EXHIBIT 4.3
================================================================================
$287,500,000
5 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2007
REGISTRATION RIGHTS AGREEMENT
Dated as of November 14, 2000
by and among
PEREGRINE SYSTEMS, INC.
and
BANC OF AMERICA SECURITIES LLC
BEAR, XXXXXXX & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
================================================================================
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of November 14, 2000 by and among Peregrine Systems, Inc., a
Delaware corporation (the "COMPANY"), and Banc of America Securities LLC, Bear,
Xxxxxxx & Co. Inc., and Prudential Securities Incorporated (each an "INITIAL
PURCHASER" and collectively, the "INITIAL PURCHASERS"). The Company proposes to
issue and sell to the Initial Purchasers (the "INITIAL PLACEMENT") $250,000,000
in aggregate principal amount of its 5 1/2% Convertible Notes due 2007 (the
"FIRM CONVERTIBLE NOTES"). The Company also proposes to issue and sell to the
Initial Purchasers not more than $37,500,000 in agregate principal amount of its
5 1/2% Convertible Subordinated Notes due 2007 (the "ADDITIONAL CONVERTIBLE
NOTES" and, together with the Firm Convertible Notes, the "NOTES"). As an
inducement to the Initial Purchasers to enter into the purchase agreement, dated
as of November 9, 2000 (the "PURCHASE AGREEMENT"), and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company agrees
with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders from time to time of the Notes whose names
appear in the register maintained by the Registrar in accordance with the
provisions of the Indenture (as defined in Section 1 hereof) (including the
Initial Purchasers), as follows:
SECTION 1 DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"ACT" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"AFFILIATE" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" means this Registration Rights Agreement.
"CLOSING" has the meaning set forth in Section 3(a) hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value $0.001
per share, issuable upon the conversion of the Notes
"DAMAGES PAYMENT DATE" means each Interest Payment Date. For purposes
of this Agreement, if no Notes are outstanding, "Damages Payment Date" shall
mean each May 15 and November 15.
2
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"HOLDER" has the meaning set forth in Section 2 hereof.
"INDENTURE" means the Indenture, dated as of November 14, 2000, between
the Company and the Trustee, relating to the Notes, as the same may be amended
from time to time in accordance with the terms thereof.
"INITIAL PLACEMENT" has the meaning set forth in the preamble hereto.
"INTEREST PAYMENT DATE" has the meaning set forth in the Indenture.
"LOSSES" has the meaning set forth in Section 7(d) hereof.
"MAJORITY HOLDERS" means the Holders of a majority of the aggregate
principal amount of securities registered under a Shelf Registration Statement.
"PROSPECTUS" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of Transfer Restricted Securities covered by such Shelf
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments and including all information incorporated
by reference into such Prospectus.
"REGISTRATION DEFAULT" has the meaning set forth in Section 3(d).
"SHELF REGISTRATION" means a registration effected pursuant to Section
3 hereof.
"SHELF REGISTRATION PERIOD" has the meaning set forth in Section 3(b)
hereof.
"SHELF REGISTRATION STATEMENT" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 3 hereof that covers some
or all of the Transfer Restricted Securities as applicable, on an appropriate
form under Rule 415 under the Act, or any similar rule that may be adopted by
the Commission, amendments and supplements to such registration statement,
including post-effective amendments, and in each case, including the Prospectus
contained therein, all exhibits thereto and all material incorporated therein by
reference.
"SPECIAL INTEREST" has the meaning set forth in Section 3(d) hereof.
"SUPPLEMENTAL DELAY PERIOD" means any period commencing on the date of
receipt by a Holder of Transfer Restricted Securities of any notice from the
Company of the existence of any fact or event of the kind described in Section
4(b)(2) hereof and ending on the date of receipt by such Holder of an amended or
supplemented Shelf Registration Statement or Prospectus, as contemplated by
Section 4(h) hereof, or the receipt by such Holder of written notice from the
3
Company (the "ADVICE") that the use of the Prospectus may be resumed, and the
receipt of copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus.
