EXECUTION COPY
WARRANT REGISTRATION RIGHTS AGREEMENT
Dated April 13, 1998
By and Among
FIRSTWORLD COMMUNICATIONS, INC.
BEAR, XXXXXXX & CO. INC.
ING BARING (U.S.) SECURITIES, INC.
X.X. XXXXXX SECURITIES INC.
and
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
TABLE OF CONTENTS
PAGE
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Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. (a) Demand Registration After Public Equity Offering. . . . . . . 5
(b) Effective Registration. . . . . . . . . . . . . . . . . . . . 5
(c) Restrictions on Sale by Holders . . . . . . . . . . . . . . . 6
(d) Underwritten Registrations. . . . . . . . . . . . . . . . . . 6
(e) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Priority in Demand Registration . . . . . . . . . . . . . . . 7
2.2. (a) Piggy-Back Registration . . . . . . . . . . . . . . . . . . . 7
(b) Priority in Piggy-Back Registration . . . . . . . . . . . . . 8
2.3. Limitations, Conditions and Qualifications to Obligations
Under Registration Covenants . . . . . . . . . . . . . . . . . . .10
2.4. Restrictions on Sale by the Company and Others . . . . . . . . . .11
2.5. Rule 144 and Rule 144A . . . . . . . . . . . . . . . . . . . . . .12
Section 3. "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . . .12
Section 4. Registration Procedures. . . . . . . . . . . . . . . . . . . . . .12
Section 5. Indemnification and Contribution . . . . . . . . . . . . . . . . .18
Section 6. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . .21
(a) No Inconsistent Agreements. . . . . . . . . . . . . . . . . .21
(b) Amendments and Waivers. . . . . . . . . . . . . . . . . . . .21
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .21
(d) Successors and Assigns. . . . . . . . . . . . . . . . . . . .22
(e) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .22
(f) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . .22
(g) Governing Law; Jurisdiction . . . . . . . . . . . . . . . . .22
(h) Severability. . . . . . . . . . . . . . . . . . . . . . . . .22
(i) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .22
(j) Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . .23
(k) Securities Held by the Company or Its Affiliates. . . . . . .23
(l) Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . .23
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WARRANT REGISTRATION RIGHTS AGREEMENT
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into April 13, 1998, by and among FIRSTWORLD COMMUNICATIONS, INC., a
California corporation (the "Company"), and BEAR, XXXXXXX & CO. INC., ING BARING
(U.S.) SECURITIES, INC., X.X. XXXXXX SECURITIES INC. and XXXXXXX LYNCH, PIERCE,
XXXXXX & XXXXX INCORPORATED (each an "Initial Purchaser" and collectively, the
"Initial Purchasers"). Bear, Xxxxxxx & Co. is acting as the representative (the
"Representative") of the Initial Purchasers.
This Agreement is made pursuant to the Purchase Agreement dated as of
April 6, 1998 among the Company and the Initial Purchasers (the "Purchase
Agreement"), relating to, among other things, the sale by the Company to the
Initial Purchasers of an aggregate of 470,000 Units, each Unit consisting of
$1,000 principal amount at maturity of 13% Senior Discount Notes due April 15,
2008 and one Warrant, each initially exercisable for 7.9002 shares of Common
Stock, no par value, of the Company. In order to induce the Initial Purchasers
to enter into the Purchase Agreement, the Company has agreed to provide to the
Initial Purchasers and the Holders (as defined herein), among other things, the
registration rights for the Warrant Shares (as defined herein) set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
Section 1. DEFINITIONS. As used in this Agreement, the following
defined terms shall have the following meanings:
"Advice" has the meaning ascribed to such term in the last paragraph
of Section 4 hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the Voting Stock (as defined in the
Indenture) of a Person shall be deemed to be control.
"Amended and Restated Investor Rights Agreement" means the agreement
dated as of the date hereof among the Company and certain holders of securities
of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means, with respect to the Company, any and all
shares, interests, rights to purchase, warrants, options, participations, or
other equivalents of, or interests (however designated) in stock issued by the
Company.
"Common Stock" means the Series B Common Stock, no par value, of the
Company.
"Company" shall have the meaning ascribed to that term in the preamble
of this Agreement and shall also include the Company's permitted successors and
assigns.
"Credit Facility Lender Warrant" means the warrant dated the date
hereof issued to Foothill Capital Corporation to purchase 800,000 shares of
Common Stock issued to a lender under the Company's former credit facility.
"Demand Registration" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"DTC" has the meaning ascribed to such term in Section 4(i) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Holder" means each of the Initial Purchasers, for so long as it owns
any Warrant Shares, and each of its successors, assigns and direct and indirect
transferees who become registered owners of such Warrant Shares.
"Included Securities" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"indemnified party" has the meaning ascribed to such term in
Section 5(c) hereof.
"indemnifying party" has the meaning ascribed to such term in
Section 5(c) hereof.
"Indenture" means the Indenture dated as of April 13, 1998, as amended
or supplemented from time to time, between the Company and The Bank of New York
as Trustee, pursuant to which the Notes are issued.
"Initial Purchasers" has the meaning ascribed to such term in the
preamble hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Notes" means the aggregate of $470,000,000 principal amount at
maturity of 13% Senior Discount Notes due April 13, 2008 of the Company issued
under the Indenture.
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"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof.
"Piggy-Back Registration" has the meaning ascribed to such term in
Section 2.2(a) hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Public Equity Offering" means an underwritten offering of Common
Stock pursuant to a registration statement that has been declared effective by
the SEC pursuant to the Securities Act (other than a registration statement on
Form S-8 or otherwise relating to equity securities issuable under any employee
benefit plan of the Company).
