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EXHIBIT 10.26
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
November 13, 1996, by and among PARK 'N VIEW, INC. a Delaware corporation (the
"Company"), the Patricof Investors set forth on Exhibit A attached hereto and
made a part hereof (the "Patricof Investors") and the New Investors set forth on
Exhibit B attached hereto and made a part hereof (the "New Investors"; together
with the Patricof Investors, the "Investors").
WHEREAS, the New Investors and the Company have entered into
that certain Stock Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), whereby the New Investors have purchased 1,372,370 shares
of Series B 7% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Series B Stock").
WHEREAS, the Company desires to (a) amend the registration
rights previously granted to the Patricof Investors with respect to the Common
Stock held thereby and (b) grant registration rights to the New Investors with
respect to (i) the Series B Stock to be issued to the New Investors pursuant to
the Purchase Agreement and that certain Amended Securityholders' Agreement and
Exchange Agreement, dated as of the date hereof, by and among the Company, the
Existing Investors (as defined in the Purchase Agreement) and the New Investors,
and (ii) the shares of Common Stock into which the Series B Stock is
convertible.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and conditions contained herein and of other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All terms not defined below shall have the
meaning set forth in the Purchase Agreement.
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Company Covered Persons" shall have the meaning set forth in
Section 4.2 hereof.
"Damages" shall have the meaning set forth in Section 4.1
hereof.
"Demand Registration" means a Demand Registration as defined
in Section 2.1.
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"Holder" means any person who now holds or shall hereafter
acquire and hold Registrable Securities.
"Holder Covered Persons" shall have the meaning set forth in
Section 4.1 hereof.
"Indemnified Party" shall have the meaning set forth in
Section 4.3 hereof.
"Indemnifying Party" shall have the meaning set forth in
Section 4.3 hereof.
"Inspectors" shall have the meaning set forth in Section
3.1(h) hereof.
"Minimum Offering Price" shall have the meaning set forth in
Section 2.1(a) hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Notices" shall have the meaning set forth in Section 6.4
hereof.
"Original Investors" shall mean Xxx Xxxxxxxx, Nelgo
Investments, Xxx Xxxxxxx, MPN Partners, Ltd. and Park 'N View General Partner,
Inc.
"Piggy-Back Registration" means a Piggy-Back Registration as
defined in Section 2.2.
"Priority Registration" shall mean one Demand Registration
pursuant to Section 2.1(a) hereof as to which the Original Investors shall not
be entitled to exercise any registration rights they may have except in
accordance with Section 2.1(d) hereof.
"Records" shall have the meaning set forth in Section 3.1(h)
hereof.
"Registrable Securities" means (a) the shares of Common Stock
into which the Series B Stock is convertible, (b) any additional shares of
Common Stock acquired by the Holders by way of a dividend, stock split or other
distribution in respect of the Series B Stock and (c) any shares of Common Stock
currently held or hereafter acquired by any Patricof Investor. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities at such time as (i) a registration statement with respect to the sale
of such securities has been declared effective by the Commission and such
securities have been disposed of pursuant to such effective registration
statement, (ii) such securities have been distributed to the public pursuant to
the provisions of Rule 144, or (iii) such securities have ceased to be
outstanding.
"Registration Expenses" shall have the meaning set forth in
Section 3.2.
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"Restricted Stock" means the Stock which may at the time be
sold pursuant to Rule 144(k) under the Securities Act or which may be otherwise
sold without registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Holder" means an Investor who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Withdrawal Election" shall have the meaning set forth in
Section 2.3(c) hereof.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1 Demand Registration. (a) Request for Registration.
At any time and from time to time after January 1, 1999, Holders of the lesser
of (i) at least 25% of the Registrable Securities or (ii) Registrable Securities
having a minimum anticipated aggregate offering price of $7,500,000 (the
"Minimum Offering Price") may make written requests on the Company for the
registration of the Registrable Securities under the Securities Act, such
requests hereinafter referred to as a Demand Registration ("Demand
Registration"). Subject to the penultimate sentence of Section 2.1(b), the
Company be obligated to file at least three (3) registration statements under
the Securities Act with respect to Demand Registrations, one of which may be a
Priority Registration (as described in subsection (d) below); provided, however,
that if the Registrable Securities may be registered on Form S-3 (or any
successor form with similar "short form" disclosure requirements), the Investors
shall have the right to request registration of their shares on Form S-3, or
such successor form, without limit on the aggregate number of such
registrations, once per year without regard to the Minimum Offering Price. Any
such request will specify the number of Registrable Securities proposed to be
sold, the intended method of disposition thereof and whether the Demand
Registration constitutes the Priority Registration. The Company shall give
written notice of such registration request within 10 days after the receipt
thereof to all other Holders of Registrable Securities and shall use its
reasonable best efforts to effect the Demand Registration within 30 days after
the giving of such written notice. Within 20 days after receipt of such notice
by any such Holder, such Holder may request in writing that Registrable
Securities be included in such Demand
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Registration and the Company shall include in the registration statement for
such Demand Registration the Registrable Securities of all Holders requested to
be so included. Each such request by such other Holders shall specify the number
of Registrable Securities proposed to be sold and the intended method of
disposition thereof.
