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EXHIBIT 10.63
REGISTRATION RIGHTS AGREEMENT
by and between
FUTURELINK CORP.
and
The INITIAL HOLDER Specified on
the Signature Pages Hereof
Dated as of November 16, 2000
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REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
November 16, 2000, by and between FutureLink Corp., a Delaware corporation (the
"Company"), and the holders specified on the signature pages to this Agreement.
W I T N E S S E T H :
WHEREAS, simultaneously herewith, the Company, and the lenders that
are signatories thereto (the "Lenders") have entered into a Loan and Security
Agreement, dated as of the date hereof (the "Loan and Security Agreement").
WHEREAS, in order to induce the Lenders to enter into the Loan and
Security Agreement, the Company is issuing and delivering to Foothill Capital
Corporation ("Foothill") or their nominees or assignees (the "Initial Holder")
warrants (the "Warrants") to purchase Common Shares (the Common Shares issued or
issuable upon exercise of the Warrants are hereinafter referred to as the
"Warrant Shares"), and the Company has further agreed to provide certain
registration rights in respect of the Registrable Securities (as defined below)
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the Company hereby agrees with the Initial Holders as
follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person, and (ii) with respect to any
individual, shall also mean the spouse, sibling, child, step-child, grandchild,
niece, nephew or parent of such Person, or the spouse thereof.
"Blackout Period" shall have the meaning set forth in Section 2.6.
"Common Shares" shall mean shares of common stock, par value $.0001
per share, of the Company.
"Company" shall have the meaning set forth in the preamble.
"Demand Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration statement
of the Company which covers the Registrable Securities requested to be included
therein pursuant to the provisions of Section 2.1 and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference (or deemed to be incorporated by
reference) therein.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Holders" shall mean the Initial Holders for so long as they are
the registered owners of any Registrable Securities and such of their respective
heirs, successors and permitted assigns (including any permitted transferees of
Registrable Securities) who acquire or are otherwise the transferee of
Registrable Securities, directly or indirectly, from such Initial Holders (or
any subsequent Holders), for so long as such heirs, successors and permitted
assigns are the registered owner of any Registrable Securities. For purposes of
this Agreement, a Person will be deemed to be a Holder whenever such Person
holds an option to purchase, or a security convertible into or exercisable or
exchangeable for, Registrable Securities, whether or not such purchase,
conversion, exercise or exchange has actually been effected and disregarding any
legal restrictions upon the exercise of such rights. Registrable Securities
issuable upon exercise of an option or upon conversion, exchange or exercise of
another security shall be deemed outstanding for the purposes of this Agreement.
"Holders' Counsel" shall mean one firm of counsel (per
registration) to the Holders of Registrable Securities participating in such
registration, which counsel shall be selected (i) in the case of a Demand
Registration, by the Initiating Holders holding a majority of the Registrable
Securities for which registration was requested in the Request, and (ii) in all
other cases, by the Majority Holders of the Registration.
"Incidental Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a registration
statement of the Company, which covers the Registrable Securities requested to
be included therein pursuant to the provisions of Section 2.2 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Initial Holders" shall mean the Persons specified as such on the
signature pages to this Agreement on the date hereof.
"Initiating Holders" shall mean, with respect to a particular
registration, the Holders who initiated the Request for such registration.
"Majority Holders" shall mean one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities then
outstanding.
"Majority Holders of the Registration" shall mean, with respect to
a particular registration, one or more Holders of Registrable Securities who
would hold a majority of the Registrable Securities to be included in such
registration.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Loan and Security Agreement" shall have the meaning set forth in
the preamble.
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"Person" shall mean any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
"Prospectus" shall mean the prospectus included in a Registration
Statement (including, without limitation, any preliminary prospectus and any
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act) and any such Prospectus as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to such Prospectus, including post-effective amendments, and in each
case including all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Redeeming Holders" shall have the meaning set forth in Section
2.1(h).
"Redemption" shall have the meaning set forth in Section 2.1(h).
"Redemption Notice" shall have the meaning set forth in Section
2.1(h).
"Redemption Price" shall have the meaning set forth in Section
2.1(h).
"Redemption Request" shall have the meaning set forth in Section
2.1(h).
"Registrable Securities" shall mean (i) any Warrant Shares issued
upon exercise of the Warrants, (ii) any Common Shares otherwise or hereafter
purchased or acquired by the Holders or their Affiliates and (iii) any other
securities of the Company (or any successor or assign of the Company, whether by
merger, consolidation, sale of assets or otherwise) which may be issued with
respect to, in exchange for, or in substitution of, Registrable Securities
referenced in clauses (i) and (ii) above by reason of any dividend or stock
split, combination of shares, merger, consolidation, recapitalization,
reclassification, reorganization, sale of assets or similar transaction. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have been declared effective under the Securities
Act and such securities shall have been disposed of in accordance with such
registration statement, (B) such securities are sold pursuant to Rule 144 (or
any similar provisions then in force) under the Securities Act, (C) such
securities have been otherwise transferred, a new certificate or other evidence
of ownership for them not bearing the legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act, or (D) such securities
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all reasonable out of
pocket expenses incident to performance of or compliance with this Agreement by
the Company and its subsidiaries, including, without limitation (i) all SEC,
stock exchange, NASD and other registration, listing and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws and compliance with the rules of any stock exchange (including
fees and disbursements of counsel in connection with such compliance and the
preparation of a blue sky memorandum and legal investment survey), (iii) all
printers' fees
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and costs incurred in printing, distributing, mailing and delivering any
Registration Statement, any Prospectus and any other document relating to the
performance of or compliance with this Agreement, (iv) the fees and
disbursements of counsel for the Company, (v) the fees and disbursements of
Holders' Counsel, (vi) the fees and disbursements of all independent public
accountants (including the expenses of any audit and/or "cold comfort" letters)
and the fees and expenses of other Persons, including experts, retained by the
Company, (vii) the expenses incurred in connection with making road show
presentations and holding meetings with potential investors to facilitate the
distribution and sale of Registrable Securities, (viii) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, (ix) premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered, and (x) all internal expenses of the Company (including all
salaries and expenses of officers and employees performing legal or accounting
duties); provided, however, Registration Expenses shall not include discounts
and commissions payable to underwriters, selling brokers, dealer managers or
other similar Persons engaged in the distribution of any of the Registrable
Securities; and provided further, that in any case where Registration Expenses
are not to be borne by the Company, such expenses shall not include salaries of
Company personnel or general overhead expenses of the Company, auditing fees,
premiums or other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the ordinary course
of its business or which the Company would have incurred in any event; provided,
further, that in the event the Company shall not register any securities with
respect to which it had given written notice of its intention to register to
Holders, notwithstanding anything to the contrary in the foregoing, all of the
costs incurred by the Holders in connection with such registration shall be
deemed to be Registration Expenses.
"Registration Statement" shall mean any registration statement of
the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Request" shall have the meaning set forth in Section 2.1(a).
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder, or any successor
statute.
"Shelf Registration" shall have the meaning set forth in Section
2.1(a).
"Underwriters" shall mean the underwriters, if any, of the offering
being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
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"Warrant Shares" shall mean the Common Shares or other securities
issued or issuable upon the exercise of the Warrants.
"Warrants" shall mean the warrants issued to the Initial Holders
pursuant to the Loan and Security Agreement, together with any additional
warrants issued in accordance with the terms thereof.
"Withdrawn Demand Registration" shall have the meaning set forth in
Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in Section
2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 Demand Registration.
(a) Right to Demand Registration. Subject to Section 2.1(c), at any
time or from time to time, upon receipt of a request in writing from the Holders
of at least 50% of the total Registrable Securities outstanding that the Company
register all or part of such Holders' Registrable Securities (a "Request")
(which Request shall specify the amount of Registrable Securities intended to be
disposed of by such Holders and the intended method of disposition thereof) by
filing with the SEC a Demand Registration Statement. As promptly as practicable,
but no later than 15 days after receipt of a Request, the Company shall give
written notice of such requested registration to all other Holders of
Registrable Securities. Subject to Section 2.1(b), the Company shall include in
a Demand Registration (i) the Registrable Securities intended to be disposed of
by the Initiating Holders and (ii) the Registrable Securities intended to be
disposed of by any other Holder which shall have made a written request (which
request shall specify the amount of Registrable Securities to be registered and
the intended method of disposition thereof) to the Company for inclusion thereof
in such registration within 20 days after the receipt of such written notice
from the Company. Subject to the Company's redemption right pursuant to Section
2.1(h), the Company shall, as expeditiously as possible, following a Request,
use its best efforts to cause to be filed with the SEC a Demand Registration
Statement providing for the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
all such Holders, to the extent necessary to permit the disposition of such
Registrable Securities to be registered in accordance with the intended methods
of disposition thereof specified in such Request or further requests (including,
without limitation, by means of a shelf registration pursuant to Rule 415 under
the Securities Act (a "Shelf Registration") if so requested and if the Company
is then eligible to use such a registration.) The Company shall use its best
efforts to have such Demand Registration Statement declared effective by the SEC
as soon as practicable thereafter and to keep such Demand Registration Statement
continuously effective for the period specified in Section 4.1(b).
A Request may be withdrawn prior to the filing of the Demand
Registration Statement by the Initiating Holders (a "Withdrawn Request") and a
Demand Registration Statement may be withdrawn prior to the effectiveness
thereof by the Initiating Holders (a "Withdrawn Demand Registration"), and such
withdrawals shall be treated as a Demand Registration which shall have been
effected pursuant to this Section 2.1, unless the Holders of
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Registrable Securities to be included in such Registration Statement reimburse
the Company for its reasonable out-of-pocket Registration Expenses relating to
the preparation and filing of such Demand Registration Statement (to the extent
actually incurred), in which case such withdrawal shall not be treated as a
Demand Registration effected pursuant to this Section 2.1 (and shall not be
counted toward the number of Demand Registrations); provided, however, that if a
Withdrawn Request or Withdrawn Registration Statement is made (A) because of a
material adverse change in the business, financial condition or prospects of the
Company, or (B) because the sole or lead managing Underwriter advises that the
amount of Registrable Securities to be sold in such offering be reduced pursuant
to Section 2.1(b) by more than 10% of the Registrable Securities to be included
in such Registration Statement, then such withdrawal shall not be treated as a
Demand Registration effected pursuant to this Section 2.1 (and shall not be
counted toward the number of Demand Registrations), and the Company shall pay
all Registration Expenses in connection therewith. Any Holder requesting
inclusion in a Demand Registration may, at any time prior to the effective date
of the Demand Registration Statement (and for any reason) revoke such request by
delivering written notice to the Company revoking such requested inclusion.
The registration rights granted pursuant to the provisions of this
Section 2.1 shall be in addition to the registration rights granted pursuant to
the other provisions of Section 2 hereof.