"Purchase Agreement" has the meaning ascribed to such term in the
preamble hereof.
"Registrable Securities" means any of (i) the Warrant Shares and
(ii) any other securities issued or issuable with respect to any Registrable
Securities by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise; PROVIDED, HOWEVER, that any particular Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the offering of such securities by the Holder thereof
shall have been declared effective under the Securities Act and such securities
shall have been disposed of by such Holder pursuant to such Registration
Statement, (ii) such securities may at the time of determination be sold to the
public pursuant to Rule 144 without any restriction on the amount of securities
which may be sold by such Holder or Rule 144(k) (or any similar provision then
in force, but not Rule 144A) promulgated under the Securities Act without the
lapse of any further time or the satisfaction of any condition, (iii) such
securities shall have been otherwise transferred by such Holder and new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company or its transfer agent and
subsequent disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in force or
(iv) such securities shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all SEC and stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities), printing expenses, messenger,
telephone
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and delivery expenses, fees and disbursements of counsel for the Company and all
independent certified public accountants, the fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (but not
including any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of Registrable Securities by Holders of such
Registrable Securities) and other reasonable out-of-pocket expenses of Holders
(it being understood that Registration Expenses shall not include, as to the
fees and expenses of counsel, the fees and expenses of more than one counsel for
the Holders).
"Registration Statement" means any appropriate registration statement
of the Company filed with the SEC pursuant to the Securities Act which covers
any of the Registrable Securities pursuant to the provisions of this Agreement
and all amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Requisite Securities" means a number of Registrable Securities equal
to not less than 25% of the Registrable Securities then outstanding held in the
aggregate by all Holders; PROVIDED, HOWEVER, that with respect to any action to
be taken at the request of the Holders of the Registrable Securities prior to
such time as the Warrants have expired pursuant to the terms thereof and of the
Warrant Agreement, each Warrant outstanding shall be deemed to represent that
number of Registrable Securities for which such Warrant would be then
exercisable.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission or any successor.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable Securities
in accordance with the provisions of Section 2.1 or 2.2.
"Warrant Agent" means The Bank of New York and any successor warrant
agent for the Warrants pursuant to the Warrant Agreement.
"Warrant Agreement" means the Warrant Agreement dated April 13, 1998
between the Company and The Bank of New York, as Warrant Agent, as amended or
supplemented from time to time in accordance with the terms thereof.
"Warrants" means the warrants of the Company issued pursuant to the
Warrant Agreement.
"Warrant Shares" means the shares of Common Stock deliverable upon
exercise of the Warrants.
Section 2. REGISTRATION RIGHTS.
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2.1. (a) DEMAND REGISTRATION AFTER PUBLIC EQUITY OFFERING.
Commencing on the earlier of April 15, 2003 or 180 days after an initial Public
Equity Offering, Holders owning, individually or in the aggregate, not less than
the Requisite Securities may make a written request for one registration under
the Securities Act of their Registrable Securities (a "Demand Registration").
Within 120 days of the receipt of such written request for a Demand
Registration, the Company shall file with the SEC and use its best efforts to
cause to become effective under the Securities Act a Registration Statement with
respect to such Registrable Securities. Any such request will specify the
number of Registrable Securities proposed to be sold and will also specify the
intended method of disposition thereof. The Company shall give written notice
of such registration request to all other Holders of Registrable Securities
within 20 days after the receipt thereof. Within 30 days after the date of such
notice from the Company, any Holder may request in writing that such Holder's
Registrable Securities be included in such Registration Statement and the
Company shall include in such Registration Statement the Registrable Securities
of any such Holder requested to be so included (the "Included Securities").
Each such request by such other Holders shall specify the number of Included
Securities proposed to be sold and the intended method of disposition thereof.
Subject to Sections 2.1(b) and 2.1(f) hereof, the Company shall be required to
register Registrable Securities pursuant to this Section 2.1(a) only once.
Subject to Section 2.1(f) hereof, no other securities of the Company
except (i) Registrable Securities held by any Holder, (ii) equity securities to
be offered and sold for the account of the Company and (iii) any equity
securities of the Company held by any Person having "piggy-back" registration
rights pursuant to any contractual obligation of the Company shall be included
in a Demand Registration; PROVIDED, HOWEVER, that no such securities for the
account of the Company or any other Person shall be so included unless, in
connection with any underwritten offering, the managing underwriter or
underwriters confirm to the Holders of Registrable Securities to be included in
such Demand Registration that the inclusion of such other securities will not be
likely to affect the price at which the Registrable Securities may be sold. The
inclusion of any such securities for the account of the Company or any other
Person, shall be on the same terms as that of the Registrable Securities.
(b) EFFECTIVE REGISTRATION. A Registration Statement will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the SEC and the Company has complied in a timely manner
and in all material respects with all of its obligations under this Agreement
with respect thereto; PROVIDED, HOWEVER, that if, after such Registration
Statement has become effective, the offering of Registrable Securities pursuant
to such Registration Statement is or becomes the subject of any stop order,
injunction or other order or requirement of the SEC or any other governmental or
administrative agency or court that prevents, restrains or otherwise limits the
sale of Registrable Securities pursuant to such Registration Statement for any
reason not attributable to any Holder participating in such registration and
such Registration Statement has not become effective within a reasonable time
period thereafter (not to exceed 45 days), such Registration Statement will be
deemed not to have been effected. If (i) a registration requested pursuant to
this Section 2.1 is deemed not to have been effected or (ii) a Demand
Registration does not remain effective under the Securities Act until at least
the earlier of (A) an aggregate of 180 days after the effective date thereof or
(B) the consummation of the distribution by the Holders of all of the
Registrable Securities covered
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thereby, then such registration shall not count towards determining if the
Company has satisfied its obligation to effect one Demand Registration pursuant
to this Section 2.1. For purposes of calculating the 180-day period referred to
in the preceding sentence, any period of time during which such Registration
Statement was not in effect shall be excluded. The Holders of Registrable
Securities shall be permitted to withdraw all or any part of the Registrable
Securities from a Demand Registration at any time prior to the effective date of
such Demand Registration.
