Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of October
4, 1999, by and among Secure Computing Corporation, a Delaware corporation, with
headquarters located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(the "COMPANY"), and Manchester Securities Corp. (the "INVESTOR").
WHEREAS:
A. In connection with the Common Stock Investment Agreement by and
among the Company and the Investor of even date herewith (the "INVESTMENT
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions of the Investment Agreement, to issue and sell to the Investor
certain shares of the Company's common stock, par value $0.01 per share (the
"COMMON STOCK"), pursuant to an effective Registration Statement (as defined
below);
B. The Company is filing a registration statement on Form S-1 with the
Securities and Exchange Commission (the "SEC"); and
C. To induce the Investor to execute and deliver the Investment
Agreement, the Company has agreed to provide certain rights with respect to the
Registration Statement under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "1933 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
Investor hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "HOLDER" means the Investor and any transferee or assignee thereof
to whom the Investor assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section 8.
(b) "PERSON" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
(c) "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing one or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 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(s) by the SEC.
(d) "REGISTERED SECURITIES" means the shares of Common Stock issued or
issuable pursuant to the Investment Agreement or the Warrant and any shares of
capital stock issued or issuable with respect to the such shares of Common Stock
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, regardless of any limitation on the Investor's right
to exercise to purchase the maximum number of shares of Common Stock provided
for under the Investment Agreement, in each case as issued pursuant the
Registration Statement.
(e) "REGISTRATION STATEMENT" shall have the meaning set forth in the
Investment Agreement, and will not include any securities owned by Persons other
than the Investor.
(f) "WARRANT" means the warrant attached to the Investment Agreement as
Exhibit F thereto.
(g) Capitalized terms used but not defined herein shall have the
meanings specified in the Investment Agreement.
2. REGISTRATION.
(a) Mandatory Registration. The Company represents and warrants that it
is filing a registration statement on Form S-1 with the SEC, which has not yet
been declared effective, all in compliance with the 1933 Act and Rule 415(a)(x)
thereunder, covering the issuance and sale to the Investor of the Registered
Securities.
(b) Counsel. Subject to Section 5 hereof, in connection with any
offering of the Registered Securities to the Holders under the Registration
Statement, the Holders shall have the right to select legal counsel to
administer their interest in the offering. The Company shall reasonably
cooperate with any such counsel.
3. RELATED OBLIGATIONS.
At all times that the Company is obligated to maintain the Registration
Statement effective, the Company will use its best efforts to effect the
registration of the Registered Securities in accordance with the intended method
of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
(a) The Company shall keep the Registration Statement (covering all
Registered Securities) effective pursuant to Rule 415 at all times during the
period beginning on the date the Registration Statement is declared effective by
the SEC and ending on the twenty-six (26) month anniversary of the date hereof
(collectively, the "REGISTRATION PERIOD"), which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
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, in light of the circumstances in which they were made, not
misleading. If at any time (the "NONEFFECTIVE
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TIME")during the Registration Period the Company shall fail to keep the
Registration Statement effective or the prospectus current and deliverable, the
Company shall pay to the Holders a cash amount equal to a percentage of the
higher of (i) the initial aggregate strike price of the Warrant and (ii) the
Fair Market Value (as defined in the Warrant) of the shares of Common Stock
(determined as of the commencement of the Noneffective Time) for which the
Warrant may be exercised (the higher of (i) and (ii) being the "NONEFFECTIVE
AMOUNT"). During the first 30 day period (or portion thereof) that the
Registration Statement is not effective or the prospectus is not current and
deliverable (such 30 day period being deemed to commence, for purpose of this
paragraph, 10 calendar days after the commencement of the Noneffective Time),
the Company shall make a cash payment equal to 1% of the Noneffective Amount;
and for each subsequent 30 day period (or portion thereof) the Company shall
make a cash payment equal to 2% of the Noneffective Amount. The payment of any
Noneffective Amount by the Company is in addition to and does not limit any
other rights and remedies the Investor or the Holders may have. Such cash
payment will be due 3 Trading Days after the earlier of (x) the day the
Registration Statement is again effective or the prospectus is again current or
(y) the end of each such 30 day period.
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
shall comply with the provisions of the 1933 Act with respect to the disposition
of all Registered Securities of the Company covered by such Registration
Statement until such time as all of such Registered Securities shall 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) Subject to Section 3(h)(ii), the Company shall furnish to each
Holder and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC such number of copies as such Holder may
reasonably request of such Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, the prospectus included in such Registration
Statement (including each prospectus supplement) and, with regards to such
Registration Statement(s), any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives and (ii) such other documents,
including copies of any final prospectus and supplements thereto, as such Holder
may reasonably request from time to time in order to facilitate the disposition
of the Registered Securities owned by such Holder.
(d) Immediately after becoming aware of the existence of such event,
the Company shall notify (subject to Section 3(h)(ii)) each Holder in writing
that the prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
promptly prepare a supplement or amendment to such Registration Statement (which
may
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consist of a document to be filed by the Company with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and to be
incorporated by reference in the prospectus) to correct such untrue statement or
omission, and deliver three (3) copies of such supplement or amendment to each
Holder (or such other number of copies as such Holder may reasonably request).
