or
exercisable for such Registrable Securities, including a sale pursuant to Rule
144 under the Securities Act, during the 90 days beginning on, the effective
date of the Company's registration statement (except as part of such
registration), if and to the extent reasonably requested by the Company in
writing in the case of a non-underwritten public offering or to the extent
reasonably requested by the Company Underwriter or Approved Underwriter in
writing in the case of an underwritten public offering.
5.2.2. Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such equity securities (except pursuant to registrations on Forms S-4 or S-8
of the Securities Act or any successor or other forms not available for
registering equity securities for sale to the public) during the ten business
days prior to, and during the 30 day period beginning on the effective date of
any registration statement in which the holders of Registrable Securities are
participating unless such registration statement also relates to securities
being offered by the Company. In addition, the Company agrees not to file,
without the consent of Rho, any registration statement for an underwritten
offering of its securities until a Shelf Registration Statement or one or more
Additional Shelf Registration Statements covering all of the Rho Registrable
Securities has been declared effective by the SEC.
6. MISCELLANEOUS.
6.1 Term. This Agreement shall terminate with respect to each Investor on
the date such Investor no longer owns any Registrable Securities. For the
avoidance of doubt, this Agreement shall continue to remain in effect with
respect to any other Investor that continues to own Registrable Securities. The
provisions of Section 4 and Section 5.1 shall survive any termination.
6.2 Assignment; Binding Effect. This Agreement and the rights, duties and
obligations of each Investor hereunder may be assigned (in whole or in part) by
such Investor to transferees or assignees of all or any portion of its
Registrable Securities, but only if (i) the such Investor (or subsequent
transferor) agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being transferred or assigned, (iii) at or
before the time the Company received the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained in this Agreement, (iv)
the transferee is an "accredited investor" as that term is defined in Rule 501
of Regulation D and (v) insofar as any assignment covers the Demand Registration
Rights, the transferee or assignee is acquiring at least 50% of the Registrable
Securities owned by such Investor and its Affiliates immediately prior to such
transfer and such Investor and its transferee or assignee allocate the Demand
Registration Rights between them so as not to increase the number of unused
Demand Registrations available to such Investor and its Affiliates in effect
immediately prior to such transfer. This Agreement and the
19
provisions hereof shall be binding upon and shall inure to the benefit of each
of the parties and their respective successors.
6.3 Notices. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been duly given (a) on the date of delivery, if delivered personally or by
facsimile, upon confirmation of receipt, (b) on the first business day following
the date of dispatch if delivered by a recognized next-day courier services, or
(c) on the third business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid, to the
parties to this Agreement at the following address or to such other address
either party to this Agreement shall specify by notice to the other party:
If to the Company: Bluefly, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Chief Financial Officer
With a copy to (which shall not constitute notice):
Dechert LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000 0000
Facsimile No.: (212 698 3599
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to Xxxxx: Quantum Industrial Partners LDC
SFM Domestic Investments LLC
c/x Xxxxx Fund Management LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxx Xxxxxxxxxxxx
If to Maverick: Maverick Fund USA, Ltd.
Maverick Fund, L.D.C.
Maverick Fund II, Ltd.
c/o Maverick Capital, Ltd.
000 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: General Counsel
20
With a copy to (which shall not constitute notice):
Shearman & Sterling, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
If to Prentice: Prentice Capital Management, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
With a copy to (which shall not constitute notice):
Xxxxxxxxxx Xxxxxxx PC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
If to Rho: Rho Ventures VI, X.X.
Xxxxxxxx Hall Tower
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (212.751.3613
Attention: Xxxxxxx X. Xxxxxx, Esq.
With a copy to (which shall not constitute notice):
Xxxxxxx Procter LLP
The New York Times Building
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
6.4 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be deemed to be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforced in
accordance with its terms to the maximum extent permitted by
21
applicable law.
6.5 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
6.6 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties and/or their affiliates with respect to the subject matter
of this Agreement.
6.7 Modifications and Amendments. Any provision of this Agreement may be
amended or modified if, but only if, such amendment or modification is in
writing and is duly executed and delivered by the Company and the Investors.
6.8 Titles and Headings. Titles and headings of sections of this Agreement
are for convenience only and shall not affect the construction of any provision
of this Agreement.
6.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The parties hereto agree that
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may only be brought in the United States
District Court for the Southern District of New York or any New York State court
sitting in the Borough of Manhattan in New York City, and each of the parties
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by Law (as defined in the
Investment Agreement), any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court.
6.10 Waiver of Trial by Jury. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
22
EXECUTION COPY
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed and delivered by their duly authorized representatives
as of the date first written above.
BLUEFLY, INC.
By: ___________________________
Name:
Title:
QUANTUM INDUSTRIAL PARTNERS LDC
By: ___________________________
Name:
Title:
SFM DOMESTIC INVESTMENTS LLC
By: ___________________________
Name:
Title:
MAVERICK FUND USA, LTD
By: MAVERICK CAPITAL, LTD.,
as its Investment Manager
By: ___________________________
Name:
Title:
MAVERICK FUND L.D.C.
By: MAVERICK CAPITAL, LTD.,
as its Investment Manager
By: ___________________________
Name:
Title:
MAVERICK FUND II, LTD
By: MAVERICK CAPITAL, LTD.,
as its Investment Manager
By: ___________________________
Name:
Title:
PRENTICE CAPITAL PARTNERS, LP
By: Prentice Capital GP, LLC
By: ___________________________
Name:
Title:
PRENTICE CAPITAL PARTNERS QP, LP
By: Prentice Capital GP, LLC
By: ___________________________
Name:
Title:
PRENTICE CAPITAL OFFSHORE, LTD.
By: Prentice Capital Management, LP
By: ___________________________
Name:
Title:
GPC XLIII, LLC
By: Prentice Capital Management, LP
By: ___________________________
Name:
Title:
PEC I, LLC
By: Prentice Capital Management, LP
By: ___________________________
Name:
Title:
S.A.C. CAPITAL ASSOCIATES, LLC
By: S.A.C. Capital Advisors, LLC
By: ___________________________
Name:
Title:
RHO VENTURES VI, L.P.
By: ___________________________
Name:
Title:
