Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
COREL CORPORATION
AND THE
STOCKHOLDERS
NAMED HEREIN
DATED AS OF
_______, 200[6]
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS................................................ 1
ARTICLE II REGISTRATION RIGHTS........................................ 5
ARTICLE III REPRESENTATIONS, WARRANTIES AND AGREEMENTS................. 15
ARTICLE IV INDEMNIFICATION AND CONTRIBUTION........................... 17
ARTICLE V MISCELLANEOUS.............................................. 00
-x-
XXXXXXXXXXXX RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
_____, 200[6], is entered into by and among Corel Corporation, a Canadian
corporation (the "Company"), Vector Capital Partners II International, Ltd. and
Vector CC Holdings SRL (the "Demand Holders") and the persons listed on Annex A
hereto (the "Piggyback Holders," and together with the Demand Holders, the
"Stockholders"))
RECITALS
WHEREAS, the Company is offering to sell its common shares in an
initial public offering ("IPO") registered under the Securities Act of 1933, as
amended, pursuant to a registration statement on Form F-1, File No. 333-_____
(the "IPO Registration Statement") in the United States and pursuant to a long
form prospectus, including any amendments or supplements thereto, in the English
and French languages, in Canada (the "Canadian IPO Prospectus");
WHEREAS, in connection with the IPO the Company intends to effect a
_____ for-one reverse stock split (the "Reverse Split") and issue common shares
to one or more of the Demand Holders (or their designated Affiliates) as
consideration for the Company's acquisition (the "Acquisition") of Cayman
Limited Holdco, a holding company that owns WinZip, formed in the Cayman
Islands;
WHEREAS, the Demand Holders will own _____ common shares of the
Company immediately prior to the initial closing of the IPO, after giving effect
to the Reverse Split and the Acquisition, (the "Demand Shares");
WHEREAS, the Piggyback Holders will collectively own _____ common
shares of the Company immediately prior to the initial closing of the IPO, after
giving effect to the Reverse Split (the "Piggyback Shares" and, together with
the Demand Shares, the "Shares");
WHEREAS, the Stockholders have certain registration rights with
respect to the Shares currently owned by them, which are set forth in Section
2.5 and Schedule B of the Amended and Restated Minority Shareholders Agreement
dated as of _____ by and among the Company, the Stockholders and the trustee
("Existing Registration Rights"); and
WHEREAS, in contemplation of the IPO, the parties have agreed to
terminate and replace the Existing Registration Rights with the respective
rights and obligations set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
The following terms, as used in this Agreement, shall have the
following meanings:
"Affiliate" shall mean, with respect to a specified Person, any other
Person, other than the Company or any of its Subsidiaries, that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with the specified Person. For purposes of this definition,
the term "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") shall mean, with
respect to any Person, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Blackout Periods" shall have the meaning set forth in Section
2.01(a).
"Canadian Prospectus" shall mean a prospectus (including a short form
prospectus) prepared in accordance with applicable Canadian Securities Laws for
the purpose of qualifying securities for distribution on any province or
territory of Canada
"Canadian IPO Prospectus" shall have the meaning set forth in the
recitals.
"Canadian Securities Laws" shall mean statutes and regulations
applicable to the trading of securities in any province or territory of Canada,
including applicable rules, policy statements and blanket rulings and orders
promulgated by Canadian securities regulatory authorities.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Shares" shall have the meaning set forth in the recitals.
"Company" shall have the meaning set forth in the preamble.
"Demand Holder" shall have the meaning set forth in the preamble,
provided, the term "Demand Holder" shall also include any Permitted Transferee
of a Demand Holder that holds Registrable Securities with a fair market value of
at least $[500,000].
"Demand Request" shall have the meaning set forth in Section 2.01(a).
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
-2-
"Existing Registration Rights" shall have the meaning set forth in the
preamble.
"IPO" shall have the meaning set forth in the recitals.
"IPO Date" shall mean the date of the first closing of the initial
sale of Common Shares in an initial public offering.
"IPO Participants shall have the meaning set forth in Section 2.04(b).
"IPO Registration Statement" shall have the meaning set forth in the
recitals.
"Maximum Number" shall have the meaning set forth in Section 2.01(b).
"Other Securities" shall have the meaning set forth in the definition
of Registrable Securities.
"Piggyback Holder" shall have the meaning set forth in the preamble,
provided, the term "Piggyback Holder" shall also include any Permitted
Transferee of a Piggyback Holder that holds Registrable Securities.
"Permitted Transferees" shall mean, with respect to any Holder, such
Holder's Affiliates.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, joint-stock company, association,
unincorporated organization, trust or other entity, including any government or
any political subdivision, agency or instrumentality thereof.
"Preliminary Prospectus" shall mean any preliminary prospectus that
may be included in any Registration Statement.
"Prospectus" or "prospectus" shall mean the prospectus included in any
registration statement filed under the Securities Act or filed pursuant to
Canadian Securities Laws (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act or the Canadian Securities Law equivalent thereof), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
registration statement, and by all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Public Offering" shall mean the offer of Common Shares on a broadly
distributed basis in the United States and/or Canada, not limited to
sophisticated investors, pursuant to a firm-commitment or best-efforts
underwriting arrangement.
-3-
"Registrable Securities" shall mean all or any portion of the Common
Shares owned by any Stockholder from time to time during the term of this
Agreement. As to any particular Registrable Securities, such Common Shares shall
cease to be Registrable Securities when: (i) a registration statement with
respect to the sale of such Common Shares shall have become effective under the
Securities Act or when a prospectus has been receipted under applicable Canadian
Securities Laws and such Common Shares shall have been disposed of under such
registration statement or pursuant to such Prospectus, (ii) such Common Shares
shall have been sold pursuant to Rule 144 or equivalent provisions under
Canadian Securities Laws, as applicable, (iii) such securities shall have
otherwise been transferred or disposed of, and subsequent transfer or
disposition of such Common Shares shall not require their registration or
qualification under the Securities Act, Canadian Securities Laws or any state,
territorial or provincial securities laws or similar laws then in force or (iv)
such Common Shares shall have been repurchased by the Company or otherwise shall
cease to be outstanding. If as a result of any reclassification, stock split,
stock dividend, bonus issue, business combination, exchange offer or other
transaction or event, any capital stock, evidences of indebtedness, warrants,
options, rights or other securities (collectively, "Other Securities") are
issued or transferred to any Stockholder in respect of Registrable Securities
held by such holder, references herein to Registrable Securities, Shares and
Common Shares, shall, as the context requires, be deemed to include such Other
Securities.
