EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of June 30,
2000, between Secure Computing Corporation, a Delaware corporation with offices
at Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx 00000 (the "Company")
and Westgate International, LP, a Cayman Islands limited partnership with an
office c/x Xxxxxxx Management Corporation, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "Investor").
W I T N E S S E T H:
Whereas, pursuant to that certain Put and Call Agreement, dated on or
about the date hereof, by and between the Company and the Investor (the "Put and
Call Agreement"), the Company may, pursuant to the Company's put rights or the
Investor's call rights thereunder, sell to the Investor 15,250 shares of the
Company's Series F 4% Cumulative Convertible Preferred Stock (the "Preferred
Shares") in two separate Tranches (each a "Tranche"); and
Whereas, the Put and Call Agreement contemplates that the Preferred Shares
will be convertible into shares (the "Common Shares") of common stock, par value
$0.01, of the Company ("Common Stock") pursuant to the terms and conditions set
forth in the Certificate of Designations for the Preferred Shares (the
"Certificate"); and
Now, Therefore, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Put and Call Agreement and
this Agreement, the Company and the Investors agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Put and Call Agreement or
the Certificate. As used in this Agreement, the following terms shall have the
following respective meanings:
"Closing" shall have the meaning ascribed to such terms in the Put
and Call Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"Holder" and "Holders" shall include the Investor and any transferee
or transferees of the Preferred Shares, Common Shares or Registrable Securities
which have not been sold to the public to whom the registration rights conferred
by this Agreement have been transferred in compliance with this Agreement and
the Put and Call Agreement.
The terms "register", "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) the Common Shares or other
securities issued or issuable to each Holder or its permitted transferee or
designee upon conversion of the Preferred Shares; (ii) securities issued or
issuable upon any stock split, stock dividend, recapitalization or similar event
with respect to such Common Shares; and (iii) any other security issued as a
dividend or other distribution with respect to, in exchange for or in
replacement of the securities referred to in the preceding clauses.
"Registration Expenses" shall mean all expenses to be incurred by
the Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to
the Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holder. Such best efforts by the Company
shall include, without limitation, the following:
(a) The Company shall, as expeditiously as possible after the
Closing of the purchase of each Tranche:
i) But in any event within 30 days of the date of each Closing
of the purchase of a Tranche of Preferred Shares under the Put and
Call Agreement (a "Tranche Closing Date"), prepare and file a
registration statement with the Commission pursuant to Rule 415
under the Securities Act on Form S-3 under the Securities Act (or in
the event that the Company is ineligible to use such form, such
other form as the Company is eligible to use under the Securities
Act) covering resales by the Holders of the Registrable Securities
included in such Tranche (a "Registration Statement"), which
Registration Statement, to the extent allowable under the Securities
Act and the rules promulgated thereunder (including Rule 416), shall
state that such
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Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon
conversion of the Preferred Shares in such Tranche. All references
herein to "Registration Statement" shall refer to the Registration
Statements covering the Registrable Securities in each Tranche. The
number of shares of Common Stock initially included in a
Registration Statement shall be no less than the sum of two times
the number of Common Shares that are then issuable upon conversion
of the Preferred Shares included in the Tranche. Nothing in the
preceding sentence will limit the Company's obligations to reserve
shares of Common Stock pursuant to Section 3.7 of the Put and Call
Agreement. Thereafter the Company shall use its best efforts to
cause such Registration Statement and other filings to be declared
effective as soon as possible, and in any event prior to 60 days
following the Tranche Closing Date. Without limiting the foregoing,
the Company will promptly respond to all SEC comments, inquiries and
requests, and shall request acceleration of effectiveness at the
earliest possible date. The Company shall provide the Holders
reasonable opportunity to review any such Registration Statement or
amendment or supplement thereto prior to filing.
ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used
in connection with such Registration Statement as may be necessary
to comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement
and notify the Holders of the filing and effectiveness of such
Registration Statement and any amendments or supplements.
iii) Furnish to each Holder such numbers of copies of a
current prospectus conforming with the requirements of the Act,
copies of the Registration Statement, any amendment or supplement
thereto and any documents incorporated by reference therein and such
other documents as such Holder may reasonably require in order to
facilitate the disposition of Registrable Securities owned by such
Holder.
iv) Register and qualify the securities covered by such
Registration Statement under the securities or "Blue Sky" laws of
all domestic jurisdictions; provided that the Company shall not be
required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
v) Notify each Holder immediately of the happening of any
event (but not the substance or details of any such events unless
specifically requested by a Holder) as a result of which the
prospectus (including any supplements thereto or thereof) included
in such Registration Statement, as then in effect, includes an
untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
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therein not misleading in light of the circumstances then existing,
and use its best efforts to promptly update and/or correct such
prospectus.
vi) Notify each Holder immediately of the issuance by the
Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the Registration Statement or
the threat or initiation of any proceedings for that purpose. The
Company shall use its best efforts to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible time.
vii) Permit counsel to the Holders to review the Registration
Statement and all amendments and supplements thereto within a
reasonable period of time (but not less than 2 full Trading Days (as
defined in the Certificate)) prior to each filing, and shall not
file any document in a form to which such counsel reasonably objects
and will not request acceleration of the Registration Statement
without prior notice to such counsel.
viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or
markets on which the Common Stock is then listed and prepare and
file any required filings with the Nasdaq National Market or any
exchange or market where the Common Shares are traded.
ix) Take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule
153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that may
arise that the Investors consider will interfere with the full enjoyment of
their rights under this Agreement, the Put and Call Agreement and the
Certificate (the "Interfering Events"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an Interfering Event
occurs and provide that the Investors may require that the Company repurchase
outstanding Preferred Shares at a specified price if certain Interfering Events
are not timely cured.
Paragraph (v) provides, inter alia, that if default
adjustments required as the remedy in the case of certain of the Interfering
Events are not provided when due, the Company may be required by the Investors
to redeem outstanding Preferred Shares at a specified price.
Paragraph (vi) provides, inter alia, that the Investors have
the right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to
serve only as an introduction to this Section 2(b), are for convenience only,
and are not to be considered in applying, construing or interpreting this
Section 2(b).
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i) Delay in Effectiveness of Registration Statement.
(A) In the event that such Registration Statement has
not been declared effective within 60 days from the Tranche
Closing Date, then the Company shall pay each Holder a Monthly
Delay Payment (as defined below) for each 30 day period (or
portion thereof) that effectiveness of the Registration
Statement is delayed. In addition to the foregoing, if the
Registration Statement has not been declared effective within
120 days after the Tranche Closing Date, then each Holder
shall have the right to sell, at any time after the 120th day
after the Tranche Closing Date, any or all of its Preferred
Shares to the Company for consideration (the "Mandatory
Repurchase Price") equal to the greater of (x) 120% of the
Liquidation Preference of all such Preferred Shares being sold
to the Company or (y) the Liquidation Preference for the
Preferred Shares being sold to the Company divided by the then
applicable Conversion Price multiplied by the greater of the
last closing price of the Common Stock on (i) the date a
Holder exercises its option pursuant to this Section 2(b) to
require repurchase of Preferred Shares or (ii) the date on
which the event triggering Holder's remedies under this
Section 2(b) first occurred, in each case payable in cash.
(B) As used in this Agreement, a "Monthly Delay Payment"
shall be a cash payment equal to 1% of the Liquidation
Preference of the Preferred Shares held by a Holder for the
first 30 day period (or portion thereof) that the specified
condition in this Section 2(b) has not been fulfilled or the
specified deficiency has not been remedied and 2% of such
Liquidation Preference thereafter for each subsequent 30 day
period (or portion thereof) that the specified condition in
this Section 2(b) has not been fulfilled or the specified
deficiency has not been remedied. Payment of the Monthly Delay
Payments and Mandatory Repurchase Price shall be due and
payable from the Company to such Holder within 5 business days
of demand therefor. Without limiting the foregoing, if cash
payment of the Mandatory Repurchase Price is not made within
such 5 business day period, the Holder may revoke and withdraw
its election to cause the Company to make such mandatory
purchase at any time prior to its receipt of such cash. At the
option of the Holder, Monthly Delay Payments may be added to
the Liquidation Preference of the Preferred Shares held by it.