(b) Priority in Demand Registrations. If a Demand Registration
involves an Underwritten Offering, and the sole or lead managing Underwriter, as
the case may be, of such Underwritten Offering shall advise the Company in
writing (with a copy to each Holder requesting registration) on or before the
date five days prior to the date then scheduled for such offering that, in its
opinion, the amount of Registrable Securities requested to be included in such
Demand Registration exceeds the number which can be sold in such offering within
a price range acceptable to the Initiating Holders (such writing to state the
basis of such opinion and the approximate number of Registrable Securities which
may be included in such offering), and the Request is not thereafter withdrawn,
the Company shall include in such Demand Registration, to the extent of the
number which the Company is so advised may be included in such offering, first,
the Registrable Securities requested to be included in the Demand Registration
by the Initiating Holders and second, the Registrable Securities requested to be
included in the Demand Registration by any other Holders, allocated pro rata in
proportion to the number of Registrable Securities requested to be included in
such Demand Registration by each of them. In the event the Company shall not, by
virtue of this Section 2.1(b), include in any Demand Registration all of the
Registrable Securities of any Holder requested to be included in such Demand
Registration, such Holder may, upon written notice to the Company given within
five days of the time such Holder first is notified of such matter, further
reduce the amount of Registrable Securities it desires to have included in such
Demand Registration, whereupon only the Registrable Securities, if any, that it
desires to have included will be so included and the Holders not so reducing
shall be entitled to a corresponding pro rata increase in the amount of
Registrable Securities to be included in such Demand Registration.
(c) Limitations on Registrations. The rights of Holders of
Registrable Securities to request Demand Registrations pursuant to Section
2.1(a) are subject to the following limitation: in no event shall the Company be
required to effect, in the aggregate, more
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than two Demand Registrations, provided, however, that such number shall be
increased to the extent the Company (x) does not include in what would otherwise
be the final registration for which the Company is required to pay Registration
Expenses the number of Registrable Securities requested to be registered by the
Holders by reason of Section 2.1(b) or (y) terminates a Shelf Registration
pursuant to Section 2.3 prior to the time that all Registrable Securities
covered by such Shelf Registration have been sold; and provided, further, that
the Registration Expenses in connection with each other Demand Registration
shall be allocated pro rata among all Persons on whose behalf securities of the
Company are included in such registration, on the basis of the respective
amounts of the securities then being registered on their behalf.
(d) Underwriting; Selection of Underwriters. Notwithstanding
anything to the contrary contained in Section 2.1(a), if the Initiating Holders
so elect, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of a firm commitment Underwritten Offering and
such Initiating Holders may require that all Persons (including other Holders)
participating in such registration sell their Registrable Securities to the
Underwriters at the same price and on the same terms of underwriting applicable
to the Initiating Holders. If any Demand Registration involves an Underwritten
Offering, the sole or managing Underwriters and any additional investment
bankers and managers to be used in connection with such registration shall be
selected by the Company subject to the approval of the Initiating Holders.
(e) Effective Registration Statement; Suspension. A Demand
Registration Statement shall not be deemed to have become effective (and the
related registration will not be deemed to have been effected) (i) unless it has
been declared effective by the SEC and remains effective in compliance with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Demand Registration Statement for the
time period specified in Section 4.1(b), (ii) if the offering of any Registrable
Securities pursuant to such Demand Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, or (iii) if, in the case of an Underwritten
Offering, the conditions to closing specified in an underwriting agreement to
which the Company is a party are not satisfied (other than by the sole reason of
any breach or failure by the Holders of Registrable Securities) and are not
otherwise waived.
(f) Registration Statement Form. Registrations under this Section
2.1 shall be on such appropriate registration form of the SEC (i) as shall be
reasonably selected by the Company, and (ii) which shall be available for the
sale of Registrable Securities in accordance with the intended method or methods
of disposition specified in the requests for registration. The Company agrees to
include in any such Registration Statement all information which any selling
Holder, upon advice of counsel, shall reasonably request.
(g) Other Registrations. During the period (i) beginning on the
date of a Request and (ii) ending on the date that is 90 days after the date
that a Demand Registration Statement filed pursuant to such Request has been
declared effective by the SEC or, if the Holders shall withdraw such Request or
such Demand Registration Statement, on the date of such Withdrawn Request or
such Withdrawn Registration Statement, the Company shall not, without the
consent of the Initiating Holders, file a registration statement pertaining to
any other securities of the Company.
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(h) Redemption Right. As promptly as practicable, but no later than
five days after receipt of a Request, the Company shall give written notice (the
"Redemption Notice") to all Holders of Registrable Securities of its intention
to effect the Demand Registration, or its intention to repurchase the
Registrable Securities in lieu of effecting a Demand Registration (the
"Redemption"). Any Redemption Notice notifying Holders of the Company's
intention to effect a Redemption shall include a determination of the Redemption
Price (as defined below). Pursuant to the Redemption, the Company shall
repurchase (i) the Registrable Securities intended to be disposed of by the
Initiating Holders and (ii) the Registrable Securities intended to be disposed
of by any other Holder which shall have made a written request (the "Redemption
Request," which request shall specify the amount of Registrable Securities to be
disposed of) to the Company for inclusion in the Redemption within 20 days after
the receipt of the Redemption Notice from the Company (such Holders are
collectively referred to as the "Redeeming Holders"). The Company shall, as
expeditiously as possible, but no later than 30 days following a Redemption
Notice, effect the Redemption by paying the Redemption Price in cash to the
Redeeming Holders. The Redeeming Holders shall deliver to the Company the
Registrable Securities upon payment of the Redemption Price. For purposes of
this Section 2.1, "Redemption Price" shall be an amount equal to the average for
the ten (10) consecutive business days immediately prior to the date of the
Request of the daily closing prices of the Common Stock on the principal
national securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the last
reported sales prices as included for quotation on Nasdaq, or if not included
for quotation on Nasdaq, the average of the highest reported bid and lowest
reported asked prices as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System, or if not then publicly traded, the
fair market price of the Common Stock as determined by the Board of Directors of
the Company.
The Redeeming Holders may withdraw a Redemption Request at any time
prior to the payment of the Redemption Price (a "Withdrawn Redemption Request")
by delivering written notice to the Company revoking such requested inclusion.