(b) Effective Registration. A registration will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the Commission and the Company has complied in all
material respects with its obligations under this Agreement with respect
thereto; provided, that if, after it has become effective, the offering of
shares of Common Stock pursuant to such Demand Registration is or becomes the
subject of any stop order, injunction or other order or requirement of the
Commission or any other governmental or administrative agency, or if any court
prevents or otherwise limits the sale of the shares of Common Stock pursuant to
the Demand Registration at any time within 180 days after the effective date of
the registration statement, such Demand Registration will be deemed not to have
been effected. If (i) a requested Demand Registration is deemed not to have been
effected or (ii) the requested Demand Registration does not remain effective (A)
for a period of at least 180 days beyond the effective date thereof or (B) with
respect to an underwritten offering of Registrable Securities, until 45 days
after the commencement of the distribution by the Selling Holders (or, in either
event, until the Registrable Securities included in such Demand Registration
have been disposed of pursuant thereto), then the Company shall continue to be
obligated to effect such Demand Registration pursuant to this Section 2.1.
Selling Holders shall be permitted to withdraw all or any part of the
Registrable Securities from a Demand Registration at any time prior to the
effective date of such Demand Registration; provided, that in the event of such
withdrawal, such Selling Holders shall be responsible for all fees and expenses
(including counsel fees and expenses) incurred by them prior to such withdrawal;
and provided, further, that if all of the Selling Holders withdraw the
Registrable Securities from any Demand Registration prior to the effective date
of such Demand Registration and do not reimburse the Company for expenses
payable by the Company pursuant to Section 3.2 hereof and incurred by the
Company in connection with such Demand Registration, such Demand Registration
shall be deemed to have been effected pursuant to this Section 2.1, unless such
withdrawal is as a result of (i) a stop order (or notice from the Commission of
the possibility of a stop order) received by the Company, or (ii) any breach by
the Company of its obligations hereunder, in which case no reimbursement shall
be made or required to be made by the Selling Holders.
(c) Selection of Underwriter. If a majority of the
Selling Holders so elect, the offering of such Registrable Securities pursuant
to such Demand Registration shall be in the form of an underwritten offering.
The Selling Holders owning a majority of Common Stock to be sold shall select
one or more nationally recognized firms of investment bankers who are reasonably
satisfactory to the Company to act as the lead managing Underwriter or
Underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
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(d) Other Securities. With respect to the Priority
Registration, no securities of the Original Investors shall be included among
the securities covered by such Priority Registration unless the managing
Underwriter or Underwriters of such offering shall have advised in writing the
Holders of Registrable Securities to be covered by such registration that the
inclusion of such other securities would not adversely affect such offering.
SECTION 2.2 Piggy-Back Registration. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to an offering by the Company for its own account or for the account of
any of its respective Security holders (other than a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the Commission),
or a Demand Registration pursuant to Section 2.1), then the Company shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event less than 20 days before the anticipated
filing date), and such notice shall offer such Holders the opportunity to
register such number of Registrable Securities as each such Holder may request
(which request shall be made within 18 days of such notice and shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its reasonable best efforts to cause the managing Underwriter
or Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other Security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw, provided, that in the event of such withdrawal, such
Holder shall be responsible for all fees and expenses (including fees and
expenses of counsel) incurred by such Holder prior to such withdrawal. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective; provided, that all expenses set forth in Section 3.2 hereof
shall be the sole responsibility of the Company in such case.
No Piggy-Back Registration, and no failure to effect a
Piggy-Back Registration, shall relieve the Company of its obligation to effect a
Demand Registration, and no failure to effect a Piggy-Back Registration and to
complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement (including,
without limitation, the Company's obligations under Sections 3.2 and 4.1).
