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EXHIBIT 10.5(a)
REGISTRATION RIGHTS AGREEMENT
AMONG
INTERLAND, INC.
CREST COMMUNICATIONS PARTNERS L.P.
CREST ENTREPRENEURS FUND L.P.
BOULDER VENTURES III, L.P.
AND
THE OTHER INVESTORS SET FORTH
ON THE SIGNATURE PAGE HERETO
DECEMBER 2, 1999
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TABLE OF CONTENTS
1. REGISTRATION RIGHTS............................................................................1
1.1. Demand Registration Rights of Initiating Holders......................................1
1.1.1. Request........................................................................1
1.1.2. Demand Procedures..............................................................2
1.1.3. Delay by Company...............................................................3
1.1.4. Reduction......................................................................3
1.1.5. Withdrawal.....................................................................4
1.2. Piggyback Registration Rights.........................................................4
1.2.1. Request........................................................................4
1.2.2. Reduction......................................................................5
1.3. Registration on Form S-3..............................................................5
1.4. Registration Procedures...............................................................6
1.5. Holdback Agreement....................................................................8
1.6. Registration Expenses.................................................................9
1.6.1. Holder Expenses...............................................................9
1.6.2. Company Expenses..............................................................9
1.6.3. Indemnity and Contribution....................................................10
1.7. Grant and Transfer of Registration Rights.............................................12
1.8. Information from Holder...............................................................13
1.9. Changes in Common Stock or Series A Preferred.........................................13
1.10 Rule 144 Reporting....................................................................13
2. DEFINITIONS....................................................................................14
3. MISCELLANEOUS..................................................................................15
3.1. Entire Agreement; Amendment...........................................................15
3.2. Waiver................................................................................15
3.3. No Third Party Beneficiaries..........................................................15
3.4. Binding Effect........................................................................16
3.5. Governing Law.........................................................................16
3.6. Notices...............................................................................16
3.7. Execution in Counterparts.............................................................17
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
entered into as of December 2, 1999 by and between Interland, Inc., a Georgia
corporation (the "Company"), Crest Communications Partners L.P., a Delaware
limited partnership, Crest Entrepreneurs Fund L.P., a Delaware limited
partnership (collectively "Crest"), Boulder Ventures III, L.P., a Delaware
limited partnership ("Boulder"), and the other investors set forth on the
signature page hereto (the "Other Investors," and together with Crest and
Boulder, the initial "Holders").
WHEREAS, on the date hereof, the Holders have acquired an
aggregate of 9,174,313 shares of Series A Convertible Participating Preferred
Stock, no par value (the "Series A Preferred"), from the Company pursuant to a
Stock Purchase Agreement among the Company, Crest, Boulder and the Other
Investors (the "Purchase Agreement");
WHEREAS, it is a condition to the obligations of the Holders
under the Purchase Agreement that the Company enter into this Agreement; and
WHEREAS, the Company and the Holders desire to enter into
this Agreement in order to provide the Holders with certain rights with respect
to the registration of the Common Stock of the Company issuable upon conversion
of the Series A Preferred; and
WHEREAS capitalized terms used in this Agreement shall have
the meanings ascribed to them in SECTION 2 hereof.
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
1. REGISTRATION RIGHTS
1.1. DEMAND REGISTRATION RIGHTS OF INITIATING HOLDERS
1.1.1. REQUEST
At any time after the earlier of (i) December 2, 2002 (provided
that the requesting Holders have agreed to convert their shares of Series A
Preferred into Common Stock upon the effective date of any registration
statement filed by the Company pursuant to this SECTION 1.1.1) or (ii) the
closing of the Company's IPO,
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the Initiating Holders may request registration for sale under the Act of all
or part of the Registrable Securities then held by them, provided that such
requested registration relates to a number of shares of Registrable Securities
which represents at least 25% of the total number of shares of Registrable
Securities (or a lesser percentage if the anticipated aggregate offering price
would exceed $5 million), and upon such request the Company will promptly take
the actions specified in SECTION 1.1.2.