Such withdrawal shall be treated as a Demand Registration which shall have been
effected pursuant to this Section 2.1, unless the Redeeming Holders reimburse
the Company for its reasonable out-of-pocket expenses relating to the Company's
preparation for the Redemption.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any
time or from time to time proposes to register any of its securities under the
Securities Act (other than in a registration on Form S-4 or S-8 or any successor
form to such forms and other than pursuant to Section 2.1 or 2.3) whether or not
pursuant to registration rights granted to other holders of its securities and
whether or not for sale for its own account, the Company shall deliver prompt
written notice (which notice shall be given at least 45 days prior to such
proposed registration) to all Holders of Registrable Securities of its intention
to undertake such registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to be registered and
the distribution arrangements) and of such Holders' right to participate in such
registration under this Section 2.2 as hereinafter provided. Subject to the
other provisions of this paragraph (a) and Section 2.2(b), upon the written
request of any Holder made within 30 days after the receipt of
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such written notice (which request shall specify the amount of Registrable
Securities to be registered and the intended method of disposition thereof), the
Company shall effect the registration under the Securities Act of all
Registrable Securities requested by Holders to be so registered (an "Incidental
Registration"), to the extent required to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered, by inclusion of such Registrable Securities in the
Registration Statement which covers the securities which the Company proposes to
register and shall cause such Registration Statement to become and remain
effective with respect to such Registrable Securities in accordance with the
registration procedures set forth in Section 4. If an Incidental Registration
involves an Underwritten Offering, immediately upon notification to the Company
from the Underwriter of the price at which such securities are to be sold, the
Company shall so advise each participating Holder. The Holders requesting
inclusion in an Incidental Registration may, at any time prior to the effective
date of the Incidental Registration Statement (and for any reason), revoke such
request by delivering written notice to the Company revoking such requested
inclusion.
If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Incidental
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, (A) in
the case of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice, however, to the rights of
Holders to cause such registration to be effected as a registration under
Section 2.1 or 2.3(a) and (B) in the case of a determination to delay such
registration, the Company shall be permitted to delay the registration of such
Registrable Securities for the same period as the delay in registering such
other securities; provided, however, that if such delay shall extend beyond 120
days from the date the Company received a request to include Registrable
Securities in such Incidental Registration, then the Company shall again give
all Holders the opportunity to participate therein and shall follow the
notification procedures set forth in the preceding paragraph. There is no
limitation on the number of such Incidental Registrations pursuant to this
Section 2.2 which the Company is obligated to effect.
The registration rights granted pursuant to the provisions of this
Section 2.2 shall be in addition to the registration rights granted pursuant to
the other provisions of Section 2 hereof.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis), and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially interfering with the successful marketing of the securities being
offered (such writing to state the basis of such opinion and the approximate
number of such securities which may be included in such offering without such
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effect), the Company shall include in such registration, to the extent of the
number which the Company is so advised may be included in such offering without
such effect, (i) in the case of a registration initiated by the Company, (A)
first, the securities that the Company proposes to register for its own account
(but solely to the extent that the proceeds thereof shall not be used to
purchase shares of common stock of the Company or other securities of the
Company), (B) second, the Registrable Securities requested to be included in
such registration by the Holders, allocated pro rata in proportion to the number
of Registrable Securities requested to be included in such registration by each
of them, and (C) third, other securities of the Company to be registered on
behalf of any other Person, and (ii) in the case of a registration initiated by
a Person other than the Company, (A) first, the Registrable Securities requested
to be included in such registration by any Persons initiating such registration
requested to be included in such registration by any Persons initiating such
registration, (B) second, the Registrable Securities requested to be included in
such registration by the Holders and any other Persons (not including Affiliates
of the Company), allocated pro rata in proportion to the number of securities
requested to be included in such registration by each of them, and (C) third,
the securities that the Company proposes to register for the account of it and
its Affiliates, provided, however, that in the event the Company will not, by
virtue of this Section 2.2(b), include in any such registration all of the
Registrable Securities of any Holder requested to be included in such
registration, such Holder may, upon written notice to the Company given within
three days of the time such Holder first is notified of such matter, reduce the
amount of Registrable Securities it desires to have included in such
registration, whereupon only the Registrable Securities, if any, it desires to
have included will be so included and the Holders not so reducing shall be
entitled to a corresponding pro rata increase in the amount of Registrable
Securities to be included in such registration.
2.3 S-3 Registration; Shelf Registration.
(a) S-3 Registration. If at any time (i) one or more Holders of
Registrable Securities representing 10% or more of the Registrable Securities
then outstanding request that the Company file a registration statement on Form
S-3 or any successor form thereto for a public offering of all or any portion of
the shares of Registrable Securities held by such Holder or Holders, the
reasonably anticipated aggregate price to the public of which would exceed
$1,000,000, and (ii) the Company is a registrant entitled to use Form S-3 or any
successor form thereto to register such securities, then the Company shall, as
expeditiously as possible following such Request, use its best efforts to
register under the Securities Act on Form S-3 or any successor form thereto, for
public sale in accordance with the intended methods of disposition specified in
such Request or any subsequent requests (including, without limitation, by means
of a Shelf Registration) the Registrable Securities specified in such Request
and any subsequent requests; provided, that if such registration is for an
Underwritten Offering, the terms of Sections 2.1(b) and 2.1(d) shall apply (and
any reference to "Demand Registration" therein shall, for purposes of this
Section 2.3, instead be deemed a reference to "S-3 Registration"). Whenever the
Company is required by this Section 2.3 to use its best efforts to effect the
registration of Registrable Securities, each of the procedures and requirements
of Section 2.1(a) and 2.1(e) (including but not limited to the requirements that
the Company (A) notify all Holders of Registrable Securities from whom such
Request for registration has not been received and provide them with the
opportunity to participate in the offering and (B) use its best efforts to have
such S-3 Registration Statement declared and remain effective for the time
period specified herein) shall apply to such registration (and any reference in
such Sections 2.1(a) and 2.1(e) to
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"Demand Registration" shall, for purposes of this Section 2.3, instead be deemed
a reference to "S-3 Registration"). Notwithstanding anything to the contrary
contained herein, no Request may be made under this Section 2.3 within 90 days
after the effective date of a Registration Statement filed by the Company
covering a firm commitment Underwritten Offering in which the Holders of
Registrable Securities shall have been entitled to join pursuant to this
Agreement in which there shall have been effectively registered all shares of
Registrable Securities as to which registration shall have been requested. There
is no limitation on the number of S-3 Registrations that the Company is
obligated to effect.