"TRANSFER RESTRICTED SECURITIES" means each Note and the Common Stock
issuable upon conversion thereof until (i) the date on which such Note or the
Common Stock issuable upon conversion thereof has been effectively registered
under the Act and disposed of in accordance with the Shelf Registration
Statement, (ii) the date on which such Note or Common Stock issuable upon
conversion thereof is distributed to the public pursuant to Rule 144 under the
Act (or any similar provision then in effect) or is salable pursuant to Rule
144(k) under the Act or (iii) the date on which such Note or the Common Stock
issuable upon conversion thereof ceases to be outstanding.
"TRUSTEE" means the trustee with respect to the Notes under the
Indenture.
"UNDERWRITER" means any underwriter of Notes in connection with an
offering thereof under a Shelf Registration Statement.
SECTION 2 HOLDERS
A person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such person becomes the registered holder of such
Transfer Restricted Securities and includes broker-dealers that hold Transfer
Restricted Securities (i) as a result of market making activities and other
trading activities and (ii) which were acquired directly from the Company or an
Affiliate of the Company.
SECTION 3 SHELF REGISTRATION
(a) The Company shall within 90 days of the date of the first closing
of the sale of the Notes (the "CLOSING"), use commercially reasonable efforts to
file with the Commission, and thereafter shall use commercially reasonable
efforts to cause to be declared effective under the Act on or prior to 180 days
after the Closing, a Shelf Registration Statement relating to the offer and sale
of the Transfer Restricted Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement.
(b) The Company shall use commercially reasonable efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of two
years from the Closing or such shorter period that will terminate when (i) all
the Transfer Restricted Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement, (ii) the date on
which, in the opinion of counsel to the Company, all of the Transfer Restricted
Securities then held by the Holders may be sold without restrictions by such
Holders in the public United States securities markets in the absence of a
registration statement covering such sales or (iii) the date on which there
ceases to be outstanding any Transfer Restricted Securities (in any such case,
such period being called the "SHELF REGISTRATION PERIOD").
4
(c) Upon (i) the occurrence of any event or the existence of any fact
as a result of which the Shelf Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or (ii) the existence of any pending corporate development that,
in the reasonable discretion of the Company, makes it appropriate to suspend the
availability of the Shelf Registration Statement and related Prospectus, or
(iii) the issuance by the Commission of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement, the Company shall
be entitled to suspend the availability of the Shelf Registration Statement or
any Prospectus during a Supplemental Delay Period, without incurring or accruing
any obligation to pay Special Interest, no more than one (1) time in any three
month period or four (4) times in any twelve month period, and any Supplemental
Delay Period shall, without incurring any obligation to pay Special Interest,
not exceed 30 days; provided, however, that in the case of corporate development
relating to an acquisition or a probable acquisition or financing,
recapitalization, business combination or other similar transaction, the Company
may, without incurring any obligation to pay Special Interest, deliver to the
Holders a second notice to the effect set forth above, which shall have the
effect of extending the Supplemental Delay Period by up to an additional 30
days, or such shorter period of time as is specified in such second notice;
provided, however, that the aggregate duration of any Supplemental Delay Periods
shall not exceed 30 days in any period of three consecutive months (or 60 days
in any period of three consecutive months in the event the Company has delivered
a second notice as required above) or 90 days in any period of twelve
consecutive months.