(b) RESTRICTIONS ON SALE BY HOLDERS. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to this Section 2.1 and are to be sold thereunder agrees, if and
to the extent reasonably requested by the managing underwriter or underwriters
in an underwritten offering, not to effect any public sale or distribution of
Registrable Securities or of securities of the Company of the same class as any
securities included in such Registration Statement, including a sale pursuant to
Rule 144 (except as part of such underwritten offering), during the 180 day
period beginning on the closing date of each underwritten offering made pursuant
to such Registration Statement, to the extent timely notified in writing by the
Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.1(c) shall not apply to any
Holder of Registrable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; PROVIDED, HOWEVER,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
Registrable Securities commencing on the date of sale of such Registrable
Securities unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) UNDERWRITTEN REGISTRATIONS. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Company.
No Holder of Registrable Securities may participate in any
underwritten registration pursuant to a Registration Statement filed under this
Agreement unless such Holder (a) agrees to (i) sell such Holder's Registrable
Securities on the basis provided in and in compliance with any underwriting
arrangements approved by the Holders of not less than a majority of the
Registrable Securities to be sold thereunder and (ii) comply with Regulation M
under the Exchange Act and (b) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements; PROVIDED, HOWEVER,
that no Holder of Registrable Securities shall be required to enter into a
custody or escrow agreement or power of attorney with respect to Registrable
Securities to be sold in connection with such underwriting arrangements.
(e) EXPENSES. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to Section 2.1(a) hereof.
Each Holder of Registrable Securities shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder's Registrable Securities pursuant to a Registration Statement
requested pursuant to this Section 2.1.
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(f) PRIORITY IN DEMAND REGISTRATION. In a registration pursuant to
Section 2.1 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders who have requested such Demand
Registration or who have sought inclusion therein that in such underwriter's or
underwriters' opinion the total number of securities which the Selling Holders
and any other Person desiring to participate in such registration intend to
include in such offering is such as to affect adversely the success of such
offering, including the price at which such securities can be sold, then the
Company will be required to include in such registration only the amount of
securities which it is so advised should be included in such registration. In
such event, securities shall be registered in such registration in the following
order of priority: (i) FIRST, the securities which have been requested to be
included in such registration by the Holders of Registrable Securities pursuant
to this Agreement, pro rata among such Holders according to the number of
securities requested to be included by each such Holder (or as they may
otherwise agree), (ii) SECOND, securities requested to be included in such
registration by the holders of the Credit Facility Lender Warrant, pro rata
among such holders according to the number of securities requested to be
included by each such holder (or as they may otherwise agree), (iii) THIRD,
Demand Shares (as defined in the Amended and Restated Investor Rights Agreement)
requested to be included therein by Demand Holders under the Amended and
Restated Investor Rights Agreement, pro rata among such Demand Holders according
to the number of securities requested to be included by each such Demand Holder
(or as they may otherwise agree), (iv) FOURTH, any securities the Company
proposes to include therein, and (v) FIFTH, the securities of other Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company, pro rata among such Persons based on the amount of
securities requested to be included by each such Person (or as they may
otherwise agree).
If any securities of a Holder have been excluded from a registration
statement pursuant to the provisions of the foregoing paragraph, then such
registration shall not count towards determining whether the Company has
satisfied its obligation to effect one Demand Registration pursuant to
Section 2.1 hereof.
2.2. (a) PIGGY-BACK REGISTRATION. If at any time the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its security holders of Common Stock (other than (i) a Registration Statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the SEC), (ii) a
Registration Statement filed in connection with an offering of securities solely
to the Company's existing security holders or any offer of debt securities or
convertible debt securities or (iii) a Demand Registration), then the Company
shall give written notice of such proposed filing to the Holders of Registrable
Securities as soon as practicable (but in no event fewer than 15 days before the
anticipated filing date or 10 days if the Company is subject to filing reports
under the Exchange Act and able to use Form S-3 under the Securities Act), and
such notice shall offer such Holders the opportunity to register such number of
shares of Registrable Securities as each such Holder may request in writing not
later than 15 days prior to the anticipated effective date of the Registration
Statement (or eight days of the notice of the proposed filing if the Company is
subject to filing reports under the Exchange Act and able to use Form S-3 under
the Securities Act) after receipt of such written notice from the Company (which
request shall specify the Registrable Securities intended to be disposed of by
such Selling
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Holder and the intended method of distribution thereof) (a "Piggy-Back
Registration"). The Company shall use its best efforts to keep such Piggy-Back
Registration continuously effective under the Securities Act until at least the
earlier of (A) 90 days after the effective date thereof or (B) the consummation
of the distribution by the Holders of all of the Registrable Securities covered
thereby. Subject to Section 2.2(b), the Company shall cause the managing
underwriter or underwriters, if any, of such proposed offering to permit the
Registrable Securities requested to be included in a Piggy-Back Registration to
be included on the same terms and conditions as any similar securities of the
Company or any other security holder included therein and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Selling Holder shall have the right to
withdraw its request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 2.2 by giving written notice to
the Company of its request to withdraw. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective or the Company
may elect to delay the registration; PROVIDED, HOWEVER, that the Company shall
give prompt written notice thereof to participating Selling Holders. The
Piggy-Back Registration right of holders of Warrants and Warrant Shares shall
not apply to any Public Equity Offering that is the initial Public Equity
Offering of the Company unless the securities of other Selling Holders are to be
included therein. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 2.2, and each Holder of Registrable Securities shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to a
Registration Statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders of Registrable
Securities pursuant to Section 2.1 hereof, and no failure to effect a
registration under this Section 2.2 and to complete the sale of securities
registered thereunder in connection therewith shall relieve the Company of any
other obligation under this Agreement.