The registration rights granted pursuant to the provisions of this
Section 2.3(a) shall be in addition to the registration rights granted pursuant
to the other provisions of this Section 2.
(b) Shelf Registration. If a request made pursuant to Section 2.1
or 2.3(a) is for a Shelf Registration, the Company shall use its best efforts to
keep the Shelf Registration continuously effective through the date on which all
of the Registrable Securities covered by such Shelf Registration may be sold
pursuant to Rule 144(k) under the Securities Act (or any successor provision
having similar effect); provided, however, that prior to the termination of such
Shelf Registration, the Company shall first furnish to each Holder of
Registrable Securities participating in such Shelf Registration (i) an opinion,
in form and substance satisfactory to the Majority Holders of the Registration
(in the case of a request under Section 2.3(a)) or the Initiating Holders (in
the case of a request under Section 2.1), of counsel for the Company
satisfactory to the Majority Holders of the Registration stating that such
Registrable Securities are freely saleable pursuant to Rule 144(k) under the
Securities Act (or any successor provision having similar effect) or (ii) a
"No-Action Letter" from the staff of the SEC stating that the SEC would not
recommend enforcement action if the Registrable Securities included in such
Shelf Registration were sold in a public sale other than pursuant to an
effective registration statement.
2.4 Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by the sole or lead
managing Underwriter for any Underwritten Offering effected pursuant to a Demand
Registration or an S-3 Registration, the Company shall enter into a customary
underwriting agreement with the Underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company and each
Holder of Registrable Securities participating in such offering and to contain
such representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnification and contribution to the effect and to the extent provided in
Section 5.
(b) Holders of Registrable Securities to be Parties to Underwriting
Agreement. The Holders of Registrable Securities to be distributed by
Underwriters in an Underwritten Offering contemplated by Section 2 shall be
parties to the underwriting agreement between the Company and such Underwriters
and may, at such Holders' option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such Underwriters shall also be made to and for the benefit
of such Holders of Registrable Securities and that any or all of the conditions
precedent to
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the obligations of such Underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders of Registrable
Securities; provided, however, that the Company shall not be required to make
any representations or warranties with respect to written information
specifically provided by a selling Holder for inclusion in the Registration
Statement. No Holder shall be required to make any representations or warranties
to, or agreements with, the Company or (in the case of an Incidental
Registration) the Underwriters other than representations, warranties or
agreements regarding such Holder, such Holder's Registrable Securities and such
Holder's intended method of disposition.
(c) Participation in Underwritten Registration. Notwithstanding
anything herein to the contrary, no Person may participate in any underwritten
registration hereunder unless such Person (i) agrees to sell its securities on
the same terms and conditions provided in any underwritten arrangements approved
by the Persons entitled hereunder to approve such arrangement and (ii)
accurately completes and executes in a timely manner all questionnaires, powers
of attorney, indemnities, custody agreements, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements.
2.5 Expenses. The Company shall pay all Registration Expenses in
connection with any Demand Registration, Incidental Registration, S-3
Registration or Shelf Registration whether or not such registration shall become
effective and whether or not all Registrable Securities originally requested to
be included in such registration are withdrawn or otherwise ultimately not
included in such registration, except as otherwise provided with respect to a
Withdrawn Request and a Withdrawn Demand Registration in Section 2.1(a).
2.6 Conversions; Exercises. Notwithstanding anything to the
contrary herein, in order for any Registrable Securities that are issuable upon
the exercise of conversion rights, options or warrants to be included in any
registration pursuant to Section 2 hereof, the exercise of such conversion
rights, options or warrants must be effected no later than immediately prior to
the closing of any sales under the Registration Statement pursuant to which such
Registrable Securities are to be sold.
3. RESTRICTIONS ON SALE BY THE COMPANY. The Company agrees, if
timely requested in writing by a sole or lead managing Underwriter, not to sell
or otherwise transfer or dispose of any of the Company's equity securities (or
any security convertible into or exchangeable or exercisable for any of the
Company's equity securities) during the one hundred eighty (180) day period
following the effective date of a registration statement of the Company filed
under the Securities Act, unless the sole or lead managing Underwriter in such
Underwritten Offering otherwise agrees.