"Registration Expenses" shall mean any and all expenses incident to
the performance of or compliance with any registration or marketing of
securities pursuant to Article 2, including: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with this
Agreement and the performance of the Company's obligations hereunder (including
the expenses of any annual audit letters and "cold comfort" letters required or
incidental to the performance of such obligations); (ii) all expenses, including
filing fees, in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to any underwriters and dealers; (iii) the cost
of printing and producing any agreements among underwriters, underwriting
agreements, selling agreements and any other documents in connection with the
offering, sale or delivery of the securities to be disposed of; (iv) all
expenses in connection with the qualification of the securities to be disposed
of for offering and sale under provincial, territorial or state securities laws,
including the fees and disbursements of counsel for the underwriters or the
Stockholders in connection with such qualification and in connection with any
blue sky and legal investment surveys, including the cost of printing and
producing any such blue sky or legal investment surveys; (v) the filing and
legal fees incident to securing any required review by the National Association
of Securities Dealers, Inc. and/or Canadian securities regulatory authorities;
(vi) transfer agents' and registrars' fees and expenses and the fees and
expenses of any other agent or trustee appointed in connection with such
offering; (vii) all security engraving and security printing expenses; (viii)
all fees and expenses payable in connection with the listing of the securities
on any securities exchange or automated inter-dealer quotation system; (ix) any
other fees and disbursements of underwriters customarily paid by the issuers of
securities, but excluding
-4-
underwriting discounts and commissions and transfer taxes, if any; (x) the costs
and expenses of the Company and its officers relating to analyst or investor
presentations or any "road show" undertaken in connection with the registration
and/or marketing of any Registrable Securities; and (xi) other reasonable
out-of-pocket costs, fees and expenses, including the fees and expenses of one
outside legal counsel retained by the Stockholders.
"register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement of the
Company under the Securities Act and the effectiveness of such registration
statement. In addition, unless inconsistent with the context: (i) the term
"registration" and any reference to the act of registering include the
qualification under Canadian Securities Laws of a Canadian Prospectus in respect
of a distribution of the Registrable Securities; the term "registered" as
applied to the Registrable Securities, includes a distribution of Registrable
Securities so qualified; the term "registration statement" includes a Canadian
Prospectus; (iv) any reference to a registration statement having become
effective, or similar references, shall include a Canadian Prospectus for which
a final receipt has been obtained from the relevant Canadian securities
regulatory authorities; and (v) the provisions of this Agreement shall be
applied to any proposed distribution of securities hereunder in any province or
territory of Canada or to which the prospectus requirements under any Canadian
Securities Laws shall otherwise apply.
"Rule 144" shall mean Rule 144 (or any successor provisions) under the
Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous basis
pursuant to Rule 415 (or any successor rule to similar effect) under the
Securities Act.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended, including all rules and regulations thereunder.
"Selling Stockholder" shall mean a Stockholder included in a relevant
Registration Statement.
"Stockholder" shall have the meaning set forth in the preamble,
provided, the term "Stockholder" shall also include any Permitted Transferee of
a Stockholder that holds Registrable Securities from time to time.
ARTICLE II
REGISTRATION RIGHTS
Section 2.01
(a) Demand Rights. At any time, and from time to time, on or after the
IPO Date, a Demand Holder shall have the right to require the Company to effect
the registration under the Securities Act and/or applicable Canadian Securities
Laws for a Public Offering of all or part of such Demand Holder's Registrable
Securities (a "Demand Registration"), by delivering to the Company written
notice naming, if
-5-
applicable, the Demand Holders whose Registrable Securities are to be included
in such registration (collectively, the "Demanding Holders"), specifying the
number of Registrable Securities to be included in such registration and the
intended method of distribution thereof (which requested method of disposition
may be a Rule 415 Offering and/or the Canadian Securities Law equivalent
thereof, including National instrument 44-102) (the "Demand Request"). Upon
receipt of such Demand Request, the Company shall comply with Section 2.05.
(b) Limitations and Conditions. The Company's obligations pursuant to
Section 2.01(a) above are subject to the following limitations and conditions:
(i) the Company shall not be obligated to fulfill the
requirements or effect or maintain a registration referred to therein (A)
during any period of time (not to exceed ninety (90) days in the aggregate
with respect to each request) when the Company has determined to proceed
with a Public Offering for its own account and, in the good faith judgment
of the managing underwriter thereof, the fulfillment of such requirements
or such filing would have an adverse effect on such Public Offering, (B)
during any period of time (not to exceed sixty (60) days with respect to
each request) when the Company is in possession of material non-public
information that the board of directors of the Company has in its good
faith judgment determined could materially and adversely affect a material
business situation, financing transaction or negotiation affecting the
Company, (C) during the 90-day period following the effectiveness of any
previous registration statement or (D) during the 180-day period following
the effectiveness of the IPO Registration Statement, except, in the case of
clause (D) hereof, as permitted under Section 2.4 hereof or with the prior
written consent of Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx")(the
periods of time referred to in clauses (A), (B), (C) and (D) hereof being
hereinafter referred to as "Blackout Periods"); provided that the aggregate
period of time during which the Company shall be relieved from its
obligation to effect a registration pursuant to Section 2.01(b)(i), shall
in no event, except in the case of clause (D), exceed ninety (90)
consecutive days with respect to each request; provided, further, that, in
the case of a Blackout Period pursuant to clause (A) hereof, the Blackout
Period shall earlier terminate upon the completion or abandonment of the
relevant Public Offering; provided, further, that in the case of a Blackout
Period pursuant to clause (B) hereof, the Blackout Period shall commence
upon the delivery of notice to the Stockholders and shall terminate upon
the earlier of: (i) public disclosure by the Company or public admission by
the Company of such material nonpublic information or (ii) such time as
such material nonpublic information shall be publicly disclosed or such
time that the Company is no longer in possession of material nonpublic
information; provided, further, that in the event the Stockholders are
notified of the initiation of a Blackout Period pursuant to clause (B)
hereof, the Stockholders shall cease and desist from effecting any further
sales pursuant to an effective registration statement or a receipted
prospectus during such Blackout Period; provided, further, that in the case
of a Blackout Period pursuant to clauses (A), (B), (C) or (D) hereof, the
Company shall furnish to the Demand Holder, upon request, a certified
resolution of the
-6-
Company's board of directors to the effect that an event permitting a
Blackout Period has occurred; provided, further, that the Company shall not
be entitled to exercise its rights under clause (B) hereof more than one
(1) time in any twelve (12) month period; and provided, further, if the
Demand Holder withdraws its Demand Request pursuant to Section 2.01(e),
such request shall not be considered a Demand Request for purposes of
Section 2.01(a) and such Demand Request shall be of no further effect;
(ii) the number of Common Shares to be sold in any such Public
Offering shall not exceed the maximum number which the managing underwriter
thereof considers in good faith to be appropriate based on market
conditions and other relevant factors, including pricing and the proportion
of Common Shares being sold by the Company and by such holders (the
"Maximum Number"); and
(iii) the Registrable Securities to be offered pursuant to such
request have an aggregate offering price of at least US $[100,000] (based
on the then current market price on the date of delivery of the Demand
Request).