(C) Notwithstanding the foregoing, there shall be
excluded from the calculation of the number of days that the
Registration Statement has not been declared effective the
delays which are solely attributable to delays
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in the Investors providing information required for the
Registration Statement.
ii) No Listing; Premium Price Redemption for Delisting of
Class of Shares.
(A) In the event that the Company fails, refuses or for
any other reason is unable to cause the Registrable Securities
covered by the Registration Statement to be listed with Nasdaq
National Market or one of the other Approved Markets (as
defined in the Put and Call Agreement) at all times during the
period ("Listing Period") from the 60th day following the
Tranche Closing Date until such time as all of the Preferred
Shares shall have been subject to mandatory conversion
pursuant to the terms of the Certificate, then the Company
shall provide to each Holder a Monthly Delay Payment, for each
30 day period or portion thereof during which such listing is
not in effect. In addition to the foregoing, following the
30th day that such listing is not in effect, each Holder shall
have the right to sell to the Company any or all of its
Preferred Shares at the Mandatory Repurchase Price. The
provisions of Section 2(b)(i)(B) shall apply to this Section
2(b)(ii)(A).
(B) In the event that shares of Common Stock of the
Company are not listed on any of the Approved Markets at all
times following the Tranche Closing Date, or are otherwise
suspended from trading and remain unlisted or suspended for 5
consecutive days, or if the Registrable Securities are not
listed for 5 consecutive days following the Closing, then at
the option of each Holder and to the extent such Holder so
elects, each Holder shall have the right to sell to the
Company the Preferred Shares held by such Holder, in whole or
in part, for the Mandatory Repurchase Price on the terms set
forth in Section 2(b)(i)(B) above.
iii) Blackout Periods. In the event any Holder's ability to
sell Registrable Securities under the Registration Statement is
suspended for more than (i) five (5) consecutive days or (ii) twenty
(20) days in any calendar year ("Suspension Grace Period"),
including without limitation by reason of any suspension or stop
order with respect to the Registration Statement or the fact that an
event has occurred as a result of which the prospectus (including
any supplements thereto) included in such Registration Statement
then in effect includes an untrue statement of material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing (a "Blackout"), then the Company
shall provide to each Holder a Monthly Delay Payment for each 30 day
period or portion thereof from and after the expiration of the
Suspension
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Grace Period, on the terms set forth in Section 2(b)(i)(B) above. In
addition, at any time following the expiration of the Suspension
Grace Period if the Blackout continues for more than five (5)
additional consecutive days, a Holder shall have the right to sell
to the Company its Preferred Shares in whole or in part for the
Mandatory Repurchase Price on the terms set forth in Section
2(b)(i)(B) above.
iv) Redemption for Conversion Deficiency. In the event that
the Company does not have a sufficient number of Common Shares
available to satisfy the Company's obligations to any Holder upon
receipt of a Conversion Notice (as defined in the Certificate) or is
otherwise unable or unwilling for any reason to issue such Common
Shares (other than failure of the Holder to comply with the
conversion notice and delivery requirements of Section 5 of the
Certificate) (each, a "Conversion Deficiency") in accordance with
the terms of the Certificate for any reason after receipt of a
Conversion Notice from any Holder, then:
(A) The Company shall provide to each Holder a Monthly
Delay Payment for each 30 day period or portion thereof
following the Conversion Deficiency, on the terms set forth in
Section 2(b)(i)(B) above. This provision shall apply
regardless of whether the Preferred Shares have been
authorized, issued or delivered to the Holder.