4. REGISTRATION PROCEDURES.
4.1 Obligations of the Company. Whenever the Company is required to
effect the registration of Registrable Securities under the Securities Act
pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC (promptly, and in any event
within 60 days after receipt of a request to register Registrable Securities)
the requisite Registration Statement to effect such registration, which
Registration Statement shall comply as to form in all material
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respects with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith, and the Company shall use
its best efforts to cause such Registration Statement to become effective
(provided, that the Company may discontinue any registration of its securities
that are not Registrable Securities, and, under the circumstances specified in
Section 2.2, its securities that are Registrable Securities); provided, however,
that before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, or comparable statements under securities or blue sky laws
of any jurisdiction, the Company shall (i) provide Holders' Counsel and any
other Inspector (as defined below) with an adequate and appropriate opportunity
to participate in the preparation of such Registration Statement and each
Prospectus included therein (and each amendment or supplement thereto or
comparable statement) to be filed with the SEC, which documents shall be subject
to the review and comment of Holders' Counsel, and (ii) not file any such
Registration Statement or Prospectus (or amendment or supplement thereto or
comparable statement) with the SEC to which Holder's Counsel, any selling Holder
or any other Inspector shall have reasonably objected on the grounds that such
filing does not comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(b) prepare and file with the SEC such amendments and supplements
to such Registration Statement and the Prospectus used in connection therewith
as may be necessary (i) to keep such Registration Statement effective, and (ii)
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement, in each case until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller(s) thereof set forth in such Registration Statement; provided that
except with respect to any Shelf Registration, such period need not extend
beyond twelve months after the effective date of the Registration Statement; and
provided further, that with respect to any Shelf Registration, such period need
not extend beyond the time period provided in Section 2.3, and which periods, in
any event, shall terminate when all Registrable Securities covered by such
Registration Statement have been sold (but not before the expiration of the 90
day period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable);
(c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement (including
each preliminary Prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify all Registrable Securities and other
securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions as any selling Holder
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of Registrable Securities covered by such Registration Statement or the sole or
lead managing Underwriter, if any, may reasonably request to enable such selling
Holder to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such selling Holder and to continue such registration or
qualification in effect in each such jurisdiction for as long as such
Registration Statement remains in effect (including through new filings or
amendments or renewals), and do any and all other acts and things which may be
necessary or advisable to enable any such selling Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
selling Holder;
(e) use its best efforts to obtain all other approvals, consents,
exemptions or authorizations from such governmental agencies or authorities as
may be necessary to enable the selling Holders of such Registrable Securities to
consummate the disposition of such Registrable Securities;
(f) notify Holders' Counsel, each Holder of Registrable Securities covered by
such Registration Statement and the sole or lead managing Underwriter, if any:
(i) when the Registration Statement, any pre-effective amendment, the Prospectus
or any prospectus supplement related thereto or post-effective amendment to the
Registration Statement has been filed and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any state securities or blue sky authority for
amendments or supplements to the Registration Statement or the Prospectus
related thereto or for additional information, (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of the Registration Statement or
the initiation or threat of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the securities or
blue sky laws of any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the existence of any fact of which the Company becomes aware or
the happening of any event which results in (A) the Registration Statement
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make any statements
therein not misleading, or (B) the Prospectus included in such Registration
Statement containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make any
statements therein, in the light of the circumstances under which they were
made, not misleading, (vi) if at any time the representations and warranties
contained in any underwriting agreement in respect of such offering cease to be
true and correct in all material respects, and (vii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate or that there exists circumstances not yet disclosed to the
public which make further sales under such Registration Statement inadvisable
pending such disclosure and post-effective amendment; and, if the notification
relates to an event described in any of the clauses (ii) through (vii) of this
Section 4.1(f), the Company shall promptly prepare a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that (1) such Registration Statement shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(2) as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in the light of the circumstances
under which they were
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made not misleading (and shall furnish to each such Holder and each
Underwriter, if any, a reasonable number of copies of such Prospectus so
supplemented or amended); and if the notification relates to an event described
in clause (iii) of this Section 4.1(f), the Company shall take all reasonable
action required to prevent the entry of such stop order or to remove it if
entered;
(g) make available for inspection by any selling Holder of
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter (in
the case of the opinion and the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable Securities and
provide and cause to be maintained a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than the
effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and any other governmental agency or authority
having jurisdiction over the offering, and make available to its security
holders, as soon as reasonably practicable but no later than 90 days after the
end of any 12-month period, an earnings statement (i) commencing at the end of
any month in which Registrable Securities are sold to Underwriters in an
Underwritten Offering and (ii) commencing with the first day of the Company's
calendar month next succeeding each sale of Registrable Securities after the
effective date of a Registration Statement, which statement shall cover such
12-month periods, in a manner which satisfies the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
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(k) use its best efforts to cause all such Registrable Securities
to be (i) duly included for quotation on the Nasdaq Stock Market's National
Market (the "Nasdaq National Market") or listed on the principal national
securities exchange on which the Company's similar securities are then listed,
if applicable, or (ii) if securities of the Company are not at the time included
on the Nasdaq National Market or listed on any national securities exchange (or
if the listing of Registrable Securities is not permitted under the rules of
each national securities exchange on which the Company's securities are then
listed), listed on the National Nasdaq Market or a national securities exchange
designated by the Majority Holders of the Registration;
(l) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and provide officers'
certificates and other customary closing documents;
(m) cooperate with each selling Holder of Registrable Securities
and each Underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the NASD and make reasonably available its employees and
personnel and otherwise provide reasonable assistance to the Underwriters
(taking into account the needs of the Company's businesses and the requirements
of the marketing process) in the marketing of Registrable Securities in any
Underwritten Offering;
(n) cooperate with the selling Holders of Registrable Securities
and the sole or lead managing Underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the Underwriters or, if not an Underwritten Offering, in
accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
(o) keep each selling Holder of Registrable Securities advised in
writing as to the initiation and progress of any registration under Section 2
hereunder;
(p) furnish to each Holder participating in the offering and the
sole or lead managing Underwriter, if any, without charge, at least one
manually-signed copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those deemed to be
incorporated by reference);
(q) if requested by the sole or lead managing Underwriter or any
selling Holder of Registrable Securities, promptly incorporate in a prospectus
supplement or post-effective amendment such information concerning such Holder
of Registrable Securities, the Underwriters or the intended method of
distribution as the sole or lead managing Underwriter or the selling Holder of
Registrable Securities reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the Registrable
Securities being sold to the Underwriters, the purchase price being paid
therefor by such Underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such
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offering; 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; and supplement or
make amendments to any Registration Statement if requested by the sole or lead
managing Underwriter of such Registrable Securities; and
(r) use its best efforts to take all other steps necessary to
expedite or facilitate the registration and disposition of the Registrable
Securities contemplated hereby.