(c) Number of Demands. Any Demand Holder may exercise its rights under
Section 2.01(a): (x) on an unlimited number of occasions with respect to
registration statements on Form F-3 or S-3 and/or any Canadian Securities Law
equivalent thereof (or any successors thereto) from such time that the Company
becomes eligible to use such forms; and (y) on not more than three occasions
after the date hereof with respect to registration statements on Form F-1 or S-1
and/or any Canadian Securities Law equivalent thereof (or any successors
thereto); provided that the Company shall not be obligated to effect more than
one registration of Registrable Securities in any 90-day period.
(d) Ineffective Demands. A request by a Demand Holder that the Company
effect a registration shall not be considered a Demand Request if: (i) the
registration statement relating thereto does not become effective; (ii) after it
has become effective such registration statement (or the use of the Prospectus
contained in such registration statement) is (A) interfered with by any stop
order, injunction or other order or requirement of the Commission, Canadian
securities regulators or other governmental agency or court for any reason other
than a misrepresentation or an omission by any Demand Holder or (B) delayed,
withdrawn, suspended or terminated and, in each case, as a result thereof, at
least 80% of the Registrable Securities requested to be registered cannot be
completely distributed in accordance with the plan of distribution set forth in
the related registration statement; or (iii) the conditions to closing specified
in any purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied or waived other than because of some
act or omission by such Demand Holder.
(e) Withdrawal of Demands. Any such Demanding Holder delivering a
Demand Request shall have the right, at any time prior to the effective date of
the registration statement relating to such Demand Request, to withdraw such
Demand
-7-
Request without liability to such Demanding Holder, by giving written notice to
the Company.
(f) Selection of Underwriters. In the event that any registration
pursuant to Section 2.01(a) shall involve, in whole or in part, an underwritten
offering, the Demanding Holders shall select the lead managing underwriter or
underwriters and bookrunner or bookrunners for such underwritten offering (after
consultation with the Company), as well as counsel for the Selling Holders, with
respect to such registration; provided, that the Company shall have the right to
appoint other syndicate members with the consent of the Demanding Holders not to
be unreasonably withheld.
(g) Inclusion of Non-Stockholders. Subject to Section 2.10, the
Company shall have the right to cause the registration of additional equity
securities for sale for the account of any Person that is not a Stockholder
(including the Company and any directors, officers or employees of the Company)
in any registration of Registrable Securities requested by the Stockholders;
provided that the number of Registrable Securities to be included in such
registration (including those sought by the Stockholders) shall not exceed the
Maximum Number; and provided, further, that in all cases, the Demand Holders
shall have priority over any such other Person.
Section 2.02
(a) "Piggy-Back" Rights. If the Company proposes to register any of
its Common Shares, any other equity securities or securities convertible into or
exchangeable for its equity securities under the Securities Act and/or
applicable Canadian Securities Laws (including, without limitation, in
connection with a Demand Request), whether or not for sale for its own account,
in a manner that would permit registration of Registrable Securities for sale
for cash to the public under the Securities Act and/or applicable Canadian
Securities Laws, the Company shall give written notice of such proposal at least
thirty (30) days before the anticipated filing date, to each Stockholder. In the
event that the Company elects to file a "universal shelf" registration statement
or the Canadian Securities Law equivalent thereof which registers any of the
classes of securities referred to in the first sentence of this Section 2.02(a),
the Company shall take such steps as would permit the shelf registration
statement to be used to permit secondary sales by the Stockholders and shall
give written notice of any proposal to make an offering off the shelf
registration statement of any class of securities referred to in the first
sentence of this Section 2.02(a) at least ten (10) days before, and, if
practicable, up to thirty (30) days before, the anticipated offering date, to
each Stockholder. Such notices, as applicable, shall specify at a minimum the
intended method of distribution of such Common Shares or other securities, the
number of Common Shares or other securities proposed to be registered or
offered, the proposed filing date of such registration statement or offering
date in the case of a shelf takedown, any proposed means of distribution of such
Common Shares or other securities and the proposed managing underwriter, if any.
Subject to Section 2.03, upon the written request of a Stockholder (the
"Piggyback Request"), given within fifteen (15) days after the transmittal of
any such written notice by email or facsimile confirmed by mail (which request
shall specify the Registrable Securities intended to be disposed of by such
Stockholder), the Company
-8-
will include in the prospectus with respect to such Public Offering, or any
prospectus supplement in the case of a shelf takedown, the number of the
Registrable Securities referred to in such Stockholder's request; provided,
that, any participation in such Public Offering by such Stockholder shall be on
substantially the same terms as the Company's participation therein; and
provided, further, that the number of Registrable Securities to be included in
any such Public Offering shall not exceed the Maximum Number.