(d) If:
(i) the Shelf Registration Statement is not filed with the
Commission on or prior to 90 days after the Closing;
(ii) the Shelf Registration Statement has not been declared
effective by the Commission on or prior to 180 days after the Closing;
or
(iii) the Shelf Registration Statement is filed and declared
effective but, during the Shelf Registration Period, shall thereafter
cease to be effective or fail to be usable for its intended purpose or
if the Company suspends the use of the Prospectus forming a part
thereof; except under the circumstances and for the time periods set
forth in Section 3(c) above,
(each such event referred to in foregoing clauses (i) through (iii), a
"REGISTRATION DEFAULT"), the Company hereby agrees to pay additional interest
("SPECIAL INTEREST") with respect to the Transfer Restricted Securities from and
including the day following the Registration Default to but excluding the day on
which the Registration Default has been cured, which shall accrue as follows:
5
(A) in respect of the Notes, to each Holder of Notes at the
rate of an additional 0.5% per year of the principal amount of the
Notes held by such Holders; and
(B) in respect of any shares of Common Stock issued upon
conversion of Notes, to each holder of such shares of Common Stock at
the rate of an additional 0.5% per year of the principal amount of the
Notes formerly held by such holders that were converted into such
shares of Common Stock.
(e) All accrued Special Interest shall be paid in arrears to Holders by
the Company on each Damages Payment Date by wire transfer of immediately
available funds pursuant to the notice requirements of Section 4(l). Following
the cure of all Registration Defaults relating to any particular Note or share
of Common Stock issued upon conversion of Notes, the accrual of Special Interest
with respect to such Note or such share of Common Stock shall cease.
SECTION 4 REGISTRATION PROCEDURES
In connection with any Shelf Registration Statement, the following
provisions shall apply:
(a) The Company shall ensure that (i) any Shelf Registration Statement
and any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the Act
and the rules and regulations thereunder, (ii) any Shelf Registration Statement
and any amendment thereto does not, when it becomes effective, 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 not misleading and
(iii) except as permitted by Section 3, any Prospectus forming part of any Shelf
Registration Statement, and any amendment or supplement to such Prospectus, does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(b) (1) The Company shall advise the Initial Purchasers and the Holders
of Transfer Restricted Securities named in any Shelf Registration Statement that
have provided in writing to the Company a telephone or facsimile number and
address for notices, and, if requested by the Initial Purchasers or any such
Holder, confirm such advice in writing when a Shelf Registration Statement and
any amendment thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has become
effective.
(2) The Company shall advise the Initial Purchasers and the Holders
of Transfer Restricted Securities named in any Shelf Registration Statement,
which have provided in writing to the Company a telephone or facsimile number
and address for notices, and, if requested by the Initial Purchasers or any such
Holder, confirm such advice in writing:
(i) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information;
6
(ii) of the initiation by the Commission of proceedings
relating to a stop order suspending the effectiveness of the Shelf
Registration Statement;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the existence of any fact and the happening of any
event (including, without limitation, pending negotiations relating to,
or the consummation of, a transaction or the occurrence of any event
which would require additional disclosure of material non-public
information by the Company in the Shelf Registration Statement as to
which the Company has a bona fide business purpose for preserving
confidential or which renders the Company unable to comply with
Commission requirements) that, in the opinion of the Company, makes
untrue any statement of a material fact made in its Shelf Registration
Statement, the Prospectus or any amendment or supplement thereto or any
document incorporated by reference therein or requires the making of
any changes in the Shelf Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading and do
not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading.
Such advice may be accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made.
(c) The Company shall use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of any Shelf Registration
Statement at the earliest possible time.
(d) The Company shall use commercially reasonable efforts to furnish to
each selling Holder named in any Shelf Registration Statement who so requests in
writing and who has provided to the Company an address for notices, without
charge, at least one conformed copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and, if the
Holder so requests in writing, all exhibits and schedules (including those
incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Transfer Restricted Securities named in any Shelf Registration
Statement and who has provided to the Company an address for notices, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
contained in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; subject to any notice by the
Company in accordance with Section 5(b) hereof, the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders for the purposes of offering and resale of the Transfer Restricted
Securities
7
covered by the Prospectus in accordance with the applicable regulations
promulgated under the Act and any restrictions set forth in the Prospectus.