(B) At any time five days after the commencement of the
running of the first 30-day period described above in clause
(A) of this paragraph (iv), at the request of any Holder, the
Company promptly (1) shall purchase from such Holder, for the
Mandatory Repurchase Price and on the terms set forth in
Section 2(b)(i)(B) above, the outstanding Preferred Shares
equal to such Holder's pro rata share of the Conversion
Deficiency, if the failure to issue Common Shares results from
the lack of a sufficient number thereof and (2) shall purchase
all of such Holder's Preferred Shares (or such portion
requested by such Holder) for such consideration and on such
terms if the failure to issue Common Shares results from any
other cause, or is without cause.
(C) In the event that the Holder shall have elected to
send a Conversion Notice prior to the issuance of the
Preferred Shares being converted, and at the time the remedy
set forth in paragraph (B) above shall become applicable such
Preferred Shares shall have remained unissued, then at the
request of the Holder the Company shall pay to the Holder the
difference between the Mandatory Repurchase Price on the terms
set forth in Section 2(b)(i)(B) above determined pursuant to
paragraph (B) above and the product of the number of Preferred
Shares multiplied by $1,000. The provision shall apply
regardless of
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whether the failure to issue Common Shares is due to a failure
to issue such shares upon conversion of Preferred Shares or
due to a failure to issue the Preferred Shares being
converted.
v) Mandatory Purchase Price for Defaults.
(A) The Company acknowledges that any failure, refusal
or inability by the Company to perform the obligations
described in the foregoing paragraphs (i) through (v) will
cause the Holders to suffer damages in an amount that will be
difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the
Registrable Securities. Accordingly, the parties agree, after
consulting with counsel, that it is appropriate to include in
this Agreement the foregoing provisions for Monthly Delay
Payments and mandatory redemptions in order to compensate the
Holders for such damages. The parties acknowledge and agree
that the Monthly Delay Payments and mandatory redemptions set
forth above represent the parties' good faith effort to
quantify such damages and, as such, agree that the form and
amount of such payments and mandatory redemptions are
reasonable and will not constitute a penalty.
(B) In the event that the Company fails to pay any
Monthly Delay Payment within 5 business days of demand
therefor, each Holder shall have the right to sell to the
Company any or all of its Preferred Shares at the Mandatory
Repurchase Price on the terms set forth in Section 2(b)(i)(B)
above.
vi) Cumulative Remedies. The Monthly Delay Payments and
mandatory purchases provided for above are in addition to and not in
lieu or limitation of any other rights the Holders may have at law,
in equity or under the terms of the Certificate, the Put and Call
Agreement, and this Agreement, including without limitation the
right to monetary contract damages and specific performance. Each
Holder shall be entitled to specific performance of any and all
obligations of the Company in connection with the registration
rights of the Holders hereunder.
vii) Remedies for Registrable Securities. In any case where a
holder of Registrable Securities would be entitled to Monthly Delay
Payments on Preferred Shares, but for the conversion of such
Preferred Shares into Registrable Securities, the Monthly Delay
Payments shall accrue on the original Liquidation Preference of the
Preferred Shares from which the Registrable Securities where
converted. In any case in which a Holder of Preferred Shares has the
right to cause the purchase of its Preferred Shares under this
Section 2(b) (or would have such right but for the conversion of
Preferred Shares), it shall have the right to cause the purchase of
the
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Registrable Securities that it owns as follows: such shares shall be
purchased at a price ("Common Purchase Price") equal to the
Mandatory Repurchase Price of the Preferred Shares which were
converted into Common Shares.
In the case in which a Holder of Preferred Shares would have
the right to receive Monthly Delay Payments with respect to
Preferred Shares under Section 2(b), it shall also have the right to
receive payments with respect to Registrable Securities owned by it
in an amount at the rate of the Monthly Delay Payments that would
have applied to the Preferred Shares converted into Common Shares
had such Preferred Shares not been converted.