(b) Withdrawal of Request. Any such Stockholder shall have the right
to withdraw a request to include Registrable Securities in any Public Offering
pursuant to Section 2.02(a), without any liability of such Stockholder by giving
written notice to the Company of its election to withdraw such request at any
time prior to the proposed effective date of such registration statement.
(c) Exception to Piggyback Rights. The Company shall not be required
to effect any registration of Registrable Securities under Section 2.02(a)
incidental to the registration of any equity securities on a Form X-0, Xxxx X-0
or Form F-4 or any similar registration under Canadian Securities Laws (or any
successors thereto).
Section 2.03 Allocation of Securities Included in a Public Offering.
If the registration referred to in Section 2.01(a) and Section 2.02(a) is to be
a Public Offering and the managing underwriter thereof advises the Company and
the Selling Holders in writing that the number of Common Shares sought to be
included in such Public Offering (including those sought to be offered by the
Company and those sought to be offered by the Selling Holders) exceeds the
Maximum Number, the Common Shares to be included in such Public Offering shall
be allocated pursuant to the procedures of this Section 2.03.
(a) Demand Allocation. If a registration or Public Offering is
effected pursuant to Section 2.01(a), the number of Registrable Securities
included in such registration shall be allocated: (x) first, pro rata among the
Demand Holders, and (y) second, pro rata among all of the other Selling Holders
on the basis of the relative number of the Registrable Shares then held by each
such Selling Holder (with any number in excess of a Selling Holder's request
reallocated among the remaining Selling Holders in a like manner) or in such
manner as shall be designated by the Selling Holders.
(b) Piggyback Allocation. If a registration or Public Offering is
effected pursuant to Section 2.02(a): the number of Registrable Securities
included in such registration shall be allocated: (x) first, to securities
sought to be included at the request of the Company ("Company Securities"), (y)
second, among the Demand Holders up to the full number of the Registrable
Securities included in the Piggyback Request, in excess of the number of Company
Securities, to the nearest extent possible on a pro rata basis, and (y) third,
among the other Selling Holders up to the full number of the Registrable
Securities included in the Piggyback Request, in excess of the number of Company
Securities, to the nearest extent possible on a pro rata basis.
Section 2.04 (a) IPO Participation. The Company shall register for
resale the Registrable Securities held by the Stockholders listed on Annex B
hereto (the
-9-
"IPO Participants") in the amounts set forth next to their respective names on
Annex B (allocated between the firm commitment underwritten offering and the
over-allotment option, as set forth on Annex B) on the IPO Registration
Statement and the Canadian IPO Prospectus, provided, such number of Registrable
Securities may be reduced and/or re-allocated between the firm commitment
underwritten offering and the over-allotment option [on a pro rata basis] in the
sole discretion of the Company.
(b) Conditions to IPO Participation. As a condition to inclusion of
any Registrable Securities for resale under the IPO Registration Statement
and/or the Canadian IPO Prospectus, each IPO Participant must: (x) execute and
comply with the terms and provisions of an underwriting agreement in form and
substance reasonably satisfactory to the Company and customary for transactions
of this type;(y) execute and comply with the terms and provisions of a custody
agreement and irrevocable power of attorney in form and substance reasonably
satisfactory to the Company and customary for transactions of this type, and (z)
provide the Company and counsel with such documents, certificates, resolutions
and representations as may be reasonably requested in connection with satisfying
the conditions to closing the IPO (including any closing of the over-allotment
option) pursuant to the IPO underwriting agreement.
Section 2.05 (a) Requirements with Respect to Registration. Subject to
Section 2.06, if and whenever the Company is required by the provisions hereof
to register any Registrable Securities under the Securities Act and/or Canadian
Securities Laws, including receipt of a Demand Request pursuant to Section
2.01(a), the Company shall comply with the provisions of this Section 2.05. The
Company shall prepare and file with the Commission and/or applicable Canadian
securities regulatory authorities as expeditiously as possible (and, in the case
of a Demand Request, no more than sixty (60) days after receipt of such Demand
Request) a Registration Statement with respect to such Registrable Securities
and use its best efforts to cause such Registration Statement to become and
remain effective; provided, however, that, as far in advance as practicable
before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to and afford each Selling Holder
and the managing underwriter(s), if any, a reasonable opportunity to review and
comment on copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be
filed, and the Company shall make any corrections reasonably requested by a
Selling Holder with respect to such information before filing such registration
statement or Prospectus or any amendments or supplements thereto.
(b) Maintaining Compliance and Effectiveness. The Company shall
prepare and file with the Commission and/or applicable Canadian securities
regulatory authorities as expeditiously as possible such amendments and
supplements to such registration statement and the prospectus used in connection
therewith and take such action as may be necessary to keep such registration
statement current and effective for a period of not less than one hundred eighty
(180) days (or such shorter period which shall terminate when all of such
Registrable Securities have been disposed of), and to comply with the provisions
of the Securities Act and/or applicable Canadian Securities Laws with
-10-
respect to the disposition of such Registrable Securities during such period in
accordance with the intended methods of disposition set forth in such
registration statement.
(c) Notification of Certain Events. The Company shall promptly notify
each Selling Holder (A) when the registration statement or any amendment or
supplement thereto has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has become
effective or receipted, as applicable, (B) of any request by the Commission or
by any other regulatory body or other body having jurisdiction relating to such
offering for amendments or supplements to the registration statement or the
Prospectus or for additional information, (C) of any order issued or threatened
by the Commission and/or applicable Canadian securities regulatory authorities
suspending the effectiveness of such registration statement or preventing or
suspending the use of a prospectus or (D) of the issuance of any notification or
order with respect to the suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceedings for such purpose. The Company shall use its
best efforts to prevent the issuance of any such order referred to in (C) or (D)
and, if any such order is issued, shall use its best efforts to obtain the
withdrawal of any such order at the earliest possible moment. The Company shall
promptly notify each Selling Holder and the managing underwriter(s), if any, in
writing at any time when a Prospectus is required to be delivered under the
Securities Act and/or applicable Canadian Securities Laws of the happening of
any event as a result of which the Prospectus included in such registration
statement, as then in effect, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and the Company shall promptly prepare and furnish to each
Selling Holder a reasonable number of copies of any supplement or amendment to
such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) Other Qualifications. The Company shall use its best efforts to
register or qualify the Registrable Securities covered by such registration
statement under the state, local provincial and territorial securities or blue
sky laws of such jurisdictions in the United States and Canada as the Selling
Holders or the managing underwriter(s) shall reasonably request, and do any and
all other acts and things that may be reasonably necessary or advisable to
enable each Selling Holder and underwriter to consummate the disposition of the
Registrable Securities in such jurisdictions; provided, however, that in no
event shall the Company be required (A) to qualify to do business as a foreign
corporation in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, or (B) to execute or file any general consent
to service of process in any such jurisdiction. The Company shall use its best
efforts to cause all Registrable Securities covered by such registration
statement to be registered with or approved by such other governmental agencies
or authorities in the United States and Canada as may be necessary to enable the
Selling Holders to consummate the disposition of such Registrable Securities.