(b) PRIORITY IN PIGGY-BACK REGISTRATION. In a registration pursuant
to Section 2.2 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting inclusion in such
offering that in such underwriter's or underwriters' opinion the total number of
securities which the Company, the Selling Holders and any other Persons desiring
to participate in such registration intend to include in such offering is such
as to materially and adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will be
required to include in such registration only the amount of securities which it
is so advised should be included in such registration. In such event: (w) in
cases other than those covered by clause (x), (y) or (z) below, securities shall
be registered in such offering in the following order of priority: (i) FIRST,
if the registration is for the sale of securities for the Company's own account
(other than pursuant to the exercise of "piggy-back" rights herein and in other
such contractual commitments of the Company), the securities which the Company
proposes to register, (ii) SECOND, those securities requested to be included in
such registration by the holders of the Credit Facility Lender Warrant, pro rata
among such holders according to the number of securities requested to be
included by each such holder (or as they
8
may otherwise agree), (iii) THIRD, the securities which have been requested
to be included in such registration by the Holders of Registrable Securities
pursuant to this Agreement and Demand Shares (as defined in the Amended and
Restated Investor Rights Agreement) requested to be included in such
registration by the Demand Holders under the Amended and Restated Investor
Rights Agreement pro rata among such Holders and such Demand Holders based
upon the number of securities requested to be included by each such Holder
and Demand Holder requesting inclusion therein (or as they may otherwise
agree), (iv) FOURTH, securities requested to be included by other holders
under the Amended and Restated Investor Rights Agreement, on a pro rata basis
according to the number of such securities requested to be included by each
such holder (or as they may otherwise agree), and (v) FIFTH, the securities
of other Persons entitled to exercise "piggy-back" registration rights
pursuant to contractual commitments of the Company, pro rata based on the
amount of securities sought to be registered by such Persons (or as they may
otherwise agree); (x) in cases involving the registration for sale of
securities pursuant to a demand registration under the Credit Facility Lender
Warrant, securities shall be registered in such offering in the following
order of priority: (i) FIRST, those securities requested to be included in
such registration by the Initiating Securityholders under the Credit Facility
Lender Warrant, pro rata among such Initiating Securityholders according to
the number of securities requested to be included by each such Initiating
Securityholder (or as they may otherwise agree), (ii) SECOND, the securities
requested to be included in such registration by other Securityholders under
the Credit Facility Lender Warrant, pro rata among such Securityholders
according to the number of securities requested to be included by each such
Securityholder (or as they may otherwise agree), (iii) THIRD, securities
requested to be included in such registration by the Holders of Registrable
Securities pursuant to this Agreement and Demand Shares (as defined in the
Amended and Restated Investor Rights Agreement) requested to be included in
such registration by Demand Holders under the Amended and Restated Investor
Rights Agreement, pro rata among such Holders and Demand Holders according to
the number of such securities requested to be included by each such Holder
and Demand Holder (or as they may otherwise agree), (iv) FOURTH, any
securities the Company proposes to include therein, and (v) FIFTH, the
securities of any other Person entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments of the Company, pro rata among
such Persons according to the number of securities requested to be included
by each such Person (or as they may otherwise agree); and (y) in cases
involving the registration for sale of securities pursuant to a Qualified
Holder Demand (as defined in the Amended and Restated Investor Rights
Agreement) under the Amended and Restated Investor Rights Agreement,
securities shall be registered in such offering in the following order of
priority: (i) FIRST, all of the Demand Shares (as defined in the Amended and
Restated Investor Rights Agreement) requested to be included in such
registration by Demand Holders under the Amended and Restated Investor Rights
Agreement, pro rata among such Demand Holders according to the number of
securities requested to be included by each such Demand Holder (or as they
may otherwise agree), (ii) SECOND, those securities requested to be included
in such registration by holders of the Credit Facility Lender Warrant, pro
rata among such holders according to the number of securities requested to be
included by each such holder (or as they may otherwise agree), (iii) THIRD,
the securities which have been requested to be included in such registration
by the Holders of Registrable Securities pursuant to this Agreement pro rata
among such Holders based upon the aggregate amount of securities requested to
be included by each such Holder (or as they may otherwise agree), (iv) FOURTH,
any securities the Company proposes
9
to include therein, and (v) FIFTH, securities of other Persons entitled to
exercise "piggy-back" registration rights pursuant to contractual
commitments, pro rata among such Persons based on the amount of securities
requested to be included by each such Person (or as they may otherwise
agree); and (z) in cases involving the registration for sale of securities
pursuant to notices delivered to the Company on the same date requesting
demand registration under the Credit Facility Lender Warrant and a Qualified
Holder Demand under the Amended and Restated Investor Rights Agreement,
securities shall be registered in such offering in the following order of
priority: (i) first, all of the securities requested to be included therein
by the Initiating Securityholders (as defined in the Credit Facility Lender
Warrant) under the Credit Facility Lender Warrant, pro rata among such
holders according to the number of securities requested to be included by
each such holder requesting inclusion therein (or as they may otherwise
agree); (ii) second, the Demand Shares (as defined in the Amended and
Restated Investor Rights Agreement) requested to be included therein by the
Demand Holders under the Amended and Restated Investor Rights Agreement and
the securities requested to be included therein by the other Securityholders
(as defined in the Credit Facility Lender Warrant), pro rata among such
holders according to the number of Demand Shares and Securityholders'
securities requested to be included by each such holder requesting inclusion
therein (or as they may otherwise agree); (iii) third, the securities
requested to be included in such registration by the Holders of Registrable
Securities pursuant to this Agreement, pro rata among such Holders based upon
the number of securities requested to be included by each such Holder
requesting inclusion therein (or as they may otherwise agree); (iv) fourth,
any securities the Company proposes to include therein; and (v) fifth, any
other securities proposed to be included therein, pro rata among the holders
of such other securities according to the number of securities requested to
be included by each such holder proposed to be included therein (or as they
may otherwise agree).