1.1.2. DEMAND PROCEDURES
Within ten (10) Business Days after receipt by the Company of
a registration request under SECTION 1.1.1 (which request shall specify the
number of shares proposed to be registered and sold and the manner in which
such sale is proposed to be effected), the Company shall promptly give written
notice to all other Holders of the proposed demand registration, and such other
Holders shall have the right to join in the proposed registration and sale,
upon written request to the Company (which request shall specify the number of
shares proposed to be registered and sold) within five (5) Business Days after
receipt of such notice from the Company. The Company shall thereafter, as
expeditiously as practicable (i) file with the SEC under the Act a registration
statement on the appropriate form concerning all Registrable Securities
specified in the demand request and all Registrable Securities with respect to
which the Company has received the written request from the other Holders and
(ii) use its reasonable efforts to cause the registration statement to be
declared effective. At the request of the Initiating Holders requesting
registration, the Company shall use its reasonable efforts to cause each
offering pursuant to SECTION 1.1.1 to be managed, on a firm commitment basis,
by a recognized regional or national underwriter selected by the Initiating
Holders and approved by the Company, such approval not to be unreasonably
withheld. All holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form. The
Company shall not be obligated to effect more than two registrations requested
by Initiating Holders under SECTION 1.1.1, provided, however, that each such
request shall be deemed satisfied only when a registration statement covering
all Registrable Securities specified in notices received as aforesaid, for sale
in accordance with the method of disposition specified by the Initiating
Holders, has become effective and, if the method of disposition is a firm
commitment underwritten public offering, at least 75% of the Registrable
Securities covered thereby shall have been sold pursuant thereto. Except for
registration statements on Form X-0, X-0 or another form not available for
registering securities for sale to the public, or any successor thereto, the
Company will not, without the consent of the Holders selling a majority of the
Registrable Securities in such offering pursuant to this SECTION 1.1, file with
the SEC any other registration statement with respect to its Common Stock,
whether for its own account or that of other
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stockholders, from the date of receipt of a notice from requesting Holders
pursuant to this SECTION 1.1 until the completion of the period of distribution
of the securities contemplated thereby as provided in SECTION 1.4; provided,
however, that the Company may include securities offered by the Company for its
own account and/or other securities of the Company that are held by
Stockholders other than the Holders in such offering pursuant to this Section
1.1, subject to reduction as provided in Section 1.1.4 of this Agreement.
1.1.3. DELAY BY COMPANY
The Company shall not be required to proceed to effect a
demand registration under the Act pursuant to SECTION 1.1.1 above if (i) the
Company receives a request for registration under SECTION 1.1.1 less than 90
days preceding the anticipated effective date of a proposed underwritten public
offering of securities of the Company approved by the Company's Board of
Directors prior to the Company's receipt of the request; (ii) within 180 days
prior to any such request for registration, a registration of securities of the
Company has been effected in which the Initiating Holders had the right to
participate pursuant to this SECTION 1.1 or SECTION 1.2 hereof; or (iii) the
Board of Directors of the Company reasonably determines in good faith that
effecting such a demand registration at such time would have a material adverse
effect upon a proposed sale of all (or substantially all) of the assets of the
Company, or a merger, share exchange, reorganization, recapitalization, or any
other form of business combination or transaction materially affecting the
capital structure, or equity ownership of the Company, or would otherwise be
seriously detrimental to the Company because the Company was then in the
process of raising capital in the public or private markets; provided, however,
that the Company may only delay a demand registration pursuant to this SECTION
1.1.3 for a period not exceeding 90 days (or until such earlier time as such
transaction is consummated or no longer proposed) and may only defer any such
filing pursuant to this SECTION 1.1.3 once per calendar year. The Company shall
promptly notify in writing the Holders requesting registration of any decision
not to effect any such request for registration pursuant to this SECTION 1.1.3,
which notice shall set forth in reasonable detail the reason for such decision
and shall include an undertaking by the Company promptly to notify such Holders
as soon as a demand registration may be effected.