-11-
(e) Listing. The Company shall use its best efforts to cause all
Registrable Securities covered by such registration statement to be (A) listed
on the Nasdaq and the Toronto Stock Exchange and (B) listed or qualified for
trading on any other stock exchange or quotation service on which the Company's
outstanding Common Shares are listed or qualified for trading; provided that the
applicable listing requirements are satisfied no later than the effective date
of such registration statement.
(f) Documents to be Delivered. The Company shall furnish to each
Selling Holder and each underwriter, if any, of the Registrable Securities
covered by such registration statement such number of copies of (A) such
registration statement and each amendment and supplement thereto (in each case
including all exhibits), including conformed copies, (B) the Prospectus included
in such registration statement (including each preliminary prospectus), in
conformity with the requirements of the Securities Act and/or applicable
Canadian Securities Laws, (C) such documents incorporated by reference in such
registration statement or Prospectus, and (D) such other documents as such
Selling Holder or such underwriter, if any, may reasonably request, and a copy
of any and all transmittal letters or other correspondence to or received from
the Commission and/or applicable Canadian securities regulatory authorities or
any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering.
(g) Opinions and Comfort Letters. In connection with an underwritten
offering of Registrable Securities, the Company shall (A) cause opinions of
counsel to the Company (which counsel and opinions shall be reasonably
satisfactory to the managing underwriter(s)), to be delivered to the
underwriters and the Selling Holders covering the matters customarily covered in
opinions requested in underwritten offerings by selling security holders and (B)
cause "cold comfort" letters and updates thereof (which letters and updates
shall be reasonably satisfactory to the managing underwriter(s)) from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired or owned by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), to be delivered to each of the underwriters and the
Selling Holders of such Registrable Securities included in such underwritten
offering, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings by selling security holders.
(h) Earnings Statement. The Company shall comply with all applicable
rules and regulations of the Commission and/or applicable Canadian securities
regulatory authorities and make generally available to security holders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act or
applicable Canadian Securities Laws) not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (A) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a Public Offering and (B) if
not sold to underwriters in such an offering,
-12-
commencing on the first day of the fiscal quarter of the Company after the
effective date of a registration statement, which statements shall cover said
12-month periods.
(i) Cooperation on Regulatory Filings. The Company shall cooperate
with each Selling Holder and the managing underwriter, if any, participating in
the disposition of such Registrable Securities in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.
and/or applicable securities regulatory authorities in Canada.
(j) Cooperation in Marketing. The Company shall use its best efforts
to cooperate as requested by the Selling Holders in customary marketing efforts
undertaken in connection with the Registrable Securities, including sending
appropriate officers of the Company to attend any "road shows" and investor and
rating agency presentations scheduled in connection with any such registration.
(k) Share Certificates. The Company shall furnish for delivery in
connection with the closing of any offering of Registrable Securities pursuant
to a registration effected pursuant to Section 2.01(a) or Section 2.02(a)
unlegended certificates representing ownership of the Registrable Securities
being sold in such denominations as shall be requested by each Selling Holder or
the underwriters.
(l) General Cooperation. The Company shall enter into any other
customary agreements and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of any Registrable Securities or
otherwise.
(m) Condition to Company's Obligation. It shall be a condition
precedent to the obligation of the Company to take any action with respect to
any Registrable Securities that the holder thereof, shall furnish to the Company
such information regarding such holder, the Registrable Securities and any other
Company securities held by such holder as the Company shall reasonably request
and as shall be required in connection with the action taken by the Company.
(n) Actions Upon Notice of Certain Events. Each holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.04(c), such
Stockholder will forthwith discontinue disposition of Registrable Securities
until such Stockholder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2.04(c), and, if so directed by the Company
such Stockholder will deliver to the Company (at the Company's expense) all
copies (including, without limitation, any and all drafts), other than permanent
file copies, then in such Stockholder's possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice. In
the event that the Company shall give any such notice, the period mentioned in
Section 2.04(b) shall be extended by the greater of (A) three months, or (B) the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 2.04(c) to and including the date when each
holder of Registrable Securities covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 2.04(c).
-13-
Section 2.06 Transfers; Rights of Transferee of Registrable
Securities.
Each Stockholder agrees not to make any transfer of all or any portion
of the Registrable Securities unless:
(a) there is then in effect a registration statement under the
Securities Act and/or applicable Canadian Securities Laws covering such proposed
transfer and such transfer is made in accordance with such registration
statement;
(b) such transfer is made in accordance with Rule 144 or equivalent
provisions under Canadian Securities Laws; or
(c) such transfer shall not require any registration or qualification
under the Securities Act or Canadian Securities Laws. Notwithstanding the
foregoing, a Stockholder may transfer all or a portion of the Registrable
Securities to a Permitted Transferee, and such Permitted Transferee shall be
deemed a Stockholder hereunder. The transferring Stockholder shall provide
notice to the Company of any such transfer stating the name and address of such
Permitted Transferee and identifying the number of Registrable Securities
transferred.
Section 2.07 Registration Expenses.
Except as otherwise provided herein, the Company shall pay all
Registration Expenses with respect to any particular offering (or proposed
offering).
Section 2.08 Underwriting; Due Diligence.