If, as a result of the provisions of this Section 2.2(b), any Selling
Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Selling Holder has requested to be included,
such Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration.
2.3. LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER
REGISTRATION COVENANTS. The obligations of the Company set forth in Sections
2.1 and 2.2 hereof are subject to each of the following limitations, conditions
and qualifications:
(a) Subject to the next sentence of this paragraph, the Company shall
be entitled to postpone, for a reasonable period of time, the filing or
effectiveness of, or suspend the rights of any Holders to make sales pursuant
to, any Registration Statement otherwise required to be prepared, filed and made
and kept effective by it hereunder; PROVIDED, HOWEVER, that the duration of such
postponement or suspension may not exceed the earlier to occur of (A) 15 days
after the cessation of the circumstances described in the next sentence of this
paragraph on which such postponement or suspension is based or (B) 90 days after
the date of the determination of the Board of Directors referred to in the next
sentence, and the duration of such postponement or suspension shall be excluded
from the calculation of the 180-day period described in Section 2.1(b) hereof.
Such postponement or suspension may be effected only if the Board of Directors
of the Company determines reasonably and in good faith that the filing or
effectiveness of, or sales pursuant to, such Registration Statement would
materially impede, delay or interfere
10
with any financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or any of
its Affiliates or require disclosure of material information which the Company
has a bona fide business purpose for preserving as confidential, which
financing, offer or sale of securities, acquisition, corporate reorganization or
other significant transaction had been initiated at the time of the filing of
such Registration Statement; PROVIDED, HOWEVER, that the Company shall not be
entitled to such postponement or suspension more than twice in any twelve-month
period. If the Company shall so postpone the filing of a Registration Statement
it shall, as promptly as possible, deliver a certificate signed by the Chief
Executive Officer of the Company to the Selling Holders as to such
determination, and the Selling Holders shall (y) have the right, in the case of
a postponement of the filing or effectiveness of a Registration Statement, upon
the affirmative vote of the Holders of not less than a majority of the
Registrable Securities to be included in such Registration Statement, to
withdraw the request for registration by giving written notice to the Company
within 10 days after receipt of such notice or (z) in the case of a suspension
of the right to make sales, receive an extension of the registration period
equal to the number of days of the suspension. Any Demand Registration as to
which the withdrawal election referred to in the preceding sentence has been
effected shall not be counted for purposes of the single Demand Registration the
Company may be required to effect pursuant to Section 2.1 hereof.
(b) The Company shall not be required by this Agreement to effect a
Demand Registration within 90 days immediately following the effective date of
any registration statement pertaining to a firmly underwritten offering of
equity securities of the Company for its own account; PROVIDED, HOWEVER, that
this clause (ii) shall not apply if the underwriter of such offering consents to
the request for such Demand Registration pursuant to Section 2.1(a).
(c) The Company shall not be required by this Agreement to effect a
Demand Registration within 60 days immediately following the effective date of
any registration statement pertaining to a firmly underwritten offering of
equity securities of the Company for the account of any security holder of the
Company; PROVIDED, HOWEVER, that this clause (ii) shall not apply if the
underwriter of such offering consents to the request for such Demand
Registration pursuant to Section 2.1(a).
(d) The Company's obligations shall be subject to the obligations
of the Selling Holders, which the Selling Holders acknowledge, to furnish all
information and materials and to take any and all actions as may be required
under applicable federal and state securities laws and regulations to permit
the Company to comply with all applicable requirements of the SEC and to
obtain any acceleration of the effective date of such Registration Statement.
(e) The Company shall not be obligated to cause any special audit to
be undertaken in connection with any registration pursuant to this Agreement
unless such audit is required by the SEC or requested by the underwriters with
respect to such registration.
2.4. RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS. The Company
covenants and agrees that (i) it shall not, and that it shall not cause or
permit any of its subsidiaries to, effect any public sale or distribution of any
securities of the same class as any of the Registrable Securities or any
securities convertible into or exchangeable or exercisable for such securities
(or
11
any option or other right for such securities) during the 30-day period prior
to, and during the 90-day period beginning on, the commencement of any
underwritten offering of Registrable Securities pursuant to a Demand
Registration which has been requested pursuant to this Agreement prior to the
Company or any of its subsidiaries publicly announcing its intention to effect
any such public sale or distribution; and (ii) that it shall use its reasonable
best efforts to secure the written agreement of each of its officers and
directors to not effect any public sale or distribution of any securities of the
same class as the Registrable Securities (or any securities convertible into or
exchangeable or exercisable for any such securities), or any option or right for
such securities during the period described in clause (i) of this Section 2.4.