(c) If the Holder(s) intend to distribute the Registrable Securities
by means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by nationally or regionally recognized
investment bankers reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith 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 Registrable
Securities are to be sold in an underwritten offering:
i) make such representations and warranties to the Holders and
the underwriter or underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in
secondary offerings;
ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
independent counsel to the Company, on and dated as of the effective
day of a Registration Statement, and within ninety (90) days
following the end of each fiscal year thereafter, which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s), if any, and
their counsel and covering, without limitation, such matters as the
due authorization and issuance of the securities being registered
and compliance with securities laws by the Company in connection
with the authorization, issuance and registration thereof and other
matters that are customarily given to underwriters in underwritten
offerings, addressed to the Holders and each underwriter, if any;
iii) cause to be delivered, immediately prior to the
effectiveness of a Registration Statement and at the beginning of
each fiscal year following a year during which the Company's
independent certified public accountants shall have reviewed any of
the Company's books or records, a "comfort" letter from the
Company's independent certified public accountants addressed to the
Holders and each underwriter, if any, stating that such accountants
are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations
thereunder, and otherwise in
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customary form and covering such financial and accounting matters as
are customarily covered by letters of the independent certified
public accountants delivered in connection with secondary offerings;
such accountants shall have undertaken in each such letter to update
the same during each such fiscal year in which such books or records
are being reviewed so that each such letter shall remain current,
correct and complete throughout such fiscal year; and each such
letter and update thereof, if any, shall be reasonably satisfactory
to the Holders;
iv) if an underwriting agreement is entered into, the same
shall include customary indemnification and contribution provisions
to and from the underwriters and procedures for secondary
underwritten offerings; and
v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable Securities
being sold or the managing underwriter or underwriters, if any, to
evidence compliance with clause (i) above and with any customary
conditions contained in the underwriting agreement, if any.
(e) The Company shall make available for inspection by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Put and Call Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the use
of any prospectus used in connection with a Registration Statement only in the
event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with respect to
any newly authorized and/or reserved Registrable Securities consisting of Common
Shares described in clause (i) of the definition of Registrable Securities
within five (5) business days of any stockholders meeting authorizing same and
shall use its best efforts to cause such Registration Statement to become
effective within sixty (60) days of such stockholders meeting. If the Holders
become entitled, pursuant to an event described in clause (ii) and (iii) of the
definition of Registrable Securities, to receive any securities in respect of
Registrable Securities that were already included in a Registration Statement,
subsequent to the date such Registration Statement is declared effective, and
the Company is unable under the securities laws to add such securities to the
then effective Registration Statement, the Company shall promptly file, in
accordance with the procedures set forth herein, an additional Registration
Statement with respect to such newly Registrable Securities. The Company shall
use its best efforts to (i) cause any such additional Registration Statement,
when filed,
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to become effective under the Securities Act, and (ii) keep such additional
Registration Statement effective during the period described in Section 5 below
and cause such Registration Statement to become effective within 30 days of that
date that the need to file the Registration Statement arose. All of the
registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including without limitation the provisions providing for default payments and
mandatory redemptions contained herein.
3. Expenses of Registration. All Registration Expenses in connection with
any registration, qualification or compliance with registration pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses of a Holder
shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best efforts to
remain qualified for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until all the Holders have completed the sales
or distribution described in the Registration Statement relating thereto or, if
earlier, until such Registrable Securities may be sold by the Holders under Rule
144(k) (provided that the Company's transfer agent has accepted an instruction
from the Company to such effect).