(a) Underwriting Agreements. If requested by the underwriters for any
underwritten offering of Registrable Securities pursuant to a registration
requested under Section 2.01 or Section 2.02, the Company shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties and covenants by the Company
and such other terms and provisions as are customarily contained in underwriting
agreements, including indemnification and contribution provisions substantially
to the effect and to the extent provided in Article 4, and agreements as to the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 2.04(g). The Selling Holders on whose behalf the
Registrable Securities are to be distributed by such underwriters shall be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, shall also be made to and for the benefit of
such Selling Holders. Such underwriting agreement shall also contain such
representations and warranties by such Selling Holders and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions on the part of selling stockholders, including,
without limitation, custody agreements (including irrevocable powers of
attorney) and indemnification and contribution provisions substantially to the
effect and to the extent provided in Article 4.
-14-
(b) Access to Information. In connection with the preparation and
filing of each Registration Statement registering Registrable Securities under
the Securities Act or applicable Canadian Securities Laws pursuant to Section
2.01 or Section 2.02 or pursuant to Section 2.08, upon reasonable notice the
Company shall give the Selling Holders and the underwriters, if any, and their
respective counsel and accountants, such reasonable and customary access to its
books, records and properties and such opportunities to discuss the business and
affairs of the Company with its officers and the independent public accountants
who have certified the financial statements of the Company as shall be
necessary, in the opinion of such Selling Holders and such underwriters, or
their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act or applicable Canadian Securities Laws; provided
that such Selling Holders and the underwriters, and their respective counsel and
accountants shall use their reasonable best efforts to coordinate any such
investigation of the books, records and properties of the Company and any such
discussions with the Company's officers and accountants so that all such
investigations occur at the same time and all such discussions occur at the same
time.
Section 2.09 Unregistered Offerings.
The parties hereto hereby agree that, in the event that the Company or
one or more Demand Holders propose to make an offering or a sale to a strategic
purchaser of Common Shares, any other equity securities or securities
convertible or exchangeable for equity securities of the Company (other than an
acquisition by the Company financed through the issuance of Common Shares) that
is exempt from, or not subject to, the registration requirements of the
Securities Act and/or the prospectus requirements under applicable Canadian
Securities Laws, the Company and management shall reasonably cooperate with such
Demand Holders(s) and their advisers in performing due diligence and marketing
such offering to potential investors.
Section 2.10 Registration Rights of Other Persons.
Prior to the date on which the Stockholder holds Registrable
Securities representing less than 50% of the outstanding Common Shares of the
Company, the Company may not, without the prior written consent of the Demand
Holders, grant to any other Person the right to request a registration of
securities of the Company under the Securities Act or Canadian Securities Laws;
provided that, if any such written consent is given, the terms of any such right
granted or issued shall not be more favorable to such Person than the terms of
this Agreement or, any more favorable terms shall also be granted to the Demand
Holders. On and after such date the Company may grant to any other Person the
right to request a registration of securities of the Company under the
Securities Act and/or Canadian Securities Laws, or the right to be included as a
Selling Holder in connection with any registration of Registrable Securities;
provided that, any such rights may not be exercised by any Person prior to the
second anniversary of the IPO Date and provided, further, that the proviso in
the preceding sentence is complied with.
-15-
Section 2.11 Termination of Existing Registration Rights; Inconsistent
Agreements.
The Company and each Stockholder acknowledge and agree that this
Agreement shall effectively terminate and replace the Existing Registration
Rights and any and all prior agreements to which the Company and such
Stockholder are a party with respect to the subject matter hereof. The Company
and each Stockholder acknowledge and agree that any rights, privileges and/or
obligations of the parties under the Existing Registration Rights or any other
prior agreement with respect to the matters set forth herein shall be terminated
and shall be of no further force and effect as of the date of this Agreement.
The Company shall not hereafter enter into any agreement with respect
to its securities which is inconsistent with, violates or diminishes the rights
granted to the Stockholders in this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 3.01 Company Representations, Warranties and Agreements.
The Company represents and warrants to, and agrees with, each
Stockholder that:
(a) The Company has all requisite corporate power and authority to
execute, deliver, and perform this Agreement. This Agreement has been duly
authorized, executed, and delivered by the Company. No consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any United States federal, state, local, or other governmental
authority or any court or other tribunal is required by the Company for the
execution, delivery or performance of this Agreement by the Company (except
filings under the Securities Act and/or Canadian Securities Laws which will be
made and any consents under state, local, provincial or territorial securities
or blue sky laws which will be obtained).
(b) The Company shall not enter into any transaction involving the
issuance or transfer by any other Person of Other Securities to a Stockholder,
or any merger or consolidation in which it is not the surviving Person or any
sale, lease or other transfer of all or substantially all the assets of the
Company, unless effective provision is made for the assumption by such other
Person, jointly and severally with the Company if the Company shall remain in
existence, of all of the obligations of the Company hereunder, and in the case
of any such issuance or transfer, the registration of such Other Securities on
the same basis as the registration of the other Registrable Securities
hereunder.
(c) The execution and delivery of this Agreement by the Company does
not, and the consummation of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision of, or constitute
a default (with or
-16-
without notice or lapse of time or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right of termination,
cancellation, or acceleration of any obligation or the loss of a material
benefit under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company or any of its
subsidiaries pursuant to any provisions of (A) the articles of incorporation,
by-laws or similar governing documents of the Company or any of its
subsidiaries, (B) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any governmental authority
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets or (C) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which the Company or any of its
subsidiaries is a party or by which it or any of its properties or assets may be
bound or affected as soon as the conditions can be so satisfied.
(d) The Company covenants that it will file any reports required to be
filed by it under the Securities Act, the Exchange Act and Canadian Securities
Laws, will make available "adequate current public information concerning the
Company within the meaning of paragraph (c) of Rule 144 and that it will take
such further action as any Stockholder may reasonably request, all to the extent
required from time to time to enable such Stockholder to sell Registrable
Securities without registration pursuant to the available exemptions under the
Securities Act and/or Canadian Securities Laws. Upon the request of any
Stockholder, the Company will deliver to it a written statement as to whether it
has complied with such requirements.
Section 3.02 Stockholder Representations, Warranties and Agreements.