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SECTION 2.3 Reduction of Offering.
(a) Demand Registration. Except as otherwise provided in
Section 2.1(d) hereof in connection with the Priority Registration, the Company
may include in a Demand Registration Securities for the account of the Company
and any other Persons who hold Securities on the same terms and conditions as
the Registrable Securities to be included therein; provided, however, that (i)
if the managing Underwriter or Underwriters of any underwritten offering
described in Section 2.1 have informed the Company in writing that it is their
opinion that the amount of Securities which Holders of Registrable Securities,
the Company and any other Persons desiring to participate in such Demand
Registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, then the number of Securities to
be offered for the account of the Company and for the account of all such other
Persons (other than the Holders) participating in such Demand Registration shall
be reduced or limited pro rata in proportion to the respective number of
Securities requested to be registered to the extent necessary to reduce the
total number of Securities requested to be included in such offering to the
number of shares, if any, recommended by such managing Underwriters, and (ii) if
the offering is not underwritten, no other Person, including the Company, shall
be permitted to offer Securities under any such Demand Registration unless all
Selling Holders consent in writing to the inclusion of such Securities therein.
(b) Piggy-Back Registration. Notwithstanding anything to
the contrary contained herein, if the managing Underwriter or Underwriters of
any underwritten offering in connection with a Piggy-Back Registration described
in Section 2.2 have informed, in writing, the Holders of the Registrable
Securities requesting inclusion in such offering that it is their opinion that
the total number of Securities which the Company, Holders of Registrable
Securities and any other Persons desiring to participate in such registration
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then the number of Securities to be offered shall
be reduced or limited in the following order of priority: first, the number of
Securities to be offered by all holders of Securities of the Company other than
the Holders of Registrable Securities shall be reduced to the extent necessary
to reduce the total number of Securities to such number recommended by such
managing Underwriters; and second, if further reduction or limitation is
required, the number of Securities to be offered for the account of the Holders
shall be reduced or limited on a pro rata basis in proportion to the relative
number of Registrable Securities of the Holders participating in such
registration.
(c) Withdrawal Election. If, as a result of the proration
provisions of this Section 2.3, any Holder shall not be entitled to include at
least 50% of the Registrable Securities in a Demand Registration or Piggy-Back
Registration that such Holder has requested to be included, such Holder may
elect to withdraw his, her or its request to include Registrable Securities in
such registration (a "Withdrawal Election"); provided, however, that a
Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a Holder
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shall no longer have any right to include Registrable Securities in the
registration as to which such Withdrawal Election was made.
ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1 Filings; Information. In connection with any
Demand Registration or Piggy-Back Registration, the Company will use its
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request:
(a) Registration Statements. The Company will prepare and
file with the Commission a registration statement (which, in the case of an
underwritten public offering, shall be on Form S-3 (unless the Company does not
qualify for use of Form S-3 in a registration involving only a secondary
offering as provided in the General Instructions to Form S-3 in such
registration, in which case such registration statement shall be a Form S-1) or
other form of general applicability satisfactory to the managing underwriter
selected as therein provided) with respect to such securities and use its
reasonable best efforts to cause such registration statement to become effective
and remain effective (i) until the completion of the distribution in the case of
a registration statement on Form S-3 or (ii) for no longer than 180 days in the
case of a registration statement on Form S-1; provided, however, that the
Company shall be required to keep each registration statement pursuant to a
Demand Registration effective for not less than 180 days (or until the
Registrable Securities included in such Demand Registration have been disposed
of pursuant thereto).
(b) Amendments and Supplements. The Company will prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for the period specified
in subsection (a) above and as to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such registration statement in accordance with the intended method of
disposition set forth in such registration statement for such period.
(c) Copies for Review. The Company will, as far in
advance as practicable, prior to filing a registration statement or prospectus
or any amendment or supplement thereto, furnish copies of such registration
statement as proposed to be filed, together with exhibits thereto if requested,
to (i) each Selling Holder, (ii) not more than one counsel representing all
Selling Holders, to be selected by a majority-in-interest of such Selling
Holders, and (iii) each Underwriter, if any, of the Registrable Securities
covered by such registration statement which documents will be subject to review
and approval by the foregoing within three (3) business days after delivery, and
thereafter as far in advance as practicable, furnish to such Selling
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Holders, counsel and Underwriters, if any, for their review and comment such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein if requested), the Prospectus included in such registration
statement (inducing each preliminary prospectus) and such other documents or
information as such Selling Holders, counsel or Underwriters may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Selling Holders.