1.1.4. REDUCTION
If a demand registration is an underwritten registration and
the managing underwriters advise the Company and the Holders participating in
the demand registration in writing that in their opinion the number of shares
of Common Stock requested to be included in such registration exceeds the
number which can be sold in such offering, then the amount of such shares that
may be
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included in such registration shall first be allocated pro rata among all of
the Holders joining in the registration under this SECTION 1.1 in proportion to
the number of shares of Registrable Securities owned by them and then to the
Company or any other party seeking to participate in the offering.
1.1.5. WITHDRAWAL
Holders participating in any demand registration pursuant to
this SECTION 1.1 may withdraw at any time before a registration statement is
declared effective, and the Company may withdraw such registration statement if
no Registrable Securities are then proposed to be included (and if withdrawn by
the Company the Holders shall not be deemed to have requested a demand
registration for purposes of SECTION 1.1.1 hereof). If the Company withdraws a
registration statement under this SECTION 1.1.5 in respect of a registration
for which the Company would otherwise be required to pay expenses under SECTION
1.6.2 hereof, the Holders that shall have withdrawn shall reimburse the Company
for all expenses of such registration in proportion to the number of shares
each such withdrawing Holder shall have requested to be registered.
Notwithstanding the foregoing, however, if at the time of the withdrawal, the
Holders have learned of a material adverse change in the condition, business or
prospects of the Company from that known to the Holders at the time of their
request, then the Holders shall not be required to pay any of said registration
expenses and the Company shall be deemed not to have effected a registration
pursuant to SECTION 1.1.2 of this Agreement.
1.2. PIGGYBACK REGISTRATION RIGHTS
1.2.1. REQUEST
If at any time or times after the date of this Agreement the
Company proposes to make a registered public offering of any of its securities
under the Act (whether to be sold by it or by one or more selling
stockholders), other than an offering pursuant to a demand registration under
SECTION 1.1.1 or SECTION 1.3 hereof or an offering registered on Form S-8 or
Form S-4, or successor forms relating to employee stock plans and business
combinations, the Company shall, not less than 20 days prior to the proposed
filing date of the registration form, give written notice of the proposed
registration to all Holders specifying in reasonable detail the proposed
transaction to be covered by the registration statement, and at the written
request of any Holder delivered to the Company within 20 days after giving such
notice, shall include in such registration and offering, and in any
underwriting of such offering, all Registrable Securities as may have been
designated in the Holder's request. The Company shall have no obligation to
include shares of Common Stock owned by any Holder in a registration statement
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pursuant to this SECTION 1.2, unless and until such Holder (a) in connection
with any underwritten offering, agrees to enter into an underwriting agreement,
a custody agreement and power of attorney and any other customary documents
required in an underwritten offering all in customary form and containing
customary provisions (but not requiring any Holder to provide indemnification
or contribution more extensive than is set forth in SECTION 1.6.3 hereof) and
(b) shall have furnished the Company with all information and statements about
or pertaining to such Holder in such reasonable detail and on such timely basis
as is reasonably deemed by the Company to be legally required with respect to
the preparation of the registration statement.
1.2.2. REDUCTION
If a registration in which any Holder has the right to
participate pursuant to this SECTION 1.2 is an underwritten registration, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering, the Company shall include in
such registration (i) first, the securities of the Company proposed to be sold
by the Company, (ii) second, the shares proposed to be sold by Holders
exercising rights under SECTION 1.2.1, allocated pro rata among such Holders in
proportion to the number of Registrable Securities owned by them and (iii)
third, by any other stockholders proposing to sell shares of Common Stock
pursuant to such registration.
1.3. REGISTRATION ON FORM S-3
Subject to the limitations set forth in SECTION 1.1.3, if at
any time the Company is eligible to use Form S-3 (or any successor form) for
secondary sales any Holder may request (by written notice to the Company
stating the number of Registrable Securities proposed to be sold and the
intended method of disposition) that the Company file a registration statement
on Form S-3 (or any successor form) for a public sale of all or any portion of
the Registrable Securities beneficially owned by it (which may include a
"shelf" registration under Rule 415 under the Act, or any successor rule),
provided that the reasonably anticipated aggregate price to the public of such
Registrable Securities shall be at least $2.5 million. Upon receiving such
request, the Company shall use its reasonable best efforts to promptly file a
registration statement on Form S-3 (or any successor form) to register under
the Act for public sale in accordance with the method of disposition specified
in such request, the number of shares of Registrable Securities specified in
such request and shall otherwise carry out the actions specified in SECTION
1.1.2 and 1.4. The Company shall not be obligated to file more than two
registration statements on Form S-3 (or any successor form) pursuant to this
SECTION 1.3 within any eighteen month period.