(f) Prior to any offering of Transfer Restricted Securities pursuant to
any Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Transfer Restricted Securities named therein and
their respective counsel in connection with the registration or qualification of
such Transfer Restricted Securities for offer and sale under the securities or
blue sky laws of such jurisdictions of the United States as any such Holders
reasonably request in writing not later than the date that is five business days
prior to the date upon which this Agreement specifies that the Shelf
Registration Statement shall become effective; PROVIDED, HOWEVER, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general or unlimited service of process or to taxation in any such
jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of Transfer Restricted
Securities to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request in writing.
(h) Except to the extent otherwise permitted under Section 3, upon the
occurrence of any event contemplated by paragraph 4(b)(2)(v) hereof, the Company
shall promptly prepare a post-effective amendment to any Shelf Registration
Statement or an amendment or supplement to the related Prospectus or file any
other required document so that as thereafter delivered to purchasers of the
Transfer Restricted Securities covered thereby, the Prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(i) Not later than the effective date of any such Shelf Registration
Statement hereunder, the Company shall cause to be provided a CUSIP number for
the Notes registered under such Shelf Registration Statement, and provide the
applicable trustee with certificates for such Notes in a form eligible for
deposit with The Depository Trust Company.
(j) The Company shall make generally available to its security holders
in a regular filing on Form 10-Q or 10-K an earnings statement satisfying the
provisions of Rule 158 (which need not be audited) for the twelve-month period
commencing after effectiveness of the Shelf Registration Statement.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act prior to the effectiveness of the Shelf Registration
Statement.
(l) The Company may require each Holder of Transfer Restricted
Securities, which are to be sold pursuant to any Shelf Registration Statement,
to furnish to the Company within 20 business days after written request for such
information has been made by the Company, such information regarding the Holder
and the distribution of such securities as the Company may from time to time
reasonably require for inclusion in such Shelf Registration Statement and such
8
other information as may be necessary or advisable in the reasonable opinion of
the Company and its counsel, in connection with such Shelf Registration
Statement. No Holder of Transfer Restricted Securities shall be entitled to the
benefit of any Special Interest (as set forth in the Notes) under the Indenture
and the Notes or be entitled to use the Prospectus unless and until such Holder
shall have furnished the information required by this Section 4(l) and all such
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
(m) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Majority Holders reasonably agree should be
included therein in order to effect their distribution of the Notes and shall
make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; PROVIDED, HOWEVER, that the
Company shall not be required to take any action pursuant to this Section 4(m)
that would, in the opinion of counsel for the Company, violate applicable law or
to include information the disclosure of which at the time would have a material
adverse effect on the business or operations of the Company and/or its
subsidiaries, as determined in good faith by the Company.
(n) In the case of any Shelf Registration Statement, the Company shall:
(i) make available at reasonable times prior to the
effectiveness of the related Shelf Registration Statement for
inspection by representatives of the Holders of Transfer Restricted
Securities to be registered thereunder and any attorney, accountant or
other agent retained by such Holders, at the office where normally kept
during normal business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the Company's officers, directors and employees
to supply all relevant information reasonably requested by the Holders'
attorneys, accountants or other agents in connection with any such
Shelf Registration Statement as is customary for similar due diligence
examinations; PROVIDED, HOWEVER, that the foregoing inspection and
information gathering shall be coordinated by one counsel designated by
the Holders and that such persons shall first agree in writing with the
Company that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by such person, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; and
(ii) upon the effectiveness of such Shelf Registration
Statement and the effectiveness of each post-effective amendment
thereto, deliver such documents and certificates as may be reasonably
requested by the Majority Holders, including those to evidence
compliance with Section 4(h).
(iii) The Company may offer securities of the Company other
than the Notes under the Shelf Registration Statement, except where
such offer would conflict with the terms of the Purchase Agreement.
9
SECTION 5 HOLDERS' AGREEMENTS
Each Holder of Transfer Restricted Securities severally but not
jointly, by the acquisition of such Transfer Restricted Securities, agrees:
(a) To furnish the information required to be furnished pursuant to
Section 4(l) hereof within the time period set forth therein.