(d) Stop Orders. After the filing of the registration
statement, the Company will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(e) Blue Sky. The Company will use its reasonable best
efforts to (i) register or qualify the Registrable Securities under such other
securities or blue sky laws of such jurisdictions in the United States as any
Selling Holder reasonably (in light of such Selling Holder's intended plan of
distribution) requests, and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
in the United States as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Selling Holder to consummate
the disposition of the Registrable Securities owned by such Selling Holder;
provided, that the Company will not be required to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subsection (e), (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in any such
jurisdiction.
(f) Certain Events. The Company will immediately notify
each Selling Holder, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the Holders of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment. The Company will promptly
prepare and if required, cause to become effective, such supplement or amendment
and deliver sufficient copies thereof to each Selling Holder.
(g) Agreements. The Company and the Selling Holders will
enter into customary agreements (including, if applicable, an underwriting
agreement in customary form and which is reasonably satisfactory to the Company)
and take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities; and the Selling
Holders may, at their option, require that any or all of the
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representations, warranties and covenants of the Company or to or for the
benefit of such Underwriters also be made to and for the benefit of such Selling
Holders.
(h) Other. The Company will use its reasonable best
efforts to (i) obtain an opinion of counsel for the Company covering such
matters as the Selling Holders or the Underwriter(s), if any, shall reasonably
request; (ii) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
contained in cold comfort letters as the Selling Holders or the Underwriter(s),
if any, shall reasonably request; and (iii) if reasonably requested by the
Selling Holders, cause the Registrable Securities included in such registration
statement to be (A) listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed or (B) authorized to be quoted
on the NASD's Automated Quotation System ("Nasdaq") or the National Market
System of Nasdaq if the Registrable Securities so qualify.
(i) Due Diligence. The Company will make reasonably
available to each Selling Holder (and its counsel) and each Underwriter, if any,
subject to restrictions imposed by the United States federal government or any
agency or instrumentality thereof, copies of all correspondence between the
Commission and the Company, its counsel or auditors and will also make available
for inspection by any Selling Holder, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other professional retained by any such Selling Holder or Underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided, that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided, further, that if failing the entry of a protective order
or the waiver by the Company permitting the disclosure or release of such
Records, the Inspectors, upon advice of counsel, are compelled to disclose such
Records, the Inspectors may disclose that portion of the Records which counsel
has advised the Inspectors that the Inspectors are compelled to disclose. Each
Selling Holder agrees that information obtained by it solely as a result of such
inspections (not including any information obtained from a third party who,
insofar as is known to the Selling Holder after reasonable inquiry, is not
prohibited from providing such information by a contractual, legal or fiduciary
obligation to the Company) shall be deemed confidential and shall not be used by
it as the basis for any
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market transactions in the securities of the Company or its Affiliates unless
and until such information is made generally available to the public (other than
by the Selling Holders). Each Selling Holder further agrees that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(j) Sales Efforts. In connection with an underwritten
offering, the Company will participate, to the extent reasonably requested by
the managing Underwriter for the offering or the Selling Holders, in customary
efforts to sell the securities under the offering, including, without
limitation, participating in "road shows"; provided, that the Company shall not
be obligated to participate in more than one such offering in any 12-month
period.
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or the NASD. Notwithstanding anything contained
herein to the contrary, the Company may exclude from such registration any
Holder who fails to provide such information within a reasonable period of time
in advance of the filing of any registration statement hereunder or an amendment
thereto.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
subsection (f) hereof, such Selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subsection (f)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall
give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in subsection (a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to subsection (f)
hereof to the date when the Company shall make available to the Selling Holders
of Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of subsection (f)
hereof.
SECTION 3.2 Registration Expenses. In connection with any
Demand Registration or Piggy-Back Registration, the Company shall pay the
following registration expenses incurred in connection with the registration
thereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
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qualifications of the Registrable Securities), (iii) processing, duplicating and
printing expenses, (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with the listing of the Registrable Securities, (vi) reasonable fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested but not the cost of any audit other than a year end audit), (vii) the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration, (viii) reasonable fees and expenses of one
firm of counsel for the Holders to be selected by the Holders of at least a
majority of the Registrable Securities to be included in such registration, and
(ix) any other fees and disbursements of underwriters customarily paid by
issuers of securities.