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1.4. REGISTRATION PROCEDURES
(a) Whenever any Holder has requested that any shares of
Common Stock be registered pursuant to SECTIONS 1.1, 1.2 or 1.3 hereof, the
Company shall, as expeditiously as reasonably possible:
(1) prepare and file with the SEC a registration
statement with respect to such shares and use its reasonable best efforts to
cause such registration statement to become effective as soon as reasonably
practicable thereafter (provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company shall furnish
counsel for such Holder with copies of all such documents proposed to be filed)
and to cause such registration statement to comply as to form and content in
all material respects with the SEC's forms, rules and regulations;
(2) prepare and file with the SEC such amendments and
supplements to such registration statement and prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than 120 days (2 years in the case of a registration
pursuant to SECTION 1.3 hereof) or until such Holder has completed the
distribution described in such registration statement, whichever occurs first;
(3) furnish to such Holder such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), and such other documents as such Holder may reasonably request;
(4) use its reasonable efforts to register or qualify
such shares under such other securities or blue sky laws of such jurisdictions
as such Holder requests (and to maintain such registrations and qualifications
effective for a period of 120 days (2 years in the case of a registration
pursuant to SECTION 1.3 hereof) or until such Holder has completed the
distribution of such shares, whichever occurs first), and to do any and all
other acts and things which may be necessary or advisable to enable such Holder
to consummate the disposition in such jurisdictions of such shares (provided
that the Company will not be required to (i) qualify generally to do business
in any jurisdiction where it would not be required but for this subsection (4),
(ii) subject itself to taxation in any such jurisdiction, or (iii) file any
general consent to service of process in any such jurisdiction); provided that,
notwithstanding anything to the contrary in this Agreement with respect to the
bearing of expenses, if any such jurisdiction shall require that expenses
incurred in connection with the qualification of such shares in that
jurisdiction be borne in part
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or full by such Holder, then such Holder shall pay such expenses to the extent
required by such jurisdiction;
(5) notify such Holder, at any time when a prospectus
relating thereto is required to be delivered under the Act within the period
that the Company is required to keep the registration statement effective, of
the happening of any event as a result of which the prospectus included in any
such registration statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not misleading, and
promptly prepare, file and furnish to the Holder a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
shares, 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, in light of
the circumstances then existing, necessary to make the statements therein not
misleading;
(6) cause all such shares to be listed on securities
exchanges, if any, on which similar securities issued by the Company are then
listed;
(7) provide a transfer agent and registrar for all such
shares not later than the effective date of such registration statement;
(8) enter into such customary agreements and take all
such other actions as such Holder reasonably requests (and subject to its
reasonable approval) in order to expedite or facilitate the disposition of such
shares;
(9) make available for inspection by such Holder, by any
underwriter participating in any distribution pursuant to such registration
statement, and by any attorney, accountant or other agent retained by such
Holder or by any such underwriter, all financial and other records, pertinent
corporate documents, and properties (other than confidential intellectual
property) of the Company;
(10) if the offering is underwritten and at the request
of any seller of Registrable Securities, use its best efforts to furnish on the
date that Registrable Securities are delivered to the underwriters for sale
pursuant to such registration: (i) an opinion dated such date of counsel
representing the Company for the purposes of such registration, addressed to
the underwriters and to such seller, stating that such registration statement
has become effective under the Act and that (A) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Act, (B) the registration statement, the related
prospectus and each amendment or supplement thereof comply as to form in all
material respects with the requirements of the Act (except that such counsel
need
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not express any opinion as to financial statements or other financial or
statistical data contained therein), (C) to such other customary matters as
reasonably may be requested by counsel for the underwriters or by such seller
or its counsel and (D) (not an opinion but as a negative assurance) that to the
best knowledge of such counsel, such registration statement does not contain a
material misrepresentation or omission to state a material fact necessary to
make the statements therein not misleading; and (ii) a letter dated such date
from the independent public accountants retained by the Company, addressed to
the underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Act and that, in the opinion of such
accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Act, and such letter shall additionally cover
such other financial matters (including information as to the period ending no
more than five business days prior to the date of such letter) with respect to
such registration as such underwriters reasonably may request; and
(11) in connection with an underwritten offering pursuant
to a registration statement filed pursuant to SECTION 1.1 hereof, enter into an
underwriting agreement in customary form and containing customary provisions,
including provisions for indemnification of underwriters and contribution, if
so requested by any underwriter.