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors, agents and partners, and each person controlling
each of the foregoing, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, 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 prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, 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 in light of the circumstances under which they were made,
or any violation by the Company of the Securities Act or any state securities
law or in either case, any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
Holder, each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to a Holder 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
upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use therein. The
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indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly,
if Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, agents and partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s) 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 such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances under which they
were made, and will reimburse the Company and such other Holder(s) and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
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 made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
and stated to be specifically for use therein, and provided that the maximum
amount for which such Holder shall be liable under this indemnity shall not
exceed the net proceeds received by such Holder from the sale of the Registrable
Securities pursuant to the registration statement in question. The indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities if such settlement
is effected without the consent of such Holder (which consent shall not be
unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 6 except to
the extent that the Indemnifying Party is materially and adversely affected by
such failure to provide notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
non-privileged information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
12
7. Contribution. If the indemnification provided for in Section 6 herein
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the registration statement in question or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter 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 who was not
guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Put and Call
Agreement or any underwriting agreement, (ii) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of the Company, and (iii) the
consummation of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the Company such
information regarding such Holder and the distribution and/or sale proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration,
13
qualification or compliance referred to in this Agreement. The intended method
or methods of disposition and/or sale (Plan of Distribution) of such securities
as so provided by such Investor shall be included without alteration in the
Registration Statement covering the Registrable Securities and shall not be
changed without written consent of such Holder.
10. Replacement Certificates. The certificate(s) representing the Common
Shares or Notes Shares held by any Investor (or then Holder) may be exchanged by
such Investor (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares, as reasonably requested by such Investor (or such Holder) upon
surrendering the same. No service charge will be made for such registration or
transfer or exchange.
11. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Preferred Shares or Registrable Securities, and all other rights
granted to the Investors by the Company hereunder may be transferred or assigned
to any transferee or assignee of any Preferred Shares, or Registrable
Securities; provided in each case that the Company must be given written notice
by the such Investor at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned; and provided further that the
transferee or assignee of such rights agrees in writing to be bound by the
registration provisions of this Agreement.
12. Miscellaneous.
(a) Remedies. The Company and the Investor acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(b) Jurisdiction. Each of the Company and the Investor (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the New York State courts and other courts of the United States sitting
in New York County, New York for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and the Investor consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
14
(c) Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
Secure Computing Corporation
000 Xxxxxx Xxxxx Xxxxx, Xxxxx 0
Xxx Xxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxx Xxxxx and
Secure Computing Corporation
Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxx XxXxxxxx
with copies to:
Xxxxxx Xxxxxx White & XxXxxxxxx
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx, Esq.
to the Investor:
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
15
Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) Indemnity. Each party shall indemnify each other party against
any loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
Closing.
(f) Execution in Counterpart. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
(g) Publicity. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of the Investor without
its consent, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement. The Company agrees
to deliver a copy of any public announcement regarding the matters covered by
this Agreement or any agreement or document executed herewith to the Investor
and any public announcement including the name of the Investor to the Investor,
prior to the publication of such announcements.
(h) Entire Agreement; Amendment. This Agreement, together with the
Put and Call Agreement, the Certificate and the agreements and documents
contemplated hereby and thereby, contains the entire understanding and agreement
of the parties, and may not be amended, modified or terminated except by a
written agreement signed by the Company plus the Holders of 75% of the Preferred
Shares issued under the Put and Call Agreement to that date; provided that for
the purposes of this Section 12(h), the Holders of Common Shares still entitled
to registration rights under this Agreement will be deemed to still be Holders
of that number of Preferred Shares which were converted into such number of
Common Shares issued upon conversion which are still held by them.
(i) Governing Law. This Agreement and the validity and performance
of the terms hereof shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed and to be
performed entirely within such state, except to the extent that the law of the
State of Delaware regulates the Company's issuance of securities.
(j) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.
(k) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
16
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
[SIGNATURE PAGE FOLLOWS]
17
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SECURE COMPUTING CORPORATION
By: /S/ XXXX XXXXXXX
----------------
Name: Xxxx XxXxxxx
Title: Chairman and CEO
WESTGATE INTERNATIONAL, LP
By: Xxxxxxx International Capital Advisors Inc.,
as Attorney-in-Fact
By: /S/ XXXX X. XXXXXX
------------------
Name: Xxxx X. Xxxxxx
Title: President
18