Each Stockholder represents and warrants to, and agrees with, the
Company, that:
(a) If such Stockholder is an entity, it is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization and has all requisite power and authority to execute, deliver, and
perform this Agreement. This Agreement has been duly authorized by such
Stockholder and has been duly executed and delivered by it.
(b) Neither Stockholder nor any of its Affiliates will take, directly
or indirectly, during the term of this Agreement, any action designed to
stabilize (except as may be permitted by applicable law) or manipulate the price
of any security of the Company.
(c) Stockholder shall promptly furnish to the Company upon the
Company's request any and all information as may be required by, or as may be
necessary or advisable to comply with the provisions of, the Securities Act, the
Exchange Act, and/or applicable Canadian Securities Laws in connection with the
preparation and filing of any Registration Statement pursuant hereto, or any
amendment or supplement thereto, or any Preliminary Prospectus or Prospectus
included therein and/or filed with Canadian securities regulators.
-17-
Section 3.03 Survival of Representations and Agreements.
All representations, warranties, covenants and agreements contained in
this Agreement shall be deemed to be representations, warranties, covenants and
agreements at the effective date of each Registration Statement contemplated by
this Agreement, and such representations, warranties, covenants and agreements
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Stockholder, or any other
Person and shall survive termination of this Agreement.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.01 Indemnification and Contribution.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities under the Securities Act and applicable Canadian
Securities Laws pursuant to this Agreement, the Company will, and it hereby
does, indemnify and hold harmless, to the full extent permitted by law, each
Selling Holder, their directors and officers, employees, stockholders, general
partners, limited partners, members, advisory directors and managing directors
(and directors, officers, stockholders, general partners, limited partners,
members, advisory directors, managing directors and controlling persons
thereof), each other person who participates as an underwriter in the offering
or sale of such securities and each other person, if any, who controls, is
controlled by or is under common control with any such Selling Holder or any
such underwriter within the meaning of the Securities Act and Canadian
Securities Laws, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's consent) to which such Selling Holder, any such
director, or officer, employee, stockholder, general or limited partner, member,
or advisory or managing director or any such underwriter or controlling person
may become subject under the Securities Act and Canadian Securities Laws, state
securities or blue sky laws, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof) or
expenses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which such Registrable Securities were
registered under the Securities Act and applicable Canadian Securities Laws, any
prospectus (including each preliminary prospectus) contained therein, or any
amendment or supplement thereto or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of a prospectus (including
each preliminary prospectus), in light of the circumstances under which they are
made), and the Company will reimburse each such Selling Holder and each such
director, officer, employee, general partner, limited partner, advisory
director, managing director or underwriter and controlling person for any legal
or any other expenses reasonably incurred by them as such expenses are incurred
in connection with investigating or defending such loss, claim, liability,
action or proceeding; provided that the Company shall not be liable in
-18-
any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment or supplement thereto
or in any such prospectus (including each preliminary prospectus) in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such Selling Holder or such director, officer,
employee, general or limited partner, managing director or underwriter
specifically stating that it is for use in the preparation thereof; provided,
further, that the Company shall not be required to indemnify any such person if
such untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the final
prospectus or any amendment or supplement thereto and the final prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by such indemnified person resulted from any action, claim or suit by
any person who purchased Registrable Securities which are the subject thereof
from such indemnified person and it is established in the related proceeding
that such indemnified person failed to deliver or provide a copy of the final
prospectus (as amended or supplemented) to such person with or prior to the
confirmation of the sale of such Registrable Securities sold to such person if
required by applicable law, unless such failure to deliver or provide a copy of
the final prospectus (as amended or supplemented) was a result of noncompliance
by the Company with this Agreement or as a result of the failure of the Company
to provide such final prospectus. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of each Selling
Holder or any such director, officer, employee, general partner, limited
partner, managing director, underwriter or controlling person and shall survive
the transfer of such securities by any Selling Holder.
(b) Indemnification by Selling Holders and Underwriters. The Company
may require, as a condition to including Registrable Securities in any
registration statement filed pursuant to this Agreement, that the Company will
have received an undertaking reasonably satisfactory to it from any Selling
Holder or any underwriter to indemnify and hold harmless the Company and its
directors, officers, employees, controlling persons and all other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons, against any and
all losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts paid in any settlement effected with the consent of the
applicable Selling Holder and underwriter) to which the Company and its
directors, officers, employees, controlling persons or any other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons may become subject
under the Securities Act and Canadian Securities Laws, state securities or blue
sky laws, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such Registrable Securities were registered under the
-19-
Securities Act or applicable Canadian Securities Laws, any prospectus (including
each preliminary prospectus) contained therein, or any amendment or supplement
thereto or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of a prospectus (including each preliminary
prospectus), in light of the circumstances under which they are made), and the
applicable Selling Holder and underwriter will reimburse the Company and its
directors, officers, employees, controlling persons and all other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons for any legal or
any other expenses reasonably incurred by them as such expenses are incurred in
connection with investigating or defending such loss, claim, liability, action
or proceeding; provided that any Selling Holder and any underwriter shall only
be liable in any such case if any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such prospectus (including each preliminary prospectus) in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such Selling Holder or any such underwriter
specifically stating that it is for use in the preparation thereof; provided,
further, that such Selling Holder or underwriter shall not be required to
indemnify the Company if such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the final prospectus or any amendment or supplement thereto and the
final prospectus does not contain any other untrue statement or omission or
alleged untrue statement or omission of a material fact that was the subject
matter of the related proceeding and is covered by such Selling Holder's or
underwriter's obligation under this Section 6.2 and any such loss, liability,
claim, damage or expense suffered or incurred by the Company resulted from any
action, claim or suit by any person who purchased Registrable Securities or
other securities of the Company which are the subject thereof from the Selling
Holder or the Company or another holder and it is established in the related
proceeding that a copy of the final prospectus (as amended or supplemented) was
delivered or provided to such person with or prior to the confirmation of the
sale of such Registrable Securities sold to such Person if required by
applicable law. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or any such director,
officer, employee or controlling person or other indemnified person. No Selling
Holder shall be liable under any indemnity provided pursuant to this Agreement
for any amounts exceeding the product of the purchase price per Registrable
Security and the number of Registrable Securities being sold pursuant to such
registration statement or prospectus by such Selling Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Agreement, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Agreement,
-20-
except to the extent that the indemnifying party is actually materially
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof or a court of competent jurisdiction determines that the
indemnifying party is not vigorously defending such action or proceeding. An
indemnifying party will not be subject to any liability for any settlement made
without its consent (which consent shall not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement of any pending or threatened proceeding which (i) does not include as
an unconditional term thereof the giving by the claimant or plaintiff to all
indemnified parties of a release from all liability in respect to such claim or
litigation, (ii) involves the imposition of equitable remedies or the imposition
of any non-financial obligations on such indemnified party or (iii) otherwise
adversely affects such indemnified party, other than as a result of the
imposition of financial obligations for which such indemnified party will be
indemnified hereunder. Notwithstanding anything to the contrary contained
herein, an indemnifying party will not be obligated to pay the fees and expenses
of more than one counsel (together with local counsel) for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels (together
with the fees of local counsel).
(d) Contribution. If the indemnification provided for in this Article
4 shall for any reason be unavailable or insufficient to an indemnified party in
respect of any loss, liability, cost, claim or damage referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, cost, claim or damage (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand from the offering or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the indemnified party or parties on the one hand and the
indemnifying party or parties on the other hand in connection with the offering
shall be
-21-
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) and the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the table
on the cover of a prospectus, bear to the aggregate public offering price of the
securities. The relative fault of the indemnified and indemnifying parties 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 indemnified or
indemnifying parties and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the loss,
cost, claim, damage or liability, or action in respect thereof, referred to
above in this paragraph (d) shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Article 4 were determined by
pro rata allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this paragraph. Notwithstanding
any other provision of this Article 4, no Selling Holder shall be required to
contribute any amount in excess of the amount by which the net proceeds of the
offering received by such Selling Holder exceed the amount of any damages which
such Selling Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. Each Selling
Holder's obligations to contribute pursuant to this Section 4.01(d) are several
in the proportion that the net proceeds of the offering received by such Selling
Holder bears to the total net proceeds of the offering received by all the
Selling Holders and not joint. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act or applicable
Canadian Securities Laws) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified in the
preceding paragraphs of this Article 4 (with appropriate modifications) shall be
given by the Company, the Selling Holders with Registrable Securities included
in such registration and the underwriters with respect to any required
registration or other qualification of securities under any state law or
regulation or governmental authority.
(f) The obligations of the parties under this Article 4 shall be in
addition to any liability which any party may otherwise have to any other party.
ARTICLE V
MISCELLANEOUS
Section 5.01 Remedies.
In the event of breach by any party of any of its obligations under
this Agreement, the other parties, in addition to being entitled to exercise all
rights provided
-22-
herein or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Stockholder agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by the Company or such Stockholder, as
the case may be, of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, the Company or such Stockholder, as the case may be, shall waive
the defense that a remedy at law would be adequate. No failure or delay on the
part of the Company or any Stockholder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
Section 5.02 Amendments; Waivers and Termination.
The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, without the written
consent of the Company and a majority of the Demand Holders.
Section 5.03 Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, by electronic mail or facsimile
(in each case, receipt of which is confirmed) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to the Company, to:
Corel Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxx X0X0X0
Attention: General Counsel,
with a copy to:
___________________________
if to a Stockholder, to the address for such Stockholder set forth in
the share register maintained by the Company, as amended from time to
time.
Section 5.04 Interpretation.
When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
-23-
Section 5.05 Counterparts.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
Section 5.06 Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents and the instruments referred
to herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
Person other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies hereunder.
Section 5.07 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the [State of New York] applicable to contracts to be performed
entirely within such State.
Section 5.08 Severability.
Wherever possible, each provision hereof shall be interpreted in such
a manner as to be valid, legal and enforceable under applicable law, but in case
any one or more of the provisions contained herein shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such provision
shall be ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating or rendering unenforceable
the remainder of this Agreement, unless such a construction would be
unreasonable or materially impair the rights of any party hereto.
Section 5.09 Successors and Assigns.
All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto whether so
expressed or not. This Agreement shall not be assignable by the Company or the
Stockholder except to a Permitted Transferee.
Section 5.10 Canadian Offering.
Although this Agreement has been drafted in contemplation of an IPO
involving a Public Offering in both the United States and Canada, the Company
may, in its sole discretion, decide not to proceed with the Canadian Public
Offering. In the event that no Public Offering in Canada is consummated at the
time of the IPO or at any relevant time under this Agreement, the Company's
Common Shares are no longer actively traded on the TSX, all provisions in this
Agreement that relate to the registration
-24-
of Registrable Securities in Canada, including without limitation, references to
Canadian Securities Laws, the Canadian Prospectus, Canadian securities
regulatory authorities and the Toronto Stock Exchange, shall be of no force and
effect and this Agreement shall be interpreted for all purposes as if such
provisions did not exist..
Section 5.11 Use of Terms.
This Agreement contemplates the filing of Registration Statements
under the Securities Act and prospectuses under Canadian Securities Laws on
numerous occasions involving various offers of securities. In connection with
such Registration Statements and prospectuses, there may be identified therein
one or more underwriters through which securities are to be offered on behalf of
the Company or the Stockholder, or both, pursuant to either a "firm-commitment"
or "best-efforts" arrangement, and, in the case where there is more than one
underwriter, one or more of the underwriters may be designated as the "manager"
or "representative" or the "co-managers" or "representatives" of the several
underwriters. Accordingly, all references herein to an "underwriter" or
"underwriters" are intended to refer to a "principal underwriter" (as defined in
Rule 405 under the Securities Act) and to provide for those transactions in
which securities may be offered by or through one or more underwriters, and not
to imply that any of the transactions contemplated hereby is conditioned in any
manner whatsoever on the participation therein by one or more underwriters on
behalf of any party.
-25-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-26-
ANNEX A
PIGGYBACK HOLDERS
-27-
ANNEX B
IPO PARTICIPANTS
REGISTRABLE SECURITIES REGISTRABLE SECURITIES
TO BE INCLUDED IN IPO TO BE INCLUDED IN IPO
NAME FIRM COMMITMENT PORTION OVER-ALLOTMENT OPTION
---- ----------------------- ----------------------
-28-