(b) In an underwritten offering pursuant to SECTIONS
1.1, 1.2 or 1.3, the Holders shall be entitled to sell the Series A Preferred
to the underwriters for conversion and sale of the shares of Common Stock
issued upon conversion thereof.
1.5. HOLDBACK AGREEMENT
(a) Notwithstanding anything in this Agreement to the
contrary, if after any registration statement to which the rights hereunder
apply becomes effective (and prior to completion of any sales thereunder), the
Board of Directors determines in good faith that the failure of the Company to
(i) suspend sales of stock under the registration statement or (ii) amend or
supplement the registration statement, would have a material adverse effect on
the Company, the Company shall so notify each Holder participating in such
registration and each Holder shall suspend any further sales under such
registration statement until the Company advises the Holder that the
registration statement has been amended or that conditions no longer exist
which would require such suspension, provided that the Company may impose any
such suspension for no more than 30 days and no more than 2 times during any
twelve month period.
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(b) In the event that the Company effects a registration
of any securities under the Act in an underwritten public offering, each Holder
agrees not to effect any sale, transfer, disposition or distribution, including
any sale pursuant to Rule 144 under the Act, of any Equity Securities (except
as part of such offering) during the 180-day period commencing with the
effective date of the registration statement for the IPO and, for so long as
each Holder owns 5% or more of the Company's outstanding voting securities, the
90-day period commencing with the effective date of the registration statement
for any subsequent public offering, provided that all officers, directors and
holders of 5% or more of the Company's outstanding voting securities enter into
agreements providing for similar restrictions on sales.
1.6. REGISTRATION EXPENSES
1.6.1. HOLDER EXPENSES
If, pursuant to SECTIONS 1.1, 1.2 or 1.3 hereof, Registrable
Securities are included in a registration statement, then the Holder thereof
shall pay all transfer taxes, if any, relating to the sale of its shares, and
any underwriting discounts or commissions or the equivalent thereof applicable
to the sale of its shares.
1.6.2. COMPANY EXPENSES
Except for the fees and expenses specified in SECTION 1.6.1
hereof and except as provided below in this SECTION 1.6.2, the Company shall
pay all expenses incident to the registration of shares by the Company and any
Holders pursuant to SECTIONS 1.1, 1.2 or 1.3 hereof, and to the Company's
performance of or compliance with this Agreement, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, underwriting discounts, fees and expenses
(other than any Holder's portion of any underwriting discounts or commissions
or the equivalent thereof), printing expenses, messenger and delivery expenses,
and fees and expenses of counsel for the Company and a single counsel for all
Holders selling shares (the fees of such counsel not to exceed $20,000 and not
to exceed $5,000 in connection with a shelf registration pursuant to Section
1.3 hereof; provided that in the case of registrations of shares pursuant to
Section 1.2 hereof, the Company shall not be responsible for counsel fees of
more than $50,000 in the aggregate for all such registrations pursuant to
Section 1.2 hereof) and all independent certified public accountants and other
persons retained by the Company.
