EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
December 29, 1999, by and among ON Technology Corporation, a Delaware
corporation (the "Company"), with headquarters located at Waltham Xxxxx, 000
Xxxxxx Xxxxxx, Xxxxxxxx 0, Xxxxxxx, XX 00000 and the undersigned (the "Initial
Purchasers").
RECITALS
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A. In connection with the Securities Purchase Agreement dated of even
date herewith by and among the Company and the Initial Purchasers (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to each Initial
Purchaser (i) shares of the Company's common stock (the "Common Stock"), (ii) a
warrant exercisable for shares of Common Stock, in the form attached as Exhibit
A to the Securities Purchase Agreement ( the "Series I Warrant") and (iii) upon
certain conditions, a warrant exercisable for shares of Common Stock, in the
form attached as Exhibit B to the Securities Purchase Agreement (the "Series II
Warrant" and, together with the Series I Warrant, the "Warrants"). Shares of
Common Stock issued and purchased pursuant to the Securities Purchase Agreement
are herein referred to as "Shares" and shares of Common Stock issuable upon
exercise of the Warrants are herein referred to as "Warrant Shares".
B. To induce the Initial Purchasers to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
AGREEMENTS
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NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, and the
Initial Purchasers hereby agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Purchasers" means the Initial Purchasers and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Article IX hereof.
(b) "register," "registered," and "registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(c) "Registrable Securities" means the Shares and the
Warrant Shares and any shares of capital stock issued or issuable, from time to
time (with any adjustments), on or in exchange for or otherwise with respect to
the Common Stock or any other Registrable Securities.
(d) "Registration Statement" means a registration
statement of the Company under the Securities Act pursuant to the provisions of
this Agreement.
(e) "Funded Amount" means Twelve Million Dollars
($12,000,000).
1.2 Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
ARTICLE II
REGISTRATION
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2.1 Mandatory Registration.
(a) The Company shall prepare and file as soon as practicable
but in any event on or prior to twenty-five (25) days after the date of the
Closing (the "Filing Date") with the SEC a Registration Statement on Form S-3
(but, without limiting the Company's obligation to file on Form S-3, if Form S-3
is unavailable to the Company, on Form S-1) covering the resale of all of the
Registrable Securities in a secondary offering by Purchasers, provided that each
Purchaser shall have provided timely to the Company all information needed for
the Registration Statement regarding it and its plan of distribution. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to (and
subject to the approval of (which approval shall not be unreasonably withheld or
denied)) each Initial Purchaser and its counsel at least five (5) days (or fewer
to the extent provided herein) prior to its filing or other submission.
(b) If the Company fails to timely obtain Stockholder Approval
(as defined in the Securities Purchase Agreement), the Company shall (i) within
five (5) days (also a "Filing Date") amend the Registration Statement required
to be filed under subsection (a) to cover the resale of
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as many of the the Shares and the Warrant Shares issuable upon exercise of the
Warrants as are registrable in a secondary offering by Purchasers in such
Registration Statement and (ii) prepare and file as soon as practicable but in
any event on or prior to five (5) days after the date of the Stockholder
Approval (also a "Filing Date") with the SEC a Registration Statement on Form
S-3 covering the resale of all of the Registrable Securities not covered by the
Registration Statement as described in clause (i) in a secondary offering by
Purchasers, provided that each Purchaser shall have provided timely to the
Company all information needed for the Registration Statement regarding it and
its plan of distribution. Each Registration Statement required to be filed
hereunder (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and subject to the
approval of (which approval shall not be unreasonably withheld or denied)) each
Initial Purchaser and its counsel at least five (5) business days (or fewer to
the extent provided herein) prior to its filing or other submission.
2.2 Underwritten Offering. If any offering pursuant to a Registration
Statement filed pursuant to Section 2.1 hereof involves an underwritten
offering, the Purchasers who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of each
Initial Purchaser, shall have the right to select a total of one legal counsel
to represent the Purchasers and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or bankers or
manager or managers shall be reasonably satisfactory to the Company, and all
fees and expenses of which shall be paid by the Purchasers.
2.3 Payments by the Company. The Company shall cause the Registration
Statement filed pursuant to Section 2.1(a) (or such Registration Statement as
amended pursuant to Section 2.1(b)(i), as applicable) to become effective as
soon as practicable, but in no event later than the one hundred twentieth
(120th) day (or the one hundred fiftieth (150th) day if the SEC reviews such
Registration Statement) following the applicable Filing Date (the "Registration
Deadline"). The Company shall cause the Registration Statement filed pursuant to
Section 2.1(b)(ii), if applicable, to become effective as soon as practicable,
but in no event later than the forty-fifth (45th) day following the applicable
Filing Date (also a "Registration Deadline"). If any Registration Statement
required to be filed by the Company pursuant to Section 2.1 hereof is not
declared effective by the SEC on or before the applicable Registration Deadline
(a "Registration Failure"), or (ii) after such Registration Statement has been
declared effective by the SEC, sales of all the Registrable Securities cannot be
made pursuant to the registration statement (by reason of a stop order or the
Company's failure to update the registration statement or any other reason
outside the control of the Purchasers) (a "Registration Suspension"), then the
Company will make payments to the Purchasers in such amounts and at such times
as shall be determined pursuant to this Section 2.3 as partial relief for the
damages to the Purchasers by reason of any such delay in or reduction of their
ability to sell the Registrable Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity). In the event of a
Registration Failure, the Company shall pay to the Purchasers an amount equal to
(A) .015 times (B) the sum of the aggregate Funded Amount times (C) the number
of months (prorated per day for partial months) following the Registration
Deadline prior to the date the Registration Statement filed pursuant to Section
2.1 is declared effective by the SEC. In addition, in the event of a
Registration Suspension, the Company shall pay to the Purchasers an amount equal
to (D) .015 times (E) the
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Applicable Funded Amount times (F) the number of months (prorated per day for
partial months) from (x) the date on which sales of all the Registrable
Securities first cannot be made to (y) the date on which sales of all the
Registrable Securities can again be made. For the purposes of this Section 2.3,
"Applicable Funded Amount" shall mean (G) the sum of the Funded Amount times (H)
the number of Shares and Warrant Shares then owned by the Purchasers (or
issuable at that time as Warrant Shares upon full exercise of the Warrant,
without regard to any limitations on conversion thereof) divided by (I) the
number of Shares originally purchased and Warrant Shares issuable upon full
exercise of the Warrant at the time of the original purchase of the Warrants, in
each case without regard to any limitations on conversion thereof. Amounts to be
paid pursuant to this Section 2.3 shall be paid pro rata to Purchasers based
upon the number of Shares and Warrant Shares owned and Warrant Shares issuable
upon full conversion of the Warrant by each Purchaser, and shall be paid in
cash. Such payments shall be made within five (5) days after the end of each
period that gives rise to such obligation, provided that, if any such period
extends for more than thirty (30) days, payments shall be made for each such
thirty (30) day period within five (5) days after the end of such thirty (30)
day period.
2.4 Intentionally deleted
2.5 Eligibility for Form S-3. The Company represents and warrants that
it meets the requirements for the use of Form S-3 for registration of the
re-sale by the Initial Purchaser and any other Purchaser of the Registrable
Securities and the Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such eligibility for
the use of Form S-3.
ARTICLE III
OBLIGATIONS OF THE COMPANY
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In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
3.1 The Company shall prepare promptly and file with the SEC each
Registration Statement required by Section 2.1, and cause each such Registration
Statement relating to Registrable Securities to become effective as soon as
practicable after such filing, and keep the Registration Statement effective
pursuant to Rule 415 and available for use at all times until such date as is
the earlier of (i) the date on which all of the Registrable Securities have been
sold (and no further Registrable Securities may be issued in the future) and
(ii) the date on which all of the Registrable Securities (in the reasonable
opinion of counsel to the Initial Purchasers) may be immediately sold to the
public without registration and without restriction as to the number of
Registrable Securities to be sold, whether pursuant to Rule 144 or otherwise
(the "Registration Period"). Each such Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) shall not contain any 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 not misleading.
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3.2 The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with each Registration Statement
as may be necessary to keep such Registration Statement effective and available
for use at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by such Registration
Statement until the termination of the Registration Period or, if earlier, such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in such Registration Statement. In the event the number of shares
available under a Registration Statement filed pursuant to this Agreement is at
any time insufficient to cover all shares of Common Stock issued or issuable
pursuant to the Warrant or the Securities Purchase Agreement (without regard to
any limitations on exercise contained therein), the Company shall amend, if
permissible, the Registration Statement, or file a new Registration Statement
(on the short form available therefor, if applicable), or both, so as to cover
all of the Warrant Shares issued or issuable upon exercise of the Warrant
(without regard to any limitation on exercise contained therein), in each case,
as soon as practicable, but in any event within five (5) days. The Company shall
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof.
3.3 The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel (a)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2.1, each letter written by or on behalf of the Company to the SEC
or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement (other
than any portion, if any, thereof which contains information for which the
Company has sought confidential treatment), and (b) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned (or to be owned) by such Purchaser.
3.4 The Company shall (a) register and qualify the Registrable
Securities covered by each Registration Statement under securities laws of such
jurisdictions in the United States as each Purchaser who holds (or has the right
to hold) Registrable Securities being offered reasonably requests, (b) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness and availability for use thereof during
the applicable Registration Period, (c) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the applicable Registration Period, and (d) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to (i) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify
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but for this Section 3.4, (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause the Company material
expense or burden, or (v) make any change in its charter or by-laws, which in
each case the board of directors of the Company determines to be contrary to the
best interests of the Company and its stockholders.
3.5 In the event the Purchasers who hold a majority in interest of the
Registrable Securities being offered in an offering pursuant to a Registration
Statement or any amendment or supplement thereto under Section 2.1 or 3.2 hereof
select pursuant to Section 2.2 underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering, but shall not
bear any costs or expenses of the underwriting.
3.6 As soon as practicable after becoming aware of such event, the
Company shall notify (by telephone and also by facsimile and reputable overnight
courier) each Purchaser of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts as soon as
possible (but in any event within five (5) days) to prepare a supplement or
amendment to the Registration Statement (and make all required filings with the
SEC) to correct such untrue statement or omission, and the Company shall
simultaneously (and thereafter as requested) deliver such number of copies of
such supplement or amendment to each Purchaser (or other applicable document) as
such Purchaser may request in writing. Unless such an event is publicly
announced, the Company shall not, without the consent of the Purchaser, give
such Purchaser any material non-public information, but shall inform the
Purchasers that such prospectus includes an untrue statement of a material fact
or omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
3.7 The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable time and the Company shall immediately notify by facsimile
each Purchaser (at the facsimile number for such Purchaser set forth on the
signature page hereto) who holds Registrable Securities (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.
3.8 The Company shall permit counsel designated by each Initial
Purchaser to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
3.9 Intentionally deleted.
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3.10 Intentionally deleted.
3.11 The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) attorneys and accountants retained by any
Purchaser, and (iv) attorneys retained by such underwriters (collectively, the
"Inspectors") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably deemed necessary by each Inspector and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to a Purchaser) of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified in
writing, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required to be disclosed in such Registration Statement to permit Purchaser to
sell under such Registration Statement, (b) the release of such Records is
ordered pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or is otherwise required by applicable law or legal
process or (c) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any other
agreement (to the knowledge of the relevant Purchaser). The Company shall not be
required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and reasonable substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form of
this Section 3.11. Each Purchaser agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit a Purchaser's ability to
sell Registrable Securities in a manner which is consistent with applicable laws
and regulations.
3.12 The Company shall hold in confidence and not make any disclosure
of information concerning a Purchaser provided to the Company excluding any
information provided by Purchaser for use in or in connection with a
Registration Statement unless (a) disclosure of such information is necessary to
comply with federal or state securities laws, (b) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (c) the release of such information is ordered pursuant
to a subpoena or other order from a court or governmental body of competent
jurisdiction or is otherwise required by applicable law or legal process, (d)
such information has been made generally available to the public other than by
disclosure in violation of this or any other agreement (to the knowledge of the
Company), or (e) such Purchaser consents to the form and content of any such
disclosure. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Purchaser is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such Purchaser prior to making such disclosure, and allow the
Purchaser, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
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3.13 From and after each Closing, the Company shall cause the listing
and the continuation of listing of all the Registrable Securities related to
such Closing and required to be covered by a Registration Statement on The
Nasdaq National Market or the New York Stock Exchange, and cause the Registrable
Securities to be quoted or listed on each additional national securities
exchange or quotation system upon which the Class A Common Stock is then listed
or quoted.
3.14 The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the applicable Registration Statement.
3.15 The Company shall cooperate with the Purchasers who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Purchasers may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchasers may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Purchasers whose Registrable
Securities are included in such Registration Statement) an opinion of such
counsel in the form attached hereto as Exhibit 1.
3.16 At the request of any Purchaser, the Company shall promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with a Registration Statement filed pursuant hereto as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
3.17 The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities covered by the
Registration Statement and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation, the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission).
3.18 The Company shall take all such other actions as any Purchaser or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities, but shall not be required to
incur any costs or expenses in connection therewith not otherwise provided
herein to be borne by the Company.
3.19 From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company
(other than Purchasers with respect to Registrable Securities) to include any of
their securities in any Registration Statement or any amendment or supplement
thereto under Section 2.1 or 3.2 hereof without the consent of each of the
Initial Purchasers and the holders of a majority of the Registrable Securities.
Without the consent of
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each of the Initial Purchasers, until the effectiveness of the Registration
Statements contemplated by Section 2.1 hereof, the Company shall not file any
other Registration Statement for the sale of any securities, whether for the
account of the Company or any other person.
3.20 The Registration Statement shall state that it covers such
indeterminate number of additional shares as may be issuable upon exercise of
the Warrants to prevent dilution resulting from stock splits, stock dividends
and other similar transactions.
ARTICLE IV
OBLIGATIONS OF THE PURCHASERS
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In connection with the registration of the Registrable Securities, the
Purchasers shall have the following obligations:
4.1 Each Purchaser shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities. At least
five (5) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Purchaser of the
information the Company requires from each such Purchaser.
4.2 Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statements hereunder, unless such Purchaser has notified the Company in writing
of such Purchaser's election to exclude all of such Purchaser's Registrable
Securities from the Registration Statement.
4.3 Each Purchaser whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant to
such Registration Statement, and each such Purchaser shall use its reasonable
efforts to comply with the applicable prospectus delivery requirements of the
Securities Act in connection with any such sale.
4.4 [Intentionally omitted]
4.5 Each Purchaser agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3.6, such
Purchaser will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Purchaser's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.6 or advice that a supplement or amendment
is not required and, if so directed by the Company, such Purchaser shall deliver
to the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Purchaser's possession
(other than a limited number of permanent file copies), of the prospectus
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covering such Registrable Securities current at the time of receipt of such
notice. Purchaser's obligations under this paragraph shall in no way limit the
Company's obligations under this Agreement or Purchaser's rights or remedies
against the Company with respect to any breach or threatened breach by the
Company of any such obligations.
4.6 Without limiting a Purchaser's rights under Section 2.1 or 3.2
hereof, no Purchaser may participate in any underwritten distribution hereunder
unless such Purchaser (a) agrees to sell such Purchaser's Registrable Securities
on the basis provided in any underwriting agreements in usual and customary form
entered into by the Company pursuant to Section 3.5 hereof, (b) completes and
executes all questionnaires, powers of attorney, custody agreements,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (c) agrees to pay its pro
rata share of all underwriting discounts and commissions and any expenses in
excess of those payable by the Company pursuant to Article V. Without
implication that the contrary would otherwise be true, it is expressly
understood and agreed that no Purchaser shall be required to participate in any
such underwritten distribution.
ARTICLE V
EXPENSES OF REGISTRATION
------------------------
All expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Articles II and III, including, without limitation, all registration, listing
and qualification fees, printers and accounting fees, the fees and disbursements
of counsel for the Company, shall be borne by the Company.
ARTICLE VI
INDEMNIFICATION
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In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify, hold
harmless and defend (a) each Purchaser who holds such Registrable Securities,
(b) each underwriter of Registrable Securities and (c) the directors, officers,
partners, members, employees, agents and persons who control any Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), if any, (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (collectively, together with actions, proceedings or inquiries whether
or not in any court, before any administrative body or by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the
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effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). The
Company shall reimburse each such Indemnified Person, promptly as such expenses
are incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6.1: (x) shall
not apply to an Indemnified Person with respect to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (y) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (z) with respect
to any preliminary prospectus, shall not inure to the benefit of any Indemnified
Person if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, if such corrected prospectus was timely made
available by the Company pursuant to Section 3.3 hereof, and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by a Purchaser pursuant to Article IX.
6.2 In connection with any Registration Statement in which a Purchaser
is participating, to the extent permitted by law, each such Purchaser agrees to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6.1, the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and
persons, if any, who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement, together with its
directors, officers and members, and any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act (such
an "Indemnified Party"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such
Purchaser expressly for use in connection with such Registration Statement; and
such Purchaser will reimburse any legal or other expenses (promptly as such
expenses are incurred and are due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6.2 shall not apply to
amounts paid
11
in settlement of any Claim if such settlement is effected without the prior
written consent of such Purchaser, which consent shall not be unreasonably
withheld; provided, further, however, that a Purchaser shall be liable under
this Agreement (including this Section 6.2 and Article VII) for only that amount
as does not exceed the net proceeds actually received by such Purchaser as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Purchasers pursuant to
Article IX. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.2 with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, and the Indemnified Party failed to utilize such
corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified
Party under this Article VI of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right (at its expense) to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume and continue control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that
such indemnifying party shall diligently pursue such defense and an indemnifying
party shall not be entitled to assume (or continue) such defense if the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party and
the indemnifying party, and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and any such
Indemnified Person or Indemnified Party reasonably determines that there may be
legal defenses available to such Indemnified Person or Indemnified Party which
are different from or in addition to those available to such indemnifying party.
Notwithstanding any assumption of such defense and without limiting any
indemnification obligation provided for in Section 6.1 or 6.2, the Indemnified
Party or Indemnified Persons, as the case may be, shall be entitled to be
represented by counsel (at its own expense if the indemnifying party is
permitted to assume and continue control of the defense and otherwise at the
expense of the indemnifying party) and such counsel shall be entitled to
participate in such defense. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Article VI, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Article VI shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
12
ARTICLE VII
CONTRIBUTION
------------
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article VI to the fullest extent permitted by law; provided, however, that
(i) 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, and (ii)
contribution (together with any indemnification or other obligations under this
Agreement) by any Purchaser of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such Purchaser from the sale of its
Registrable Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
------------------------------
With a view to making available to each Purchaser the benefits of Rule
144, the Company agrees that so long as a Purchaser holds Warrants or any
Registrable Securities, the Company shall:
8.1(a) Not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
8.1(b) File with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the filing and availability of such reports and
other documents is required for the applicable provisions of Rule 144; and
8.2 Furnish to each Purchaser promptly upon written request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Purchaser to sell such securities
pursuant to Rule 144 without registration.
Notwithstanding the foregoing, if the Company is a party to a transaction
following which the holders of the Warrants or Registrable Securities no longer
hold shares of capital stock or securities convertible into shares of capital
stock of the Company, such obligation shall cease with respect to the Company;
provided, however, that if the Shares and the Warrant Shares are converted in
such transaction into shares of capital stock or other equivalent equity
interest of another entity, such entity shall be bound by the provisions of this
Article VIII.
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ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
---------------------------------
The rights of the Purchasers hereunder as to Registrable Securities
transferred by a Purchaser (or represented by Warrants transferred by a
Purchaser), including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be automatically assigned by each
Purchaser to any transferee of all or any portion of the Registrable Securities
if: (a) the Purchaser agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee, (ii) the securities
with respect to which such registration rights are being transferred or assigned
and (iii) the information specified in Section 3.12 to such transferee, (c)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
or applicable state securities laws, and (d) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing for the benefit of the Company to be
bound by all of the provisions contained herein. The rights of a Purchaser
hereunder with respect to any Registrable Securities not transferred (and not
represented by Warrants transferred) shall not be assigned by virtue of the
transfer of other Registrable Securities or transferred Warrants representing
other Registrable Securities.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
--------------------------------
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company, any
Initial Purchaser (but not an Initial Purchaser who no longer owns any
Registrable Securities and who is not affected by such amendment or waiver) and
Purchasers who hold a majority interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Article X shall be binding
upon each Purchaser and the Company. Notwithstanding the foregoing, no amendment
or waiver shall retroactively affect any Purchaser without its consent or
prospectively adversely affect any Purchaser who no longer owns any Warrants,
Registrable Securities without its consent. No amendment or waiver may adversely
affect one or more Purchasers or group of Purchasers vis-a-vis any other
Purchaser or group of Purchasers. Neither Article VI nor Article VII hereof may
be amended or waived in a manner adverse to a Purchaser without its consent.
Notwithstanding anything to the contrary contained in this Article X, no
amendment or waiver shall be applicable to an Initial Purchaser who does not
consent in writing thereto.
14
ARTICLE XI
MISCELLANEOUS
-------------
11.1 A person or entity is deemed to be a holder (or a holder in
interest) of Registrable Securities whenever such person or entity owns of
record such Registrable Securities (or the Warrants which may be exercised for
Registrable Securities). If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities (or Warrants, as the case may be).
11.2 Any notices herein required or permitted to be given shall be in
writing and may be personally served or delivered by courier or by
machine-generated confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
ON Technology Corporation
Waltham Xxxxx
000 Xxxxxx Xxxxxx, Xxxxxxxx 0
Xxxxxxx, XX 00000-0000
Telecopy: (000)000-0000
Attention: President
with a copy to:
Xxxxxxx Xxxxxx & Green, P.C.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopy: (000)000-0000
Attention: Xxxxx Xxxxx, Esq.
and if to any Purchaser, at such address as such Purchaser, shall have provided
in writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
15
11.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the
jurisdiction of the federal courts located in the state of New York and the
state courts of the State of New York located in the County of New York in any
suit or proceeding based on or arising under this Agreement and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in such courts. The Company irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The parties hereto further
agree that service of process upon the parties hereto mailed by first class mail
shall be deemed in every respect effective service of process upon each such
party in any such suit or proceeding. Nothing herein shall affect either party's
right to serve process in any other manner permitted by law. The parties hereto
agree that a final non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
11.5 This Agreement and the Securities Purchase Agreement (including
all schedules and exhibits thereto and all certificates and opinions required
thereby) constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
11.6 Subject to the requirements of Article IX hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto. Notwithstanding anything to the contrary contained
herein, including, without limitation, Article IX (and without compliance
therewith), the rights of a Purchaser hereunder shall be assignable to and
exercisable by a bona fide pledgee of the Registrable Securities in connection
with a Purchaser's margin or brokerage accounts.
11.7 The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
11.9 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
11.10 Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by each Purchaser and shall
16
not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof). The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Purchasers
and that the remedy at law for any such breach may be inadequate.
11.11 The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be allocated pro rata among the Purchasers based on the
number of Registrable Securities held by each Purchaser at the time of such
establishment or increase, as the case may be. In the event a Purchaser shall
sell or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included on a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated
to any person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Purchasers, pro rata based on the number of shares of
Registrable Securities then held by such Purchasers. Without implication that
the contrary would otherwise be true, for purposes of this paragraph, all
Warrants then outstanding shall be assumed exercised for Registrable Securities
(without giving effect to any limitations on exercise contained therein).
11.12 Payment of Cash; Defaults. Whenever the Company is required to
make any cash payment to a Purchaser under this Agreement, such cash payment
shall be due on the date (the "Cash Due Date") that such Purchaser delivers
written notice from the Purchaser to the Company. Such cash payment shall be
made to the Purchaser by the method (by certified or cashier's check or wire
transfer of immediately available funds) elected by such Holder.
11.13 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement.
* * *
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
ON TECHNOLOGY CORPORATION
By: ______________________________
Name: ______________________________
Title: ______________________________
18
PURCHASER:
CASTLE CREEK TECHNOLOGY PARTNERS LLC
BY: Castle Creek Partners, L.L.C.
ITS: Investment Manager
BY: _____________________________
NAME: Xxxx Xxxxxxx
TITLE: Member
Address: 00 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000)000-0000
Copy to:
Altheimer & Xxxx
00 X. Xxxxxx Xxxxx Xxx. 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000)000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
19
PURCHASER:
XXXXXXXX CAPITAL MANAGEMENT, INC.
By: _______________________
Name: Xxxxx Xxxxx
Title: President
Address:
c/o Credit Suisse First Boston
00 Xxxxxxx Xxx., Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Copy to:
c/o Credit Suisse First Boston
000 X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000)000-0000
20
EXHIBIT 1
TO REGISTRATION
RIGHTS AGREEMENT
[Date]
[Name and address
of transfer agent]
RE: ON TECHNOLOGY CORPORATION
Ladies and Gentlemen:
We are counsel to ON Technology Corporation, a Delaware corporation
(the "Company"), and we understand that [Name of Purchaser] (the "Holder") has
purchased from the Company shares of the Company's common stock (the "Common
Stock"). The Common Stock was purchased by the Holder pursuant to a Securities
Purchase Agreement, dated as of December __, 1999, by and among the Company and
the signatories thereto (the "Agreement"). Pursuant to a Registration Rights
Agreement, dated as of December __, 1999, by and among the Company and the
signatories thereto (the "Registration Rights Agreement"), the Company agreed
with the Holder, among other things, to register the Registrable Securities (as
that term is defined in the Registration Rights Agreement) under the Securities
Act of 1933, as amended (the "Securities Act"), upon the terms provided in the
Registration Rights Agreement. In connection with the Company's obligations
under the Registration Rights Agreement, on December __, 1999, the Company filed
a Registration Statement on Form S-3 (File No. 333- __________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities, which names the Holder as a
selling stockholder thereunder.
[Other customary introductory and scope of examination language to be
inserted, in each case as reasonably acceptable to Holders.]
Based on the foregoing, we are of the opinion that the resale of
Registrable Securities have been registered under the Securities Act.
[Other appropriate customary language to be included, in each case as
reasonably acceptable to Holders.]
Very truly yours,
cc: Castle Creek Technology Partners LLC