2.5. RULE 144 AND RULE 144A. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner and, if at any time the Company is not required to file such reports, it
will, upon the request of any Holder or beneficial owner of Registrable
Securities, make available the information required by Rule 144A(a)(4) under the
Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A under the Securities Act and the information required
under Rule 144(c) to permit resales under Rule 144. Upon the request of any
Holder of Registrable Securities, the Company will in a timely manner deliver to
such Holder a written statement as to whether it has complied with such
information requirements.
Section 3. "MARKET STAND-OFF" AGREEMENT.
(a) If the Company has complied with all its obligations with respect
to a Demand Registration or a Piggy-Back Registration relating to an
underwritten public offering, all holders of Warrants and Warrant Shares, upon
request of the lead managing underwriter with respect to such underwritten
public offering, will be required to not sell or otherwise dispose of any
Warrants and Warrant Shares owned by them for a period not to exceed 180 days
from the consummation of such underwritten public offering: PROVIDED, HOWEVER,
that except for the initial Public Equity Offering of the Company, such
requirement shall apply to Warrant Shares not sold in a Demand Registration or
Piggy-Back Registration due to a reduction pursuant to Section 2.2(b) hereof for
a period not to exceed 90 days from such date of consummation.
(b) In order to enforce the foregoing covenant, the Company shall
have the right to place restrictive legends on the certificates representing the
shares subject to this Section 3 and to impose stop transfer instructions with
respect to the Registrable Securities and such other shares of stock of each
Holder (and the shares or securities of every other Person subject to the
foregoing restriction) until the end of such period. The provisions of this
Section 3 shall be binding upon any transferee of any Registrable Securities.
Section 4. REGISTRATION PROCEDURES. In connection with the
obligations of the Company with respect to any Registration Statement pursuant
to Sections 2.1 and 2.2 hereof, the Company shall, except as otherwise provided:
(a) Prepare and file with the SEC as soon as practicable each such
Registration Statement (but in any event on or prior to the date of filing
thereof required under
12
this Agreement) and cause such Registration Statement to become effective and
remain effective as provided herein; PROVIDED, HOWEVER, that before filing any
such Registration Statement or any Prospectus (for registrations pursuant to
Sections 2.1 and 2.2 hereof) or any amendments or supplements thereto (only for
registrations pursuant to Section 2.1 hereof) (including, at any time the
Company is preparing a Registration Statement for a registration pursuant to
Section 2.1 or 2.2 hereof, documents that would be incorporated or deemed to be
incorporated therein by reference, including such documents filed under the
Exchange Act that would be incorporated therein by reference), the Company
shall, upon request, afford promptly to the Holders of the Registrable
Securities covered by such Registration Statement, their counsel and the
managing underwriter or underwriters, if any, an opportunity to review copies of
all such documents proposed to be filed a reasonable time prior to the proposed
filing thereof. The Company shall not file any Registration Statement or
Prospectus (for registrations pursuant to Sections 2.1 and 2.2 hereof) or any
amendments or supplements thereto (only for registrations pursuant to
Section 2.1 hereof) if the Holders of a majority of the Registrable Securities
covered by such Registration Statement, their counsel, or the managing
underwriter or underwriters, if any, shall reasonably object in writing unless
the Company reasonably believes that failure to file any such amendment or
supplement would involve a violation of the Securities Act or other applicable
law.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods prescribed
hereby; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities, their counsel and
the managing underwriter or underwriters, if any, promptly (but in any event
within two (2) Business Days), and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules and exhibits), (ii) of the issuance
by the SEC of any stop order suspending the effectiveness of such Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation or threatening of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Securities the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 4(l) below, to
the knowledge of the Company, cease to be true and correct in any material
respect, (iv) of the receipt by the Company of any notification with respect to
(A) the suspension of the qualification or exemption from qualification of the
Registration Statement or any of the Registrable Securities covered thereby for
offer or sale in any jurisdiction, or (B) the initiation of
13
any proceeding for such purpose, (v) of the happening of any event, the
existence of any condition or information becoming known that requires the
making of any changes in such Registration Statement, Prospectus or documents so
that, in the case of such Registration Statement, it will conform in all
material respects with the requirements of the Securities Act and it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will conform in all
material respects with the requirements of the Securities Act and it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(vi) of the Company's reasonable determination that a post-effective amendment
to such Registration Statement would be appropriate.
(d) Use every reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities covered
thereby for sale in any jurisdiction, and, if any such order is issued, to
obtain the withdrawal of any such order as soon as practicable.
(e) If requested by the managing underwriter or underwriters, if any,
or the Holders of a majority of the Registrable Securities being sold in
connection with an underwritten offering (only for registrations pursuant to
Section 2.1 hereof), (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters, if any, or such Holders reasonably request to be included therein
to comply with applicable law, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement.
(f) Furnish to each Holder of Registrable Securities who so requests
and to counsel for the Holders of Registrable Securities and each managing
underwriter, if any, without charge, upon request, one conformed copy of the
Registration Statement and each post-effective amendment thereto, including
financial statements and schedules, and of all documents incorporated or deemed
to be incorporated therein by reference and all exhibits (including exhibits
incorporated by reference).
(g) Deliver to each Holder of Registrable Securities, their counsel
and each underwriter, if any, without charge, as many copies of each Prospectus
(including each preliminary prospectus) and each amendment or supplement thereto
as such Persons may reasonably request; and, subject to the last paragraph of
this Section 4, the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the Holders of Registrable
Securities and the underwriter or underwriters or agents, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
14
(h) Prior to any offering of Registrable Securities, to register or
qualify, and cooperate with the Holders of Registrable Securities, the
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
the managing underwriter or underwriters reasonably request in writing, or, in
the event of a non-underwritten offering, as the Holders of a majority of the
Registrable Securities may request; PROVIDED, HOWEVER, that where Registrable
Securities are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform blue sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 4(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective hereunder and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the securities
covered thereby; PROVIDED, HOWEVER, that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) become
subject to taxation in any jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two Business Days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering.