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1.6.3. INDEMNITY AND CONTRIBUTION
(a) In the event that any shares owned by a Holder are
proposed to be offered by means of a registration statement pursuant to
SECTIONS 1.1, 1.2 or 1.3 hereof, to the extent permitted by law, the Company
agrees to indemnify and hold harmless such Holder, any underwriter
participating in such offering, each officer, partner, manager and director of
such person, each person, if any, who controls or may control such Holder or
underwriter within the meaning of the Act and each representative of any Holder
serving on the Board of Directors of the Company (such Holder or underwriter,
its officers, partners, managers, directors and representatives, and any such
other persons being hereinafter referred to individually as an "Investor
Indemnified Person" and collectively as "Investor Indemnified Persons") from
and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs, and expenses, including, without
limitation, interest, penalties, and attorneys' fees and disbursements,
asserted against, resulting to, imposed upon or incurred by such Investor
Indemnified Person, directly or indirectly (hereinafter referred to in this
SECTION 1.6.3 in the singular as a "claim" and in the plural as "claims"),
based upon, arising out of or resulting from any breach of representation or
warranty made by the Company in any underwriting agreement or any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement or any omission or alleged omission to state therein a
material fact necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading, except insofar as
such claim is based upon, arises out of or results from information furnished
to the Company in writing by such Investor Indemnified Person for use in
connection with the registration statement.
(b) In the event that any shares owned by a Holder are
proposed to be offered by means of a registration statement pursuant to
SECTIONS 1.1, 1.2 OR 1.3 hereof, to the extent permitted by law, each such
Holder agrees, severally and not jointly, to indemnify and hold harmless the
Company, each officer of the Company who signs the Registration Statement, each
director of the Company, any underwriter participating in such offering, and
each person, if any, who controls or may control the Company or such
underwriter within the meaning of the Act (the Company, such officers and
directors of the Company, such underwriter, and any such other persons also
being hereinafter referred to individually as a "Company Indemnified Person"
and collectively as "Company Indemnified Persons") from and against all claims
based upon, arising out of or resulting from any untrue statement or alleged
untrue statement of a material fact contained in the registration statement or
any omission or alleged omission to state therein a material fact necessary in
order to make the statement made therein, in the light of the circumstances
under which they were made, not misleading, but only to the extent that such
claim is based upon, arises out of or results from information furnished to
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the Company in writing by such Holder explicitly for use in connection with the
registration statement; provided, however, that a Holder shall be under no
obligation to indemnify or hold harmless any Company Indemnified Persons with
respect to any amount in excess of the net cash proceeds paid to such Holder in
connection with any sales of securities effected under such registration
statement.
(c) The indemnification provisions set forth herein
shall be in addition to any liability the Company or any Holder may otherwise
have to the Investor Indemnified Persons or Company Indemnified Persons. The
Company Indemnified Persons and the Investor Indemnified Persons are
hereinafter referred to as Indemnified Persons. Promptly after receiving notice
of any claim in respect of which an Indemnified Person may seek indemnification
under this SECTION 1.6.3, such Indemnified Person shall submit written notice
thereof to either the Company or the Holders, as the case may be (sometimes
being hereinafter referred to as an "Indemnifying Person"). The omission of the
Indemnified Person so to notify the Indemnifying Person of any such claim shall
not relieve the Indemnifying Person from any liability it may have hereunder
except to the extent that (a) such liability was caused or increased by such
omission, or (b) the ability of the Indemnifying Person to reduce such
liability was materially adversely affected by such omission. In addition, the
omission of the Indemnified Person so to notify the Indemnifying Person of any
such claim shall not relieve the Indemnifying Person from any liability it may
have otherwise than hereunder. The Indemnifying Person shall have the right to
undertake, by counsel or representatives of its own choosing, the defense,
compromise or settlement (without admitting liability of the Indemnified
Person) of any such claim asserted, such defense, compromise or settlement to
be undertaken at the expense and risk of the Indemnifying Person, and the
Indemnified Person shall have the right to engage separate counsel, at its own
expense, whom counsel for the Indemnifying Person shall keep informed and
consult with in a reasonable manner; provided, however, if the defendants in
any such action include both the Indemnified Person and the Indemnifying Person
and the Indemnified Person shall have reasonably concluded that there may be a
conflict between the positions of the Indemnifying Person and the Indemnified
Person in conducting the defense of any such action or that there may be legal
defenses available to it and/or other Indemnified Persons which are different
from or additional to those available to the Indemnifying Person, the
Indemnified Person shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such action
on behalf of the Indemnified Person at the expense of the Indemnifying Person.