SECTION 3.3 Advice by Company. The Company will keep each
Holder advised as to the completion of any registration contemplated in this
Agreement. At its expense, the Company will furnish promptly to each Holder such
number or copies of prospectuses (including preliminary prospectuses), and all
amendments and supplements thereto, in conformity with the requirements of the
Securities Act, and such other documents as any such Holder from time to time
may reasonably request.
SECTION 3.4 Rule 144 and 144A. The Company covenants that it
will timely file any reports required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 or Rule
144A under the Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Selling Holder, its partners, officers,
directors, employees and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, together with the partners, officers, directors,
employees and agents of such controlling Person (collectively, the "Holder
Covered Persons"), from and against any loss, claim, damage, liability,
reasonable attorneys' fees, cost or expense, costs and expenses of investigating
and defending any such claim, joint or several, and any action in respect
thereof (collectively, the "Damages"), to which such Selling Holder, its
partners, officers, directors, employees and agents, and any such Holder
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Covered Person may become subject under the Securities Act or otherwise, insofar
as such Damages (or actions or proceedings, whether commenced or threatened, or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
any preliminary prospectus, or arise out of, or are based upon, 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, or any violation by
the Company of any federal or state securities law or any rule or regulation
thereof, except insofar as the same are based upon information furnished in
writing to the Company by a Selling Holder expressly for use therein, and shall
reimburse each Holder Covered Person for any legal and other expenses reasonably
incurred by that Holder Covered Person in investigating or defending or
preparing to defend against any such Damages or proceedings; provided, however,
that the Company shall not be liable to any Selling Holder to the extent that
any such Damages (or action or proceeding in respect thereof) arise out of or
are based upon an untrue statement or omission made in any preliminary
prospectus if (i) a copy of the final prospectus was not sent or delivered to
the Person asserting the claim from which such Damages arise on or prior to the
time such delivery is required by the Securities Act, and (ii) the final
prospectus would have corrected such untrue statement or such omission; provided
further, that the Company shall not be liable to any Selling Holder in any such
case to the extent that any such Damages arise out of or are based upon an
untrue statement or omission in any prospectus if (x) such untrue statement or
omission is corrected in an amendment or supplement to such prospectus, and (y)
having previously been furnished by or on behalf of the Company with copies of
such prospectus as so amended or supplemented, such Selling Holder thereafter
fails to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the Person asserting the
claim from which such Damages arise. The Company also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1.
SECTION 4.2 Indemnification by Selling Holders. Each Selling
Holder shall, severally but not jointly, indemnify and hold harmless the
Company, its officers, directors, employees and agents and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the partners, officers,
directors, employees and agents of such controlling Person (collectively,
"Company Covered Persons"), to the same extent as the foregoing indemnity from
the Company to such Selling Holder, but only with reference to information
related to such Selling Holder, or its plan of distribution, furnished in
writing by such Selling Holder or on such Selling Holder's behalf expressly for
use in any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus and the aggregate amount which may be recovered from any Selling
Holder pursuant to the indemnification provided for in this Section 4.2 in
connection with any registration and sale of Registrable Securities shall be
limited to the total proceeds received by such Holder from the sale of such
Registrable Securities. In case any action or proceeding
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13
shall be brought against any Company Covered Person in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company Covered Persons
shall have the rights and duties given to such Selling Holder, by Section 4.1.
Each Selling Holder also agrees to indemnify and hold harmless any Underwriters
of the Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2.
SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after
receipt by any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of
the claim or the commencement of such action; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2 and
except to the extent of any actual prejudice resulting therefrom. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its controlling Persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the reasonable judgment of the Company and such Indemnified Party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
claim or action or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for all
Indemnified Parties, or for fees and expenses that are not reasonable. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding. Whether or not the
defense of any claim or action is assumed by the
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14
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent, which consent will not be
unreasonably withheld.
SECTION 4.4 Contribution. If the indemnification provided for
in this Article 4 is unavailable to the Indemnified Parties in respect of any
Damages referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages (i) as between the
Company and the Selling Holders on the one hand and the Underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other from the offering of the Registrable Securities, or if
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such Damages, as well as any other relevant equitable
considerations, and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4 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 the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be
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15
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriting discounts and commissions) exceeds 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. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. Each Selling
Holder's obligations to contribute pursuant to this Section 4.4 is several in
the proportion that the proceeds of the offering received by such Selling Holder
bears to the total proceeds of the offering received by all the Selling Holders
and not joint.