4.2 Seller Information. The Company may require each selling Holder
of Registrable Securities as to which any registration is being effected to
furnish to the Company such information regarding such seller and the
disposition of such securities as the Company may from time to time reasonably
request in writing; provided, however, that such information shall be used only
in connection with such Registration. If any Registration Statement or
comparable statement under "blue sky" laws refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Holder and the Company, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company, and
(ii) in the event that such reference to such Holder by name or otherwise is not
in the judgment of the Company, as advised by counsel, required by the
Securities Act or any similar federal statute or any state "blue sky" or
securities law then in force, the deletion of the reference to such Holder.
4.3 Notice to Discontinue. Each Holder of Registrable Securities
agrees by acquisition of such Registrable Securities that, (i) upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 4.1(f)(ii) through 4.1(f)(v), such Holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4.1(f) and, if
so directed by the Company, such Holder shall 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 such Registrable Securities which
is current at the time of receipt of such notice. If the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective pursuant to this Agreement (including,
without limitation, the period referred to in Section 4.1(b)) by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 4.1(f) to and including the date when the Holder shall have
received the copies of the supplemented or amended prospectus contemplated by
and meeting the requirements of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1 Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, each Holder of
Registrable Securities, its officers, directors, partners, members,
stockholders, employees, Affiliates, advisers, attorneys and agents
(collectively, "Agents") and each Person who controls such Holder (within the
meaning of the Securities Act) and its Agents with respect to each registration
which has been
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effected pursuant to this Agreement, against any and all losses, claims, damages
or liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof, and expenses (as incurred or suffered and
including, but not limited to, any and all expenses incurred in investigating,
preparing or defending any litigation or proceeding, whether commenced or
threatened, and the reasonable fees, disbursements and other charges of legal
counsel) in respect thereof (collectively, "Claims"), insofar as such Claims
arise out of or are based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (including
any preliminary, final or summary prospectus and any amendment or supplement
thereto) related to any such registration or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, or any qualification or compliance incident thereto;
provided, however, that the Company will not be liable in any such case to the
extent that any such Claims arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
of a material fact so made in reliance upon and in conformity with written
information furnished to the Company by a Holder, Underwriter or other
indemnified person hereunder expressly for use therein. The Company shall also
indemnify any Underwriters of the Registrable Securities, their Agents and each
Person who controls any such Underwriter (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the Holders of Registrable Securities. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any Person
who may be entitled to indemnification pursuant to this Section 5 and shall
survive the transfer of securities by such Holder or Underwriter.
5.2 Indemnification by Holders. Each Holder, if Registrable
Securities held by it are included in the securities as to which a registration
is being effected, agrees to, severally and not jointly, indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors and
officers, each other Person who participates as an Underwriter in the offering
or sale of such securities and its Agents and each Person who controls the
Company against any and all Claims, insofar as such Claims arise out of or are
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to such
registration, or 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, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by a Holder, Underwriter or other indemnified person hereunder expressly
for use therein; provided, however, that the aggregate amount which any such
Holder shall be required to pay pursuant to this Section 5.2 shall in no event
be greater than the amount of the net proceeds received by such Holder upon the
sale of the Registrable Securities pursuant to the Registration Statement giving
rise to such Claims less all amounts previously paid by such Holder with respect
to any such Claims. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any Person who may be
entitled to indemnification pursuant to this Section 5 and shall survive the
transfer of securities by such Holder or Underwriter.
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5.3 Conduct of Indemnification Proceedings. Promptly after receipt
by an indemnified party of notice of any Claim or the commencement of any action
or proceeding involving a Claim under this Section 5, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to Section 5, (i) notify the indemnifying party in writing of the
Claim or the commencement of such action or proceeding; provided, that the
failure of any indemnified party to provide such notice shall not relieve the
indemnifying party of its obligations under this Section 5, except to the extent
the indemnifying party is materially and actually prejudiced thereby and shall
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 5, and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any indemnified
party shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (A) the indemnifying party has agreed
in writing to pay such fees and expenses, (B) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such indemnified party within 20 days after receiving notice
from such indemnified party that the indemnified party believes it has failed to
do so, or (C) in the reasonable judgment of any such indemnified party, based
upon advice of counsel, a conflict of interest shall exist between such
indemnified party and the indemnifying party with respect to such claims; it
being understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to no more than one firm of local
counsel) at any time for all such indemnified parties. No indemnifying party
shall be liable for any settlement of any such claim or action effected without
its written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement of any claim or action in respect of which
indemnification or contribution may be sought hereunder, unless such settlement,
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim, (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on behalf
of any indemnified party, and (3) does not provide for any action on the part of
any party other than the payment of money damages which is to be paid in full by
the indemnifying party.
5.4 Contribution. If the indemnification provided for in Section
5.1 or 5.2 from the indemnifying party for any reason is unavailable to (other
than by reason of exceptions provided therein), or is insufficient to hold
harmless an indemnified party hereunder in respect of any Claim, then the
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 Claim in such proportion as is appropriate to reflect the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, in connection with the actions which resulted in such Claim, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties'
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relative intent, knowledge, access to information and opportunity to correct or
prevent such action. If, however, the foregoing allocation is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations.
5.5. Other Indemnification. Indemnification similar to that
specified in the preceding Sections 5.1 and 5.2 (with appropriate modifications)
shall be given by the Company and each selling Holder of Registrable Securities
with respect to any required registration or other qualification of securities
under any Federal or state law or regulation of any governmental authority,
other than the Securities Act. The indemnity agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract.
5.6 Indemnification Payments. The indemnification and contribution
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when bills are
received or any expense, loss, damage or liability is incurred.