In the event the Indemnifying Person shall elect not to undertake such defense
by its own representatives, the Indemnifying Person shall give prompt written
notice of such election to the Indemnified Person, and the Indemnified Person
shall undertake the defense, compromise or settlement (without admitting
liability of the Indemnified Person) thereof on behalf of and for the account
and risk of the Indemnifying Person by
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counsel or other representatives designated by the Indemnified Person.
Notwithstanding the foregoing, no Indemnifying Person shall be obligated
hereunder with respect to amounts paid in settlement of any claim if such
settlement is effected without the consent of such Indemnifying Person (such
consent not to be unreasonably withheld).
(d) If the indemnification provided for in this SECTION
1.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Person, then the Indemnifying Person, in lieu of indemnifying such
Indemnified Person hereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of any losses or claims in such proportion
as is appropriate to reflect the relative fault of the Indemnified Person on
the one hand and the Indemnifying Person on the other in connection with the
statements or omissions that resulted in such losses or claims as well as any
other relevant equitable considerations. The relative fault of the Indemnified
Person and the Indemnifying Person 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 Indemnifying Person or by the Indemnified Person
and the parties' relative intent, knowledge and access to information and
opportunity to correct or prevent such statement or omission. In no event will
the liability of any Holder for contribution exceed the net proceeds received
by such Holder in any sale of securities to which such liability relates.
1.7. GRANT AND TRANSFER OF REGISTRATION RIGHTS
Except for registration rights granted by the Company after
the date hereof (a) in connection with business acquisitions and which relate
solely to registrations on Form S-3 or (b) which are subordinate to the rights
of the Holders hereunder, the Company shall not grant any registration rights
to any other person or entity without the prior written consent of the
Initiating Holders, which consent shall not be unreasonably withheld or
delayed. Holders shall have the right to transfer or assign the rights
contained in this Agreement (i) to any limited partner or affiliate of a Holder
in connection with the transfer of any Registrable Securities or (ii) to any
third party transferee acquiring at least 20% of the Registrable Securities
issued to the Holder as of the date hereof or the shares of Common Stock issued
upon conversion of such Registrable Securities; provided: (a) the Company is,
within thirty (30) days after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement; and (c) such assignment shall be
effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the Act.
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1.8. INFORMATION FROM HOLDER
It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this SECTION 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
1.9. CHANGES IN COMMON STOCK OR SERIES A PREFERRED
If there is any change in the Common Stock or the Series A
Preferred by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made
in the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock or the Series A Preferred as so
changed.
1.10. RULE 144 REPORTING
With a view to making available to the Holders the benefits
of certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Act, at all times after the effective date of the
first registration under the Act filed by the Company for an offering of its
securities to the general public;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the Act and the Exchange Act;
and
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
of the Act, and of the Exchange Act (at any time after it has become subject to
such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a Holder may
reasonably request in
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availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
2. DEFINITIONS
The capitalized terms contained in this Agreement shall have
the following meanings unless otherwise specifically defined:
"Act" shall mean the Securities Act of 1933, as amended.
"Agreement" shall mean this Registration Rights Agreement.
"Business Day" shall mean Monday through Friday and shall
exclude any federal or bank holidays observed in New York City.
"Company" shall mean Interland, Inc., a Georgia corporation,
or any successor thereto.
"Common Stock" shall mean the common stock of the Company, no
par value per share.
"Equity Securities" shall mean the Common Stock, the Series A
Preferred and any warrants or other rights to subscribe for or to purchase, or
any options for the purchase of, Common Stock, any stock or security
convertible into or exchangeable for Common Stock or any other stock, security
or interest in the Company whether or not convertible into or exchangeable for
Common Stock.
"Holders" shall mean Crest, Boulder, the Other Investors and
any other person or entity that is a valid transferee of the rights granted
hereunder pursuant to SECTION 1.7 hereof.