(j) Upon the occurrence of any event contemplated by
Section 4(c)(v) or 4(c)(vi) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference and, subject to Section 4(a) hereof, file
such with the SEC so that, as thereafter delivered to the purchasers of
Registrable Securities being sold thereunder, such Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(k) Prior to the effective date of a Registration Statement,
(i) provide the registrar for the Registrable Securities with certificates for
such securities in a form eligible for deposit with DTC and (ii) provide a CUSIP
number for such securities.
(l) In an underwritten offering, enter into an underwriting agreement
in form, scope and substance as is customary in underwritten offerings and take
all such other actions as are reasonably requested by the managing underwriter
or underwriters in order to expedite or facilitate the registration or
disposition of such Registrable Securities in any underwritten offering to be
made of the Registrable Securities in accordance with this Agreement, and in
such connection, (i) make such representations and warranties to the underwriter
or underwriters, with
15
respect to the business of the Company and the subsidiaries of the Company, and
the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) use reasonable
efforts to obtain opinions of counsel to the Company and updates thereof,
addressed to the underwriter or underwriters covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by underwriters; (iii) use reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if applicable, the subsidiaries of the
Company) and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement, addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other matters as reasonably requested by the managing
underwriter or underwriters and as permitted by the Statement of Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into, the
same shall contain customary indemnification provisions and procedures (or such
other provisions and procedures acceptable to Holders of a majority of
Registrable Securities covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to such agreement. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder.
(m) Make available for inspection by a representative of the Holders
of Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney or accountant
retained by such representative of the Holders or underwriter, at the offices
where normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and the
subsidiaries of the Company, and cause the officers, directors and employees of
the Company and the subsidiaries of the Company to supply all information in
each case reasonably requested by any such Person in connection with such
Registration Statement; PROVIDED, HOWEVER, that all material non-public
information shall be kept confidential by such Person, except to the extent that
(i) the disclosure of such information is necessary or advisable to avoid or
correct a misstatement or omission in the Registration Statement or in any
Prospectus; PROVIDED, HOWEVER, that prior notice is given to the Company, and
the Company's legal counsel and such Holder's legal counsel concur that
disclosure is required, (ii) the release of such information is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction,
(iii) disclosure of such information is necessary in connection with any action,
claim, suit or proceeding, directly or indirectly, involving or potentially
involving such Person and arising out of, based upon, relating to or involving
this Agreement or any of the transactions contemplated hereby or arising
hereunder; PROVIDED, HOWEVER, that prior notice shall be provided as soon as
practicable to the Company of the potential disclosure of any information by
such Person pursuant to clauses (ii) or (iii) of this sentence to permit the
Company to obtain a protective order (or waive the provisions of this paragraph
(m)) and that such Person shall take all actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to the extent
such action is
16
otherwise not inconsistent with, an impairment of or in derogation of the rights
and interests of the Holder or any such Person, or (iv) such information has
been made generally available to the public.
(n) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders as soon as practicable
following the effective date of each Registration Statement filed hereunder an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act).
(o) Use its best efforts to cause all Registrable Securities relating
to such Registration Statement to be listed on each securities exchange, if any,
on which similar securities issued by the Company are then listed.
(p) Cooperate with the Selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends and registered in such names as
the Selling Holders may reasonably request at least two Business Days prior to
the closing of any sale of Registrable Securities.
(q) Each Selling Holder agrees, as a condition to the registration
obligations with respect to such Selling Holder provided herein, to furnish to
the Company such information regarding such Selling Holder and the distribution
of such Registrable Securities as the Company may, from time to time, reasonably
request in writing to comply with the Securities Act and other applicable law.
The Company may exclude from such registration the Registrable Securities of any
Selling Holder for so long as such Selling Holder fails to furnish such
information within a reasonable time after receiving such request.
(r) Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 4(c)(ii), 4(c)(iv),
4(c)(v), or 4(c)(vi) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by the Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof), or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any amendments or
supplements thereto, and, if so directed by the Company, such Holder will, at
the Company's expense, deliver to the Company all copies, other than permanent
file copies, then in such Holder's actual possession of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice;
PROVIDED, HOWEVER, that nothing herein shall create any obligation on the part
of any Holder to undertake to retrieve or return any such Prospectus not within
the actual possession of such Holder. In the event the Company shall give any
such notice, the period of time for which a Registration Statement is required
hereunder to be effective shall be extended by the number of days during such
periods from and including the date of the giving of such notice to and
including the date when each Selling Holder shall have received (x) the copies
of the supplemented or amended Prospectus contemplated by Section 4(j) hereof or
(y) the Advice.