6. General.
6.1 Adjustments Affecting Registrable Securities. The Company
agrees that it shall not effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the Holder of
any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.
6.2 Registration Rights to Others. Other than as set forth on
Schedule A attached hereto, the Company represents and warrants that it is not
currently a party to any agreement with respect to its securities granting
registration rights to Persons. If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act (not including any
such rights which have been previously granted), (i) such rights shall not be in
conflict with or adversely affect any of the rights provided in this Agreement
to the Holders and (ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in this
Agreement, the Company shall provide (by way of amendment to this Agreement or
otherwise) such more favorable terms or conditions to the Holders.
6.3 Availability of Information; Rule 144; Rule 144A; Other
Exemptions. The Company covenants that it shall timely file any reports required
to be filed by it under the Securities Act or the Exchange Act (including, but
not limited to, the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c) of Rule 144 under the Securities Act), and that
it shall take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 and Rule
144A under the Securities Act, as such rules may
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be amended from time to time, or (ii) any other rule or regulation now existing
or hereafter adopted by the SEC. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements.
6.4 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified,
supplemented or terminated, and waivers or consents to departures from the
provisions hereof may not be given, without the written consent of the Company
and the Majority Holders; provided, however, that no such amendment,
modification, supplement, waiver or consent to departure shall reduce the
aforesaid percentage of Registrable Securities without the written consent of
all of the Holders of Registrable Securities; and provided further, that nothing
herein shall prohibit any amendment, modification, supplement, termination,
waiver or consent to departure the effect of which is limited only to those
Holders who have agreed to such amendment, modification, supplement,
termination, waiver or consent to departure.
6.5 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to the applicable
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties in accordance with the
provisions of this Section:
If to the Company: FUTURELINK CORP.
0 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx, Esq.
Fax No. 000.000.0000
with copies to: XXXX XXXXXXXX XXXXXXXX & XXXXXX, LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxx, Esq.
Fax No. 000.000.0000
If to Initial Holder: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: XXXXXXX, XXXXXXX & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
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All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; when receipt
is acknowledged, if telecopied; on the next business day, if timely delivered to
a courier guaranteeing overnight delivery; and five days after being deposited
in the mail, if sent first class or certified mail, return receipt requested,
postage prepaid.
6.6 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors and permitted assigns (including any permitted transferee of Warrants
or Registrable Securities). Any Holder may assign to any permitted (as
determined under the Warrants) transferee of its Warrants or Registrable
Securities (other than a transferee that acquires such Registrable Securities in
a registered public offering or pursuant to a sale under Rule 144 of the
Securities Act (or any successor rule)), its rights and obligations under this
Agreement; provided, however, if any permitted transferee shall take and hold
Warrants or Registrable Securities, such transferee shall promptly notify the
Company and by taking and holding such Registrable Securities such permitted
transferee shall automatically be entitled to receive the benefits of and be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement as if it were a party hereto (and shall,
for all purposes, be deemed a Holder under this Agreement). If the Company shall
so request any heir, successor or permitted assign (including any permitted
transferee) wishing to avail itself of the benefits of this Agreement shall
agree in writing to acquire and hold the Registrable Securities subject to all
of the terms hereof. For purposes of this Agreement, "successor" for any entity
other than a natural person shall mean a successor to such entity as a result of
such entity's merger, consolidation, sale of substantially all of its assets, or
similar transaction. Except as provided above or otherwise permitted by this
Agreement, neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any Holder or by
the Company without the consent of the other parties hereto.
6.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
6.8 Descriptive Headings, Etc. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (4) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.
6.9 Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the
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validity, legality and enforceability of any such provision, paragraph, word,
clause, phrase or sentence in every other respect and of the other remaining
provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be
in any way impaired, it being intended that all rights, powers and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by law.
6.10 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF
THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND
THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA.
THE COMPANY AND THE INITIAL HOLDERS WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 6.10.
THE COMPANY AND THE INITIAL HOLDERS HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. THE COMPANY AND THE INITIAL HOLDERS REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
6.11 Remedies; Specific Performance. The parties hereto acknowledge
that money damages would not be an adequate remedy at law if any party fails to
perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court specified in Section 6.10 hereof, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by a
party hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
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6.12 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 in
respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties, covenants or undertakings relating to
such subject matter, other than those set forth or referred to herein or in the
Other Agreements. This Agreement and the Other Agreements supersede all prior
agreements and understandings between the Company and the other parties to this
Agreement with respect to such subject matter.
6.13 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
6.14 Construction. The Company and the Initial Holders acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel and
that this Agreement shall be construed as if jointly drafted by the Company and
the Holders.
6.15 No Inconsistent Agreement. The Company will not hereafter
enter into any agreement which is inconsistent with the rights granted to the
Holders in this Agreement.
6.16 Costs and Attorneys' Fees. In the event that any action, suit
or other proceeding is instituted concerning or arising out of this Agreement,
the Company and the Initial Holders agree that the prevailing party shall
recover from the non-prevailing party all of such prevailing party's costs and
reasonable attorneys' fees incurred in each and every such action, suit or other
proceeding, including any and all appeals or petitions therefrom.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
THE COMPANY:. INITIAL HOLDER:
FUTURELINK CORP. FOOTHILL CAPITAL CORPORATION
By: /S/ XXXXX X. XXXXXXX By: /s/ XXXXXXX XXXXX
-------------------------------- -----------------------------------
Name: XXXXX X. XXXXXXX Name: XXXXXXX XXXXX
------------------------------ ---------------------------------
Title: VICE PRESIDENT Title: VICE PRESIDENT
----------------------------- --------------------------------
[SIGNATURE PAGE TO THE REGISTRATION RIGHTS AGREEMENT]
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