ARTICLE 5.
LIMITATIONS OF THE COMPANY'S OBLIGATIONS
SECTION 5.1 Other Registration Rights; Holdback. The Company represents
and warrants to the Holders that there is not in effect on the date hereof any
agreement by the Company pursuant to which any holders of Securities of the
Company have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any jurisdiction
that would conflict in any material respect with any provision of this
Agreement. The Company shall not in the future grant to any owner or purchaser
of Securities of the Company any demand registration rights, or any piggyback
registration rights unless (a) such piggyback registration rights are made
subordinate to the rights granted hereunder, including without limitation, so
that each Holder shall have priority to participate in any piggy-back
registration with respect to such other shares of Stock of the Company and (b)
if the offering by the Holders is underwritten, such owner or purchaser agrees
not to sell any shares of Stock of the Company during the period commencing ten
(10) days prior to any such underwritten offering and ending ninety (90) days
following any such underwritten offering (or for such shorter period of time as
is sufficient and appropriate, in the opinion of any managing Underwriter(s)).
If requested by managing Underwriter(s) in any such registration, the Company
shall cause the directors and executive officers of the Company to execute and
deliver similar holdback agreements.
SECTION 5.2 Participation in Underwritten Registrations.
Notwithstanding anything contained herein to the contrary, the Company shall
have no obligation to register the Registrable Securities of any Holder in an
offering to which the Company is also offering securities for sale for its own
account, unless the Holder (other than Benefit Capital Management Corporation
in the case of clause (b) below) enters into (a) an
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16
underwriting agreement in customary form with the Underwriter(s) selected for
the offering by the Company (which shall not require the Holder to indemnify
the Underwriter with respect to misstatements or omissions in the registration
statement other than such misstatements or omissions in written material
supplied by such Holder expressly for inclusion in the registration statement)
and (b) if requested by the Underwriter(s), an agreement appointing one or more
(but not more than three) persons approved by a majority-in-interest of the
Holders whose Registrable Securities are to be included in the registration, to
act as attorney-in-fact for the Holder and as escrow agent for the Registrable
Securities to be included in the offering in customary form. In addition, each
such Holder shall, if requested by the Company, complete and execute any
questionnaires and other documents reasonably required under the terms of such
underwriting arrangements and these registration rights.
SECTION 5.3 Holdback Agreement. For so long as the Holder has
the right to have Registrable Securities included in any registration pursuant
to this Agreement, the Holder agrees in connection with any underwritten
registration of the Company's securities, upon the request of the Underwriters
managing any underwritten offering of the Company's securities, not to effect
any public sale or distribution (including any sale pursuant to Rule 144 of the
Securities Act) of any Registrable Securities without the prior written consent
of the Company or such underwriters, as the case may be, within such periods of
time prior to or after the effective date of such registration, as the Company
or the Underwriters may reasonably specify, but in no event in excess of 180
days. This provision shall apply whether or not any Registrable Securities of
the Holder are included in the offering.
SECTION 5.4 Suspension of Obligation to File. Notwithstanding
the provisions of Section 3.1(a), the Company's obligations to file a
registration statement, or cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 90 days if
there exists at the time material non-public information relating to the
Company that, in the reasonable opinion of the Company, should not be
disclosed.
SECTION 5.5 Satisfaction of Demand Registration Obligation.
The Company shall be deemed to have satisfied its obligations hereunder with
regard to a Demand Registration (including any obligation with regard to a
request of Selling Holders to register their Registrable Securities on Form S-3
as provided in Section 2.1(a) hereof) if, at the time of a Demand Registration
request (including a request of Selling Holders to have their Registrable
Securities registered on Form S-3) under Section 2.1(a) hereof, the requesting
Selling Holders may sell their Registrable Securities in accordance with the
method of disposition elected by such Selling Holders pursuant to an effective
registration statement of the Company or pursuant to such registration
statement subject to the Company amending the same or supplementing the
prospectus included therein; provided, however, that the Company must effect
such amendment or file such supplement; and provided, further, that the Company
must agree thereafter to keep the registration statement effective, subject to
the limitations set forth herein, for at least 180 days following such request,
amendment effective date or supplement filing date, as the case may be.
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17
ARTICLE 6.
MISCELLANEOUS
SECTION 6.1 Amendment and Modification. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by the party against whom the enforcement of such waiver is sought.
This Agreement may not be amended, modified or supplemented other than by a
written instrument signed by holders of a majority of the Registrable
Securities; provided, however, that without the consent of the Holders, no
amendment or modification which materially and adversely affects the ability of
such Holders to have securities registered hereunder may be effected. No course
of dealing between or among any Persons having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any Person under or by reason of this
Agreement.
SECTION 6.1 No Waiver. No failure on the part of the Company
or the Investors in exercising any right, power or privilege granted hereunder
shall operate as a waiver thereof or of any other right, power or privilege,
nor shall any single or partial exercise of such right, power or privilege
preclude any other or further exercise thereof or of any other right, power or
privilege.
SECTION 6.2 Successors and Assigns; Entire Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and executors, administrators and heirs. This Agreement sets forth the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior discussions, oral and written
agreements (including without limitation that certain Registration Rights
Agreement, dated as of November 2, 1995, by and among the Company and the
Existing Investors) and understandings of any and every nature among them.
SECTION 6.3 Severability. In the event that any provision of
this Agreement or the application of any provision hereof is declared to be
illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected except to
the extent necessary to delete such illegal, invalid or unenforceable provision
unless that provision held invalid shall substantially impair the benefits of
the remaining portions of this Agreement.
SECTION 6.4 Notices. All notices, demands, requests, consents
or approvals (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served or mailed, registered or certified, return
receipt requested, postage prepaid (or by a substantially similar method), or
delivered by a reputable overnight courier service with charges prepaid, or
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18
transmitted by hand delivery, telegram, telex or facsimile, addressed as set
forth below, or such other address as such party shall have specified most
recently by written notice:
(1) If to the Company:
Park `N View, Inc.
0000 XX 00xx Xxxxxx, Xxxxxxxx 00
Xxxx Xxxxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx X'Xxxxxxx, Esq.
Xxxxxx Stockton, LLP
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(2) If to the Holder, at the most current address, and
with a copy to be sent to each additional address, given by such Holder to the
Company in writing, and copies sent to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Notice shall be deemed given or delivered on the date of service or
transmission if personally served or transmitted by telegram, telex or
facsimile (with telephonic confirmation of receipt). Notice otherwise sent as
provided herein shall be deemed given or delivered on the third business day
following the date mailed or on the next business day following delivery of
such notice to a reputable overnight courier service.
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19
SECTION 6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 6.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this
Agreement, nor shall they affect their meaning, construction or effect.
SECTION 6.8 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
SECTION 6.9 Further Assurances. Each party shall cooperate
and take such action as may be reasonably requested by another party in order
to carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 6.10 Remedies. In the event of a breach or a
threatened breach by any party to this Agreement of its obligations under this
Agreement, any party injured or to be injured by such breach will be entitled
to specific performance of its rights under this Agreement or to injunctive
relief, in addition to being entitled to exercise all rights provided in this
Agreement and granted by law. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties
that the remedy at law, inducing monetary damages, for breach of any such
provision will be inadequate compensation for any loss and that any defense or
objection in any action for specific performance or injunctive relief that a
remedy at law would be adequate is waived.
SECTION 6.11 Pronouns. Whenever the context may require, any
pronouns used herein shall be deemed also to include the corresponding neuter,
masculine or feminine forms.
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20
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PARK `N VIEW, INC.
By: /s/ Xxx Xxxxxxxx
--------------------------------
Name:
Title:
INVESTORS
Existing Investors whose signatures appear
on Exhibit A hereto, and the Investors whose signatures appear on Exhibit B
hereto
- 20 -
21
EXHIBIT A
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name:
Title:
XXXXXX & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/ OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name:
Title:
/s/ Xxxxxxx Xxxxxxx
-----------------------------
Xxxxxxx Xxxxxxx
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22
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By:/s/ Xxxx Xxxx
-----------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/ Xxx XxXxxxx
-----------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as
Trustee of Dynamic Growth Fund II
By: /s/ X X Xxxxxxxxxx
-----------------------------
Name:
Title:
By: /s/ X X Xxxxxxx
-----------------------------
Name:
Title:
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23
EXHIBIT B
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.(Its General Partner)
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name:
Title:
XXXXXX & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name:
Title:
/s/ Xxxxxxx Xxxxxxx
-----------------------------
Xxxxxxx Xxxxxxx