17
Section 5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Holder and
each Person, if any, who controls such Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, or is under
common control with, or is controlled by, such Holder, from and against all
losses, claims, damages and liabilities (including, without limitation, and
subject to clause (c) of this Section 5 below, the reasonable legal fees and
other reasonable out-of-pocket expenses actually incurred by any Holder or any
such controlling or affiliated Person in connection with any suit, action or
proceeding or any claim asserted), caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the Securities Act, or caused by any omission
or alleged omission to state in any such Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state in
any such preliminary prospectus or Prospectus a material fact required to be
stated in any such preliminary prospectus or Prospectus or necessary to make the
statements in any such preliminary prospectus or Prospectus in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Holder furnished to the Company in
writing by such Holder expressly for use in any such Registration Statement, or
Prospectus; PROVIDED, HOWEVER, that the Company shall not be required to
indemnify any such Person if such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus, or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and any such loss, liability, claim, damage or expense
suffered or incurred by such indemnified Person resulted from any action, claim
or suit by any Person who purchased Registrable Securities which are the subject
thereof from such indemnified Person and it is established in the related
proceeding that such indemnified Person failed to deliver or provide a copy of
the Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Securities sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 4 hereof or as a result of the failure of the Company to
provide such Prospectus.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign any
Registration Statement and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Holder, but only with reference to information relating to
such Holder furnished to the Company in writing by such Holder expressly for
use in any Registration Statement (or any amendment thereto) or any
Prospectus, as the case may be (or any amendment
18
or supplement thereto). The liability of any Holder under
this paragraph shall in no event exceed the proceeds received by such Holder
from sales of Registrable Securities giving rise to such obligations.
(c) In case any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "indemnified party") shall promptly notify
the Person against which such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred of such counsel relating to such proceeding;
PROVIDED, HOWEVER, that the failure to so notify the indemnifying party shall
not relieve it of any obligation or liability under paragraph (a) or (b) above
unless and to the extent that it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the contrary, (ii) the indemnifying party shall have failed to retain
within a reasonable period of time counsel reasonably satisfactory to such
indemnified party or parties or (iii) the named parties to any such proceeding
(including any impleaded parties) include both such indemnified party or parties
and the indemnifying parties or an Affiliate of the indemnifying parties or such
indemnified parties and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between the
indemnifying party or parties and the indemnified party or parties. It is
understood that the indemnifying parties shall not, in connection with any one
such proceeding or separate but substantially similar or related proceedings in
the same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any time
for such indemnified party or parties and that all such fees and expenses shall
be reimbursed within reasonable time of the request after the incurrence
thereof. Any such separate firm for the Holders and such control Persons of the
Holders shall be designated in writing by Holders who sold a majority in
interest of Registrable Securities sold by all such Holders in the transaction
that is the subject of such proceeding and reasonably acceptable to the Company
and any such separate firm for the Company, its directors, its officers and such
control Persons of the Company shall be designated in writing by the Company and
reasonably acceptable to the Holders. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed) but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify and hold harmless the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened
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proceeding in respect of which any indemnified party is or could have been a
party, or indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional written release of such
indemnified party in form and substance reasonably satisfactory to such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 5 is unavailable to, or insufficient to hold harmless, an
indemnified party in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Company on the one hand and the Holders on the other hand from the offering
of such Registrable Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, not only such relative benefits
but also the relative fault of the Company on the one hand and the Holders on
the other hand in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Holders on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of discounts and
commissions but before deducting expenses) of the Warrants sold pursuant to the
Purchase Agreement received by the Company bears to the total proceeds received
by such Holder from the sale of Registrable Securities, as the case may be. The
relative fault of the Company on the one hand and the Holders on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 5(d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in Section 5(d) above shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses actually incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, in no event shall a Holder be required to
contribute any amount in excess of the amount by which proceeds received by such
Holder from sales of Registrable Securities exceeds the amount of any damages
that such Holder has otherwise been required to pay or has paid 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. The remedies
provided for in this Section 5 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
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(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Initial Purchaser or any Person who
controls an Initial Purchaser, the Company, their respective directors or
officers or any Person controlling the Company and (ii) any termination of this
Agreement.
Section 6. MISCELLANEOUS.
(a) NO CONFLICTING AGREEMENTS. The Company represents and warrants
to the Holders that it has not entered into nor will the Company on or after the
date of this Agreement enter into, or cause or permit any of its subsidiaries to
enter into, any agreement which conflicts with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the prior
written consent of Holders of not less than a majority of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; PROVIDED, HOWEVER, that Section 5 hereof and this
Section 6(b) may not be amended, modified or supplemented without the prior
written consent of each Holder (including any Person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Securities may be given by the Holders of not less than a
majority of the Registrable Securities proposed to be sold by such Holders
pursuant to such Registration Statement.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address of Holder as set forth
in the register for the Warrants or the Warrant Shares, which address initially
is, with respect to the Initial Purchasers, the address set forth in the
Purchase Agreement; and (ii) if to the Company, initially at the address set
forth below the Company's name on the signature pages hereto and thereafter at
such other address, notice of which is given in accordance with the provisions
of this Section 6(c), with a copy to Xxxxxx & Xxxxxxx, 000 X Xxxxxx, Xxxxx 0000,
Xxx Xxxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxxx X. Xxxx, Esq., and
thereafter at such other address notice of which is given in accordance with the
provisions of this Section 6(c).
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All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Warrants and/or Registrable Securities, in any manner, whether by
operation of law or otherwise, such Warrants and/or Registrable Securities shall
be held subject to all of the terms of this Agreement, and by taking and holding
such Warrants and/or Registrable Securities such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such Person shall be entitled to receive the
benefits hereof.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(h) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(i) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement and the Warrant Agreement, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This Agreement, the Purchase
Agreement and the Warrant Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
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(j) ATTORNEYS' FEES. As between the parties to this Agreement, in
any action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
(k) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities or Warrants is required hereunder, Registrable Securities or Warrants
held by the Company or by any of its affiliates (as such term is defined in Rule
405 under the Securities Act) shall not be counted (in either the numerator or
the denominator) in determining whether such consent or approval was given by
the Holders of such required percentage.
(l) REMEDIES. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, in the Purchase Agreement or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FIRSTWORLD COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President,
Corporate Finance and
Administration
Address for Notices:
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxx Xxxxxx
---------------------------
Name:
Title:
For itself and the
other Initial Purchasers
named in the preamble hereto
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