EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this AGREEMENT"), dated as of July 30,
1998, by and among OPEN MARKET, INC., a corporation organized under the laws of
the State of Delaware, with executive offices located at Xxx Xxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000 (the "COMPANY"), and the undersigned (together with
affiliates, the "INITIAL INVESTOR").
WHEREAS:
A. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Initial Investor (the "SECURITIES
PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Investor (i) Five
Million United States Dollars ($5,000,000) of the Company's common stock, par
value $.001 per share (the "COMMON STOCK") of which the shares issued at the
Closing (under and as defined in the Securities Purchase Agreement) constitute
Initial Shares (as defined in the Securities Purchase Agreement) and 20% of the
Initial Shares constitute Adjustment Shares (as defined in the Securities
Purchase Agreement) which shares may be issuable as a result of a decline in the
Closing Price (as defined in the Securities Purchase Agreement) of the Common
Stock after the Closing Date, (as defined in the Securities Purchase Agreement),
and (ii) warrants (the "WARRANTS") to acquire an aggregate of 83,682 shares of
Common Stock (the "WARRANT SHARES").
B. To induce the Initial Investor to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
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(i) "INVESTORS" means the Initial Investor and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof and are entitled to the rights of this
Agreement in accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means (a) the Initial Shares, (b) the
Adjustment Shares, if any, (c) the Warrant Shares and (d) any shares of capital
stock issued or issuable, from time to time (with any adjustments), as a
distribution on or in exchange for or otherwise with respect to any of the
foregoing, provided, however, that shares of capital stock which are Registrable
Securities shall cease to be Registrable Securities upon (i) any resale thereof
pursuant to a Registration Statement filed under the Securities Act or pursuant
to Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("RULE 144"), or
(ii) any sale in any manner to a person or entity which, by virtue of Section 9,
is not entitled to the rights provided by this Agreement.
(iv) "REGISTRATION STATEMENT" means a registration statement of the
Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registrations.
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(i) The Company shall prepare and use its best efforts to file with
the SEC on or prior to the date (the "FILING DATE") which is ten (10) days after
the Closing Date, a Registration Statement on Form S-3 (or, if Form S-3 is not
then available, on such form of Registration Statement as is then available) to
effect a registration of all of the Registrable Securities, covering the resale
of the Registrable Securities, which Registration Statement, to the extent
allowable under the Securities Act and the Rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also covers
such number of additional shares of Common Stock as may become issuable as
Adjustment Shares pursuant to the Securities Purchase Agreement or upon the
exercise of the Warrants, to prevent dilution by reason of (i) stock splits,
stock dividends or similar transactions or (ii) reductions in the Exercise Price
of the Warrants in accordance with the terms thereof, and/or (iii) a decline in
the Per Share Purchase Price to the extent the Closing Price of the Common Stock
decreases after the Closing Date and
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on or prior to the Adjustment Date. The Registrable Securities included in the
Registration Statement filed in accordance with this Section 2(a)(i) shall be
allocated to the Investors as set forth in Section 11(k) hereof. Such
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to the
Initial Investor and its counsel prior to its filing or other submission. The
Company shall use its best efforts to cause the Registration Statement to be
filed pursuant to this Section 2(a)(i) hereof to become effective as soon as
practicable after the filing thereof.
(ii) If after the initial filing of a Registration Statement covering
all of the Registrable Securities as required by the first sentence of Section
2(a)(i) above, the SEC advises the Company (the "SEC DENIAL") that the SEC will
not permit the registration of the resale of the Adjustment Shares or the
Warrant Shares, or both, as the case may be, until the actual issuance of such
shares, then, the Company may abandon its efforts to cause the shares
identified in the SEC Denial to be included in the Registration Statement
required by the first sentence of Section 2(i)(a) above upon advanced written
notice (the "ABANDONMENT NOTICE" ) sent by the Company to the Investors and
accompanied by the SEC Denial, if in writing. In addition, at any time
Investors holding a majority in interest of the Registrable Securities may
require that the Company abandon its efforts to cause Registrable Shares that
have not been issued to be included in the Registration Statement required by
the first sentence of Section 2(a)(i) above by sending to the Company an
Abandonment Notice.
(iii) If the Adjustment Shares are for any reason not included in the
Registration Statement required by the first sentence of Section 2(a)(i) above,
and if such shares are required to be issued as provided in the Securities
Purchase Agreement, the Company shall prepare and use its best efforts to file
with the SEC on or prior to the date (the "ADJUSTMENT SHARE FILING DATE") which
is three (3) business days after the Adjustment Date, a Registration Statement
on Form S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available) to effect a registration of the resale of the
Adjustment Shares, if any, and any shares of capital stock issued or issuable,
from time to time (with any adjustments), as a distribution on or in exchange
for or otherwise with respect to any of the Adjustment Shares. The Registrable
Securities included in the Registration Statement filed in accordance with this
Section 2(a)(iii) shall be allocated to the Investors as set forth in Section
11(k) hereof. Such Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided to the Initial Investor and its counsel prior to its filing or other
submission. The Company shall use its best efforts to cause the Registration
Statement required to be filed pursuant to this Section 2(a)(iii) to become
effective as soon as practicable after the filing thereof.
(iv) If the Warrant Shares are for any reason not included in the
Registration Statement required by the first sentence of Section 2(a)(i) above,
the Investors who hold a majority in interest of outstanding Warrant Shares, may
request and the Company shall prepare and use its best efforts to file with the
SEC on or prior to a date (the "WARRANT SHARE FILING DATE") which is twenty (20)
days after the date of such request (the "REQUEST DATE"), a Registration
Statement on Form S-3 (or, if Form S-3 is not then available, on such form of
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Registration Statement as is then available) to effect a registration of the
resale of the outstanding Warrant Shares and any shares of capital stock issued
or issuable from time to time (with any adjustments), as a distribution on or in
exchange for or otherwise with respect to any of the outstanding Warrant Shares.
The Registrable Securities included in the Registration Statement filed in
accordance with this Section 2(a)(iv) shall be allocated to the Investors as set
forth in Section 11(k) hereof. Such Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to the Initial Investor and its counsel prior to its
filing or other submission. The Company shall use its best efforts to cause the
Registration Statement required to be filed pursuant to this Section 2(a)(iv) to
become effective as soon as practicable after the filing thereof. The Investors
shall be entitled two (2) registrations under this Section 2(a)(iv) for which
the Company will pay all registration expenses as provided in Section 5 hereof,
provided that each Registration Statement shall cover not less than fifty
thousand (50,000) Warrant Shares.
b. Underwritten Offering. If any Registration Statement filed pursuant
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to Section 2(a) hereof involves an underwritten offering, the Investors who hold
a majority in interest of the Registrable Securities subject to such
underwritten offering, with the consent of the Initial Investor, shall have the
right to select one legal counsel to represent the Investors and an investment
banker or bankers and manager or managers to administer the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company. In the event that any Investors elect not to
participate in such underwritten offering, the Registration Statement covering
all of the Registrable Securities shall contain appropriate plans of
distribution reasonably satisfactory to the Investors participating in such
underwritten offering and the Investors electing not to participate in such
underwritten offering (including, without limitation, the ability of
nonparticipating Investors to sell from time to time and at any time during the
effectiveness of such Registration Statement).
c. Payments by the Company.
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(i) If (A) the Registration Statement(s) covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) (i) and
2(a)(iii) above are not declared effective by the SEC on or before (x) sixty
(60) calendar days after the Filing Date in respect of the Registration
Statement filed pursuant to Section 2(a)(i) above, (y) twenty (20 )calendar days
after the Adjustment Share Filing Date in respect of a Registration Statement
filed pursuant to Section 2(a)(iii) above and (z) thirty (30) calendar days
after the Warrant Share Filing Date in respect of a Registration Statement filed
pursuant to Section 2(a)(iv) (each a "REGISTRATION DEADLINE") or (B) after the
applicable Registration Statement has been declared effective by the SEC, sales
of all applicable Registrable Securities (including any Registrable Securities
required to be registered pursuant to Section 3(b) hereof) cannot be made
pursuant to such Registration Statement (by reason of a stop order or the
Company's failure to update such Registration Statement (unless within the
period specified in Section 3(f) below) for any other reason outside the control
of the Investors), then the Company will make payments to the Investors in such
amounts and at such times as shall be determined pursuant to this Section 2(c)
as the sole and exclusive relief for the damages to the Investors by reason of
any such delay in
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their ability to sell the Registrable Securities; provided that such remedy
shall not be the sole and exclusive in the event the Company has breached its
obligations under this Agreement.
(ii) The Company shall pay to each Investor an amount equal to the sum
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of (i) the product of (a) the Total Purchase Price (as defined in the Securities
Purchase Agreement) multiplied by (b) a fraction, the numerator of which is
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equal to the number of Registrable Securities held by such Investor as
determined pursuant to Section 11(k) and the denominator of which is the total
number of Registrable Securities determined in the same manner (the "INVESTOR'S
FRACTIONAL INTEREST OF REGISTRABLE SHARES"), multiplied by (c) one-half of one
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percent ( 1/2 % ) for the first thirty (30) days or portion thereof, pro rata,
after the Registration Deadline provided in Section 2(c)(i)(A)(x) and prior to
the date the Registration Statement filed pursuant to Section 2(a)(i) is
declared effective by the SEC, or the first thirty (30) days or portion
thereof, pro rata, that sales of any Registrable Securities cannot be made
pursuant to such Registration Statement after the Registrations Statement has
been declared effective after the period in Section 3(f) below has expired plus
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(ii) the product of (a) the Total Purchase Price multiplied by (b) the
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Investor's Fractional Interest of Registrable Securities multiplied by (c) one
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and one-half percent (1 1/2 %) for the second thirty (30) days or portion
thereof, pro rata, after the Registration Deadline provided in Section 2(a)(i)
hereof and prior to the date the Registration Statement filed pursuant to
Section 2(a)(i) hereof is declared effective by the SEC or the second thirty
(30) days or portion thereof, pro rata, that sales of any Registrable Securities
cannot be made pursuant to such Registration Statement after such Registration
Statement has been declared effective after the period in Section 3(f) below has
expired. If the Company is current in the payment of the foregoing penalties
and has paid in full the aggregate Redemption Price (as defined in Section 2(d))
for all shares of Common Stock subject to Redemption Notices as defined in and
as given in accordance with Section 2(d) below hereof, no additional penalties
shall be payable under this Section 2(c)(ii). If however, the Company is not
current in the payment of the penalties described in this Section 2(c)(ii) or
has not paid in full the aggregate Redemption Price for all shares of Common
Stock subject to Redemption Notices given in accordance with Section 2(d) below,
then the penalties shall be deemed to recommence on the 120th day after the
Closing Date at the rate of two percent (2%) for every thirty (30) day period or
portion thereof, pro rata, thereafter, until all penalties have been paid in
full and all obligations to redeem shares pursuant to Section 2(d) have been
honored.
(iii) The Company shall pay to each Investor an amount equal to the
sum of (i) the product of (a) the Total Purchase Price multiplied by (b) a
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fraction, the numerator of which is the total number of Adjustment Shares and
the denominator of which is the total number of Shares (as such term is defined
in the Securities Purchase Agreement) issued in accordance with the terms of the
Securities Purchase Agreement, multiplied by (c) a fraction, the numerator of
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which is equal to the number of Adjustment Shares held by such Investor and the
denominator of which is the total number of all Adjustment Shares (the
"INVESTOR'S FRACTIONAL INTEREST OF ADJUSTMENT SHARES"), multiplied (d) by one-
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half of one percent ( 1/2 % ) for the first thirty (30) days, or portion
thereof, pro rata, after the Registration Deadline provided in Section
2(c)(i)(A)(y) and prior to the date the Registration Statement filed pursuant to
Section 2(a)(iii) is declared effective by the SEC, or the first thirty (30)
days or portion thereof, pro rata, that
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sales of any Adjustment Shares cannot be made pursuant to such Registration
Statement after such Registration Statement has been declared effective plus
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(ii) the product of (a) the Total Purchase Price multiplied by (b) a fraction,
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the numerator of which is the total number of Adjustment Shares and the
denominator of which is the total number of Shares issued in accordance with the
terms of the Securities Purchase Agreement, multiplied by (c) the Investor's
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Fractional Interest of Adjustment Shares multiplied by (d) one and one-half
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percent (1 1/2 %) for the second thirty (30) days or portion thereof, pro rata,
after the Registration Deadline provided in Section 2(c)(i)(A)(y) hereof and
prior to the date the Registration Statement filed pursuant to Section 2(a)(iii)
hereof is declared effective by the SEC or the second thirty (30) days or
portion thereof, pro rata, that sales of any Adjustment Shares cannot be made
pursuant to such Registration Statement after such Registration Statement has
been declared effective after the period specified in Section 3(f) below has
expired. Notwithstanding the foregoing, no penalties shall accrue under this
Section 2(c)(iii) by reason of the failure of the Registration Statement to be
declared effective on or before the Registration Deadline provided in Section
2(c)(i)A)(y) if such Registration Statement is declared effective on or before
the lapse of forty (40) calendar days after the Adjustment Share Filing Date.
If, however such Registration Statement is not declared effective on or before
the lapse of forty (40) calendar days after the Adjustment Date Filing Date, the
penalties under this Section 2(c)(iii) shall be deemed to have commenced as of
the Registration Deadline provided in Section 2(c)(i)(A)(y). If the Company is
current in the payment of the penalties described in this Section 2(c)(iii) and
has paid in full the aggregate Redemption Price for all shares of Common Stock
subject to Redemption Notice(s) given in accordance with Section 2(d) below, no
additional penalties shall be payable under this Section 2(c)(iii). If however,
the Company is not current in the payment of the penalties described in this
Section 2(c)(iii) or has not paid in full the aggregate Redemption Price for all
shares of Common Stock subject to Redemption Notice(s) given in accordance with
Section 2(d) below, then the penalties under this Section 2(c)(iii) shall be
deemed to recommence on the seventy-fifth (75th) day after the Adjustment Date
at the rate of two percent (2%) for every thirty (30) day period , or portion
thereof, pro rata, thereafter, until all penalties have been paid in full and
all obligations to redeem shares pursuant to Section 2(d) have been honored.
(iv) The Company shall pay to each Investor who requested that its
Warrant Shares be included in a Registration Statement filed pursuant to Section
2(c)(iv) an amount equal to the sum of (i) the product of (a) the difference
between (I) the Closing Price of a share of Common Stock on the day which is the
Registration Deadline as provided in Section 2(c)(i)(A)(z) applicable to such
Registration Statement and (II) the Exercise Price as defined in the Warrants
(the "NET VALUE") multiplied by (b) the number of Warrant Shares which such
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Investor had requested be included in the Registration Statement filed pursuant
to Section 2(c)(iv), appropriately adjusted in the event such shares were issued
in a cashless exercise of the Warrants, (the "INVESTOR'S WARRANT SHARES")
multiplied (c) by one-half of one percent ( 1/2 % ) for the first thirty (30)
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days, or portion thereof, pro rata, after the date which is sixty (60) days
after the Request Date and prior to the date the Registration Statement filed
pursuant to Section 2(c)(iv) is declared effective by the SEC, or the first
thirty (30) days or portion thereof, pro rata, that sales of any Warrant
Shares subject to such Registration Statement cannot be made pursuant to such
Registration Statement after such Registration Statement has been declared
effective plus
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(ii) the product of (a) the Net Value multiplied by (b) the Investor's Warrant
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Shares multiplied by (c) one and one-half percent (1 1/2 %) for the second
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thirty (30) days or portion thereof, pro rata, after the date which is sixty
(60) days after the Request Date and prior to the date the Registration
Statement filed pursuant to Section 2(a)(iv) hereof is declared effective by the
SEC or the second thirty (30) days or portion thereof, pro rata, that sales of
any Warrant Shares subject to such Registration Statement cannot be made
pursuant to such Registration Statement after such Registration Statement has
been declared effective after the period specified in Section 3(f) has expired.
If the Company is current in the payment of the penalties described in this
Section 2(c)(iv) and has paid in full the aggregate Redemption Price for all
shares of Common Stock subject to Redemption Notice(s) given in accordance with
Section 2(d) below, no additional penalties shall be payable under this Section
2(c)(iv). If however, the Company is not current in the payment of the penalties
described in this Section 2(c)(iv) or has not paid in full the aggregate
Redemption Price for all shares of Common Stock subject to Redemption Notice(s)
given in accordance with Section 2(d) below, then the penalties under this
Section 2(c)(iv) shall be deemed to recommence on the 120th day after the
Request Date at the rate of two percent (2%) for every thirty (30) day period ,
or portion thereof, pro rata, thereafter, until all penalties have been paid in
full and all obligations to redeem shares pursuant to Section 2(d) have been
honored.
(v) Notwithstanding the foregoing, there shall be excluded from each
penalty period described in Sections 2(c)(ii), 2(c)(iii) and 2(c)(iv)above any
delays which are solely attributable to changes (other than corrections of the
Company's mistakes with respect to information previously provided by the
Investors) required by the Investors in such Registration Statement with respect
to information relating to the Investors, including without limitation, changes
to the plan of distribution or any periods prior to an Abandonment Notice sent
by the Investors to the Company pursuant to Section 2(a)(ii).
In addition, the penalties under Sections 2(c)(ii) and 2(c)(iii) are
not intended to be duplicative and shall be appropriately adjusted if at any
time penalties are accruing simultaneously under both Sections 2(c)(ii) and
(iii).
(vi) Penalties incurred under this Section 2(c) shall be paid in cash
within five(5) days after the end of each period that gives rise to such
obligation or, if earlier, within five (5) days after the end of each calendar
month in which such obligation accrues. If such payment is not made within such
five (5) day period, the Investor thereafter shall be entitled to interest on
the unpaid amount at a rate equal of two percent (2%) per month until such
amount is paid in full to the Investor. If the Company is unable to pay all
amounts due and payable with respect to the penalties, the Company will pay the
Investors such amounts pro rata based upon the total amounts payable to each
Investor relative to the total amounts payable to all Investors.
d. Put. If the Company fails to obtain the effectiveness of a
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Registration Statement covering the Initial Shares within one hundred twenty
(120) calendar days after the Closing Date under and as defined in the
Securities Purchase Agreement, each Investor shall thereafter have
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the option, exercisable in whole or in part, at any time and from time to time
by delivery of a written notice to the Company (a "REDEMPTION NOTICE"), to
require the Company to purchase for cash all or any part of the Investor's
Initial Shares at a redemption price per share (the "REDEMPTION PRICE") equal to
the sum of (i) the Estimated Price Per Share, (as defined in the Securities
Purchase Agreement, but subject to appropriate adjustment in the event of a
stock splits, stock dividends or similar transactions) plus (ii) any penalty
that has accrued on such share in accordance with Section 2(c) above, which
penalty remains unpaid. The aggregate Redemption Price shall be paid in cash
within three (3) days after the Company's receipt of a Redemption Notice. If
such payment is not made within such three (3) day period, the redeeming
Investor shall be entitled to interest on the unpaid amount at a rate of two
percent (2%) per month until the aggregate Redemption Price, together with
interest thereon is paid to the redeeming Investor. If the Company is unable to
pay the Redemption Price for the Initial Shares covered by all Investors'
Redemption Notices, the Company will redeem the shares covered by the Investors'
Redemption Notices, pro rata., based upon the aggregate Redemption Price payable
to each redeeming Investor relative to the aggregate Redemption Price payable to
all redeeming Investors.
e. Piggy-Back Registrations. If at any time (y) prior to the date the
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Registration Statement required to be filed by the Company pursuant to Section
2(a)(i) hereof is declared effective by the SEC, or (z) between the Adjustment
Date and the date the Registration Statement required to be filed by the Company
pursuant to Section 2(a)(iii) is declared effective by the SEC, the Company
shall file with the SEC a Registration Statement relating to an offering for its
own account or the account of others under the Securities Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor who is entitled to registration rights under this Section
2(d) written notice of such determination and, if within fifteen (15) days after
the date of such notice, such Investor shall so request in writing, the Company
shall include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if, in
connection with any underwritten public offering for the account of the Company
the managing underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock which may be included in the Registration Statement
because, in such underwriter(s)' judgment, marketing or other factors dictate
such limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Investor has
requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to
include Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other
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securities having the right to include such securities in the Registration
Statement other than holders of securities entitled to inclusion of their
securities in such Registration Statement by reason of demand registration
rights (except to the extent any existing agreements otherwise provide). No
right to registration of Registrable Securities under this Section 2(e) shall be
construed to limit any registration required under Section 2(a) hereof. If an
offering in connection with which an Investor is entitled to registration under
this Section 2(e) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in
an underwritten offering using the same underwriter or underwriters and, subject
to the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
f. Eligibility for Form S-3. The Company represents and warrants that it
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meets the requirements for the use of Form S-3 for registration of the sale by
the Initial Investor and any other Investor of the Registrable Securities and
the Company shall file all reports required to be filed by the Company with the
SEC in a timely manner necessary to maintain such eligibility for the use of
Form S-3.
g. Rule 416. The Company and the Investors each acknowledge that a
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number of Registrable Securities shall be registered pursuant to Rule 416 under
the Securities Act so as to include in such Registration Statement any and all
Registrable Securities which may become issuable to prevent dilution by reason
of (i) stock splits, stock dividends or similar transactions , (ii) a decline on
the Per Share Price as provided in the Securities Purchase Agreement to the
extent the bid price of the Common Stock decreases after the Closing Date and
prior to the Adjustment Date and (iii) reductions in the Exercise Price of the
Warrants in accordance with the terms thereof (collectively, the "RULE 416
SECURITIES"). In this regard, the Company agrees to take all steps reasonably
necessary to ensure that the maximum number of Registrable Securities which may
be registered pursuant to Rule 416 under the Securities Act are covered by the
Registration Statement filed pursuant to Section 2(a)(i) hereof and, absent
guidance from the SEC or other definitive authority to the contrary, the Company
shall affirmatively support and not take any action adverse to the position that
the Registration Statements filed hereunder cover all of the Rule 416
Securities. If the Company determines that the Registration Statements filed
hereunder do not cover all of the Rule 416 Securities, the Company shall
immediately provide to each Investor written notice (a "RULE 416 NOTICE")
setting forth the basis for the Company's position and the authority therefor.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the
Registrable Securities, the Company shall have the following obligations:
a. The Company shall prepare promptly and use its best efforts to file
with the SEC the Registration Statements required by Section 2(a)(i), 2(a)(iii)
and 2(a)(iv) as soon as practicable in accordance with the applicable Filing
Date, Adjustment Share Filing Date and Warrant Share Filing Date, respectively,
and to cause such Registration Statement(s) relating to Registrable Securities
to become effective as soon as practicable thereafter and keep such
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Registration Statements effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the applicable
Registrable Securities have been sold and (ii) the date on which all of the
Registrable Securities (in the reasonable opinion of counsel to the Initial
Investor) may be immediately sold to the public without registration or
restriction pursuant to Rule 144(k) under the Securities Act (the "REGISTRATION
PERIOD"), which Registration Statement(s) as amended or supplemented, including
the prospectuses contained therein and all documents incorporated by reference
therein) 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.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement(s) and the prospectus(es) used in connection with the Registration
Statement(s) as may be necessary to keep such Registration Statement(s)
effective at all times during the applicable Registration Period, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the
applicable Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of such Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statements referred
to in Section 2(a), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of such Registration Statements or amendment
thereto), and each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statements (other than any portion,
if any, thereof which contains information for which the Company has sought
confidential treatment), (ii) on the date of effectiveness of such Registration
Statement(s) or any amendment thereto, a notice stating that such Registration
Statement or amendment has been declared effective, and (iii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor.
d. The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Investor who holds Registrable Securities being offered reasonably requests,
(ii) prepare and file in those jurisdictions such amendments (including post-
effective amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the applicable
Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and
10
qualifications in effect at all times during such Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its charter
or bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders.
e. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of any event, the
Company shall notify each Investor of the happening of such event, of which the
Company has knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission but in any event within
ten (10) calendar days, and deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request.
g. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable moment (including in each case by amending or supplementing
such Registration Statement) and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
h. The Company shall permit a single firm of counsel designated by the
Initial Investor to review each Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
i. The Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act)
11
covering a twelve- month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date of each Registration
Statement.
j. At the request of any Investor whose Registrable Securities are
included in a Registration Statement, the Company shall furnish, on the date of
effectiveness of such Registration Statement in an underwritten offering, (i) an
opinion, dated as of such date, from counsel representing the Company addressed
to the underwriters and in form, scope and substances as is customarily given in
an underwritten public offering and (ii) a letter, dated such date, from the
Company's independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters. In addition, at
the request of any Investor whose Registrable Securities are included in a
Registration Statement, the Company shall furnish on the date of effectiveness
of such Registration Statement an opinion, dated as of such date, from counsel
representing the Company to the Investors to the effect that the Registration
Statement and the Prospectus comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations
thereunder (except that no opinion need be expressed with respect to the
financial statements, including the notes and schedules thereto, or any other
financial, statistical or accounting information, or information relating to the
Investors or any underwriters or the method of distribution of the Registrable
Securities by the Investors and any underwriters included therein).
k. The Company shall make available for inspection by (i) any Investor
whose Registrable Securities are included in a Registration Statement, (ii) any
underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Investors, and (iv) one firm of attorneys retained by all
such underwriters (collectively, the "INSPECTORS") all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence; provided, however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (b) the release of such Records is ordered pursuant
to a subpoena or other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at the Company's expense, to
undertake
12
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein shall be deemed to limit
the Investors' ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations or to effect the
obligations of the Company to comply with applicable securities laws and
regulations.
l. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (iv) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement, or (v) such Investor consents to the form and
content of any such disclosure. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
m. The Company shall use its best efforts to promptly either (i) cause
all the Registrable Securities covered by a Registration Statement to be listed
on the New York Stock Exchange or the American Stock Exchange or another
national securities exchange and on each additional national securities exchange
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) secure the designation and quotation,
of all the Registrable Securities covered by each Registration Statement on the
Nasdaq National Market and, without limiting the generality of the foregoing, to
arrange for or maintain at least two market makers to register with the National
Association of Securities Dealers ("NASD") as such with respect to such
Registrable Securities.
n. The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of each Registration Statement.
o. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing underwriter or
underwriters, if any, or the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the Investors
may request, and, within three (3) business days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal
13
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an opinion of such
counsel sufficient to permit the free transferability of the Registrable
Securities covered by such Registration Statement.
p. At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.
q. The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the Securities Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated by the SEC).
r. The Company shall, subject to reasonable business considerations,
take such other actions to expedite or facilitate the disposition of Registrable
Securities as are reasonably requested by any Investor or the underwriters.
s. From and after the date of this Agreement, the Company shall not, and
shall not agree to, allow the holders of any securities of the Company to
include any of their securities in any Registration Statement under Section 2(a)
hereof or any amendment or supplement thereto under Section 3(b) hereof without
the consent of the holders of a majority in interest of the Registrable
Securities.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) business
days prior to the first anticipated filing date of a Registration Statement, the
Company shall notify each Investor of the information the Company requires from
each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of each Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
14
c. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter(s) of such offering and the Company and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election not to participate in such
underwritten distribution.
d. Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f) or 3(g),
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(g). The Company shall deliver to
each Investor copies of such supplemented or amended prospectuses no later than
one (1) business day after the earlier of the date such supplemented or amended
prospectus is filed with or declared effective by the SEC.
e. No Investor may participate in any underwritten distribution hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
f. The Initial Investor and its affiliates will not during the five
Trading Days (as defined in the Securities Purchase Agreement) immediately
preceding the Adjustment Date engage in any sales (including any short sales) of
the Company's Common Stock; provided that if the Adjustment Date is the date a
--------
Registration Statement filed pursuant to Section 2(a)(i) is declared effective,
the Company shall have notified the Initial Investor of the effectiveness date
of such Registration Statement at least five (5) days in advance of such date.
5. EXPENSES OF REGISTRATION.
All reasonable expenses incurred by the Company or the Investors in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 above, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one
counsel selected by the Investors, shall be borne by the Company. In addition,
the Company shall pay all of the Investors' costs and expenses (including legal
fees) incurred in connection with the enforcement of the rights of the Investors
hereunder if, in any action to enforce their rights hereunder, the Investors
prevail in whole or in part.
15
6. INDEMNIFICATION. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor whose Registrable Securities were included
in a Registration Statement prepared under Section 2 hereof, and (ii) the
directors, officers, partners, members, employees and agents of such Investor
and each person who controls any Investor within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"), against
any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation resulting from action or inaction by the Company under the Securities
Act, the Exchange Act or any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"VIOLATIONS"). Subject to the restrictions set forth in Section 6(c) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable out-of-pocket expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for use
in the Registration Statement or any such amendment thereof or supplement
thereto; (ii) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company; and
(iii) with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by the Company pursuant to Section 3(c) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used the incorrect prospectus or failed to
deliver the correct prospectus as required by the Securities Act. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on
16
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement covering Registrable
Securities, each Investor whose Registrable Securities are included therein
agrees severally and not jointly to indemnify, hold harmless and defend, to the
same extent and in the same manner set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration Statement, its
employees, agents and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and any other stockholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who controls such
stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and subject to
Section 6(c) such Investor will reimburse any legal or other expenses (promptly
as such expenses are incurred and are due and payable) reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor; provided, further, however,
that the Investor shall be liable under this Agreement (including this Section
6(b) and Section 7) for only that amount as does not exceed the net proceeds
actually received by such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus used by the Company in
connection with any Registration Statement filed under Section 2(e) hereof shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, and the
Indemnified Party failed to utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel reasonably satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that if, in the reasonable opinion of counsel
17
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party in conducting
the defense of any action would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party and
the indemnifying party or if the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to or may not be asserted by such indemnifying party, then such
Indemnified Person or Indemnified Party shall have the right to retain separate
counsel to assume such legal defenses or defend such action in its entirety on
behalf of such Indemnified Person or Indemnified Party, if appropriate, with the
fees and expenses to be paid by the indemnifying party. The indemnifying party
shall pay for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be selected by
Investors holding a majority-in-interest of the Registrable Securities included
in the Registration Statement to which the Claim relates, if the Investors are
entitled to indemnification hereunder, or by the Company, if the Company or any
of its directors, officers or any person who controls the Company within the
meaning of the Securities Act or the Exchange Act, is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144, the Company agrees to:
a. file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 4(c) of the Securities Purchase Agreement)
18
and the filing and availability of such reports and other documents is required
for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns Shares,
Warrants or Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Investors hereunder,
including the right to have the Company register Registrable Securities pursuant
to this Agreement, shall be automatically assignable by each Investor to any
transferee of at least ten percent (10%) of the Registrable Securities if: (i)
the Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company after such
assignment, (ii) the Company is furnished with written notice of (a) the name
and address of such transferee or assignee and (b) the securities with respect
to which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions contained herein,
and (v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities or in the case of a waiver by the Company, with the
written consent of the Company or in the case of a waiver by the Investors, with
the written consent of Investors who hold a majority in interest of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the
19
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
OPEN MARKET, INC.
Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with copies to:
OPEN MARKET, INC.
Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Legal Counsel
and
XXXX & XXXX LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to an Investor, at such address as such Investor shall have
provided in writing to the Company or such other address as such Investor
furnishes by notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. Governing Law; Jurisdiction. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts made and to be performed in the Commonwealth of
Massachusetts. The Company irrevocably consents to the jurisdiction of the
United States federal courts and state courts located in Boston, Massachusetts
in any suit or proceeding based on or arising under this Agreement and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The
20
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company further agrees that service
of process upon the Company mailed by first class mail shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect an Investor's right to serve process in
any other manner permitted by law. The Company agrees that a final non-
appealable judgment in any such suit or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
e. This Agreement, the Securities Purchase Agreement, and the Warrants
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the
Securities Purchase Agreement, and the Warrants supersede all prior agreements
and understandings among the parties hereto and thereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each party 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 the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
j. All consents, approvals and other determinations to be made by the
Investors or the Initial Investor pursuant to this Agreement shall be made by
the Investors holding a majority in interest of the Registrable Securities
(determined as if all Warrants then outstanding had been exercised for
Registrable Securities and assuming no Adjustment Shares are outstanding prior
to the Adjustment Date) then held by all Investors or by the Initial Investor,
as the case may be.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time of such
establishment or increase, as the case may be. In the event an Investor shall
sell
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or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included on a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated
to any person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Investors, pro rata based on the number of shares of
Registrable Securities then held by such Investors. For the avoidance of doubt,
the number of Registrable Securities held by an Investor shall be determined as
if all Warrants then outstanding and held by an Investor were exercised for
Registrable Securities. In addition, in calculating the number of Registrable
Securities held by an Investor, Adjustment Shares shall constitute Registrable
Securities for this purpose only after the Adjustment Date.
l. For purposes of this Agreement, the term "BUSINESS DAY" means any day
other than a Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law, regulation or executive
order to close.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
OPEN MARKET, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and Chief Financial Officer
INITIAL INVESTOR:
CMG INFORMATION SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Treasurer and Chief Financial Officer
Address: 000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.:: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
Treasurer and Chief Financial Officer
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