(b) That upon receipt of a notice of the commencement of a Supplemental
Delay Period, it will keep the fact of such notice confidential, forthwith
discontinue disposition of its Transfer Restricted Securities pursuant to the
Shelf Registration Statement, and will not deliver any Prospectus forming a part
thereof until receipt of the amended or supplemented Shelf Registration
Statement or Prospectus, as applicable, as contemplated by Section 4(h) hereof,
or until receipt of the Advice.
(c) If so directed by the Company in a notice of the commencement of a
Supplemental Delay Period, each Holder of Transfer Restricted Securities will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering the Transfer Restricted Securities.
(d) Sales of such Transfer Restricted Securities pursuant to a Shelf
Registration Statement shall only be made in the manner set forth in such
currently effective Shelf Registration Statement and in accordance with
applicable law.
SECTION 6 REGISTRATION EXPENSES
The Company shall bear all expenses incurred in connection with the
performance of its obligations under Sections 3 and 4 hereof and will reimburse
the Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection with any Shelf Registration Statement. Notwithstanding the foregoing
or anything in this Agreement to the contrary, each Holder shall pay all
underwriting discounts and commission of any Underwriters with respect to any
Transfer Restricted Securities sold by it.
SECTION 7 INDEMNIFICATION AND CONTRIBUTION
(a) In connection with the Shelf Registration Statement and to the
extent permitted by law, the Company agrees to indemnify and hold harmless each
Holder of Transfer Restricted Securities covered thereby (including each Initial
Purchaser), the directors, officers, employees, partners, representatives and
agents of each such Holder and each person who controls any such Holder within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an "indemnified
party") against any and all losses, claims, damages, judgments or liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the Shelf
Registration Statement as originally
10
filed or in any amendment thereof, or in any Prospectus, or in any amendment
thereof or supplement thereto, or arise out of, or are based upon, the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, judgment, liability or action; PROVIDED,
HOWEVER, that (i) the Company will not be liable in any case to the extent that
any such loss, claim, damage or liability arises out of, or is based upon, any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder
specifically for inclusion therein and (ii) the Company will not be liable to
any indemnified party under this indemnity agreement with respect to the Shelf
Registration Statement or Prospectus to the extent that any such loss, claim,
damage or liability of such indemnified party results solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, the Shelf Registration Statement or Prospectus, which untrue statement or
omission was corrected in an amended or supplemented Shelf Registration
Statement or Prospectus, if the person alleging such loss, claim, damage or
liability was not sent or given, at or prior to the written confirmation of such
sale, a copy of the amended or supplemented Shelf Registration Statement or
Prospectus if the Company had previously furnished copies thereof to such
indemnified party and if delivery of a prospectus is required by the Act and was
not so made. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Holder of Transfer Restricted Securities covered by a Shelf
Registration Statement (including each Initial Purchaser) severally agrees to
indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs such Shelf Registration Statement and (iv) each
person who controls the Company within the meaning of either the Act or the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each such Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder specifically
for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have. In no event shall any Holder, its directors, officers or any
person who controls such Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Shelf
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) Promptly after receipt by an indemnified party under this Section 7
or notice of the commencement of any action, the indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the failure to so notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party
11
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party shall
be entitled to assume the defense of any such claim and to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to represent
the indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); PROVIDED, HOWEVER, that such counsel shall
be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and local
counsel) if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party, and the
indemnified party reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, (iii) the indemnifying
party did not employ counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party authorized the indemnified party
to employ separate counsel at the expense of the indemnifying party. The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against all losses, claims, damages and liabilities by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. Notwithstanding the
immediately preceding sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, an indemnifying party shall not be liable for any
settlement of the nature contemplated by the immediately preceding sentence
effected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent that it
considers such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case, prior to the date of settlement. An indemnifying party shall not, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding for which indemnification or contribution may
be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action), unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 7 is unavailable or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall to the extent
12
permitted by law have a joint and several obligation to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "LOSSES") to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, from the Initial Placement and the Shelf Registration Statement that
resulted in such Losses; PROVIDED, HOWEVER, that in no case shall any Initial
Purchaser be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Note, as set forth in Section
2 of the Purchase Agreement. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits, but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the sum of (x) the total
net proceeds from the Initial Placement (before deducting expenses) as set forth
in Section 2 of the Purchase Agreement and (y) the total amount of additional
interest that the Company was not required to pay as a result of registering the
securities covered by the Shelf Registration Statement that resulted in such
Losses. Benefits received by the Initial Purchasers shall be deemed to be equal
to the total purchase discounts and commissions as set forth in Section 2 of the
Purchase Agreement, and benefits received by any other Holders shall be deemed
to be equal to the value of the Transfer Restricted Securities sold by such
Holders under the Shelf Registration Statement. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand, or
by the indemnified party, on the other hand. The parties agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls a Holder within the meaning of either the
Act or the Exchange Act and each director, officer, employee and agent of such
Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d). The obligations of each Holder and
each Initial Purchaser hereunder are several and not joint.
(e) The provisions of this Section 7 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred to
in Section 7 hereof, and will survive the sale by a Holder of Transfer
Restricted Securities or Exchange Notes.
SECTION 8 RULE 144A AND RULE 144
13
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 9 MISCELLANEOUS
(a) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that would prevent the Company from
satisfying or continuing to satisfy its obligations herein or that would
otherwise conflict with the provisions hereof. Without limiting the foregoing,
the Company may from time to time grant registration rights to holders of its
securities so long as such rights do not diminish the contractual obligations of
the Company to the Holders herein.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of Notes; PROVIDED, HOWEVER, that with respect to any matter that
directly or indirectly adversely affects the rights of any Initial Purchaser
hereunder, the Company shall obtain the written consent of each such Initial
Purchaser against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to depart from the provisions hereof, with respect
to a matter, which relates exclusively to the rights of Holders whose securities
are being sold pursuant to a Shelf Registration Statement and does not directly
or indirectly adversely affect the rights of other Holders, may be given by the
Majority Holders, determined on the basis of Notes being sold rather than
registered under such Shelf Registration Statement.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this Section
9(c), which address initially is, with respect to each Holder, the
address of such Holder maintained by the registrar under the Indenture
(ii) with a copy in like manner to Banc of America Securities
LLC;
14
(iii) if to the Initial Purchasers, initially at the
respective addresses set forth in the Purchase Agreement; and
(iv) if to the Company, initially at its address set forth in
the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
Upon the date of filing of a Shelf Registration Statement notice shall
be delivered to Banc of America Securities LLC, on behalf of the Initial
Purchasers in the form attached hereto as Exhibit A.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assigns of each of the parties
hereto, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Notes. The Company hereby agrees to
extend the benefits of this Agreement to any Holder of Notes and any such Holder
may specifically enforce the provisions of this Agreement as if an original
party hereto.
(e) COUNTERPARTS. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State (without reference to the
conflict of law rules thereof).
(h) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) NOTES HELD BY THE COMPANY, ETC. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Notes is required
hereunder, Notes held by the Company or its Affiliates (other than subsequent
Holders of Notes if such subsequent Holders are deemed to be Affiliates solely
by reason of their holdings of such Notes) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
15
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto with respect
to the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PEREGRINE SYSTEMS, INC.
By:
----------------------------
Name:
Title:
00
XXXX XX XXXXXXX SECURITIES LLC
BEAR, XXXXXXX & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
By: BANC OF AMERICA SECURITIES LLC
By:
-------------------------------------------------
Name:
Title: Managing Director
17
EXHIBIT A
NOTICE OF FILING OF
SHELF REGISTRATION STATEMENT
To: Banc of America Securities LLC
___________________
New York, New York _____
Attention: _______________________________________
Fax: ______________
From: Peregrine Systems, Inc.
5 1/2% Convertible Subordinated Notes due 2007
Date: _________________, 200_
For your information only (NO ACTION REQUIRED):
Today, _______________, ____, we filed a Shelf Registration Statement with the
Securities and Exchange Commission.
18