"Indemnified Person" shall have the meaning ascribed to that
term in SECTION 1.6.3.
"Indemnifying Person" shall have the meaning ascribed to that
term in SECTION 1.6.3.
"Initiating Holders" shall mean Holders who in the aggregate
beneficially own not less than 50% of the Registrable Securities.
"IPO" shall mean the initial public offering of the Company's
Equity Securities registered under the Act.
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"Registrable Securities" shall mean (i) shares of Common
Stock issued or issuable upon conversion of the Series A Preferred and (ii) any
equity securities issued as a distribution with respect to or in exchange for
or in replacement for any of the shares referred to in clause (i); provided,
however, that Registrable Securities shall not include any securities that have
been previously sold pursuant to a registration statement filed under the Act
or under Rule 144 promulgated under the Act, or which have otherwise been
transferred in a transaction in which the transferor's rights under this
Agreement are not assigned or are not subject to transfer restrictions under
the Act or applicable state securities laws.
"SEC" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Act.
3. MISCELLANEOUS
3.1. ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the entire agreement among the
parties hereto with respect to the matters provided for herein, and it
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein. This Agreement may not be
amended without the written consent of the Company and the Initiating Holders.
3.2. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any
other instruments given in connection with or pursuant to this Agreement shall
impair any such right, power or privilege or be construed as a waiver of any
default or any acquiescence therein. No single or partial exercise of any such
right, power or privilege shall preclude the further exercise of such right,
power or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and
signed by the party against whom enforcement of such waiver is sought and then
only to the extent expressly specified therein.
3.3. NO THIRD PARTY BENEFICIARIES
Except to the extent that the rights hereunder are assigned
in accordance with SECTION 1.7, it is the explicit intention of the parties
hereto that no person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants, undertakings and agreements set
forth in this Agreement shall
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be solely for the benefit of, and shall be enforceable only by, the parties
hereto or their respective successors, heirs, executors, administrators, legal
representatives and permitted assigns.
3.4. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators, legal representatives and permitted assigns.
3.5. GOVERNING LAW
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of Delaware (excluding the choice of law
rules thereof).
3.6. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be
hand-delivered, sent by overnight courier service or mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by telecopy, addressed as follows:
(i) If to the Company:
Interland, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxx Xxxxxxxxxx
in each case with a copy (which shall not constitute
notice) to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
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(ii) If to Crest:
Crest Communications Holdings LLC
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxxx
If to Boulder:
Boulder Ventures Ltd.
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxx Xxxxx, XX 00000
Telecopy No: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
If to the Other Investors, then to the names and
addresses set forth on the books and records of the
Company
in each case with a copy (which shall not constitute
notice) to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request, or communication which shall be
hand-delivered, mailed, transmitted or telecopied in the manner described
above, shall be deemed sufficiently given, served, sent, received or delivered
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, or the answerback being deemed
conclusive, but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
3.7. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall
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collectively constitute a single agreement. It shall not be necessary in making
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Registration Rights Agreement to be duly
executed on their behalf, as of the day and year first hereinabove set forth.
INTERLAND, INC.
By: /s/ Xxx Xxxxxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxxxxx
Title: President and Chief Executive
Officer
THE HOLDERS
CREST COMMUNICATIONS
PARTNERS L.P.
By: Crest Communications Holdings LLC
Its: Authorized Representative
By: /s/ Xxxxx X. Xxxxxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Director
CREST ENTREPRENEURS FUND
L.P.
By: Crest Communications Holdings LLC
Its: Authorized Representative
By: /s/ Xxxxx X. Xxxxxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Director
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BOULDER VENTURES III, L.P.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Partner
BANCBOSTON VENTURES INC.
By: /s/ M. Xxxxx XxXxxxxxx
-----------------------------------------
Name: M. Xxxxx XxXxxxxxx
Title: Vice President
PRIVATE EQUITY CO-INVEST LTD.
By: VBTC Management, Ltd.
Its: Sole Director
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman
BOULDER VENTURES III (ANNEX),
L.P.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Partner
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