The Company shall also immediately notify (subject to Section 3(h)(ii)) each
Holder in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective, other than the Registration
Statement and the amendments thereto that were filed prior to the date hereof
(notification of such effectiveness shall be delivered to each Holder by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
any request by the SEC for amendments or supplements to a Registration Statement
or related prospectus or related information, and (iii) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate.
(e) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registered Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify (subject to Section 3(h)(ii)) each Holder of the issuance
of such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
(f) Subject to Section 3(h)(ii), the Company shall permit the Inspector
(as defined below) and/or the Investor's counsel, to review and comment upon a
Registration Statement and all amendments and prospectus supplements thereto at
least two (2) full Trading Days (or such shorter period as Investor's and
Company's counsel may mutually agree) prior to their filing with the SEC.
Without limiting Section 3(h)(iii), the Company shall not submit to the SEC any
amendment or prospectus supplement thereto if a Holder objects to facts or
characterizations therein related to such Holder.
(g) Subject to Section 3(h)(ii), the Company shall make available for
inspection by (i) any Holder and (ii) its independent attorneys and independent
accountants or other agents or Persons retained and designated by the Holders in
a written schedule to this Agreement (which schedule may be updated from time to
time by the Holders) (collectively, such attorneys, accountants or other agents
or Persons being "INSPECTORS") all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the
"RECORDS"), as shall in good faith be deemed necessary by each Inspector, and
cause the Company's officers, directors and employees to supply all information
which any Inspector in good faith may request. The Investor agrees (to the
extent it has approved receipt of non-public information pursuant to Section
3(h)(ii)) to keep confidential (and to cause its Inspectors and counsel to keep
confidential) all non-public information received pursuant to Section 3(h)(ii);
provided such obligation to maintain confidentiality shall be subject to the
same type of limitations identified in Section 3(p).
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(h) Due Diligence Review. (I) Subject to Section 3(h)(ii), the Company
shall make available, during normal business hours, for inspection and review by
the Investor, its Inspectors (who may or may not be affiliated with the
Investor) all financial and other records, all SEC Documents and other filings
with the SEC, and all other corporate documents and properties of the Company as
the Investor may in good faith request reasonably in advance (it being
acknowledged that during pre-arranged diligence such advance request shall not
be required) for the purpose of such review, and cause the Company's officers,
directors and employees to supply promptly all such information requested by the
Investor or its Inspectors in connection with such Registration Statement
(including, without limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from time to time
after the filing and effectiveness of the Registration Statement for the sole
purpose of enabling the Investor and its Inspectors to conduct initial and
ongoing due diligence with respect to the Company and the accuracy of the
Registration Statement.
(ii) Notwithstanding any other provision of any of the Transaction
Documents, the Company shall not disclose nonpublic information to the Investor
or its Inspectors unless prior to disclosure of such information the Company
identifies such information as being nonpublic information (without conveying
the substance of such nonpublic information) and provides the Investor and its
Inspectors with the opportunity to accept or refuse to accept such nonpublic
information for review. If nonpublic information is provided by the Company or
its representatives or advisors in violation of this Section 3(h)(ii), the
Investor shall be free to disclose such information to the public without
incurring liability therefor. If the Investor accepts such nonpublic
information, the Company will provide such information only to the Inspector
designated by the Investor. Nothing in the Transaction Documents shall entitle
the Company to withhold non-public information accepted pursuant to this Section
3(h)(ii).
(iii) Subject to Section 3(h)(ii), the Company will immediately
notify the Inspectors and, if any, underwriters, of any event or the existence
of any circumstance of which it becomes aware, constituting nonpublic
information (whether or not requested of the Company specifically or generally
during the course of due diligence or otherwise by any such persons or
entities), which, if not disclosed in the Prospectus included in the
Registration Statement, would cause such Prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements therein, in light of the circumstances in which they were
made, not misleading. In no event shall the Investor's Inspectors receiving
nonpublic information pursuant to Section 3(h)(ii) disclose to the Investor the
nature of the specific event or circumstances constituting any nonpublic
information discovered by such advisors or representatives in the course of
their due diligence without the written consent of the Investor prior to
disclosure of such information. The Investor's Inspectors shall make complete
disclosure to the Investor's independent counsel of all events or circumstances
constituting nonpublic information discovered by such Inspectors in the course
of their due diligence upon which such Inspectors form the opinion that the
Registration Statement contains an untrue statement of a material fact or omits
a material fact required to be stated in the Registration Statement or necessary
to make the statements contained therein, in the light of the circumstances in
which they were made, not misleading. Upon receipt of such disclosure, the
Investor's independent counsel shall consult with the Company's independent
counsel (who, for all purposes of this
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Agreement, must be an independent law firm with substantial experience in
underwritten offerings which is reasonably acceptable to the Investor) in order
to address the concern raised as to the existence of a material misstatement or
omission and to discuss appropriate disclosure with respect thereto. In the
event after such consultation the Investor's independent counsel believes in
good faith that the Registration Statement contains an untrue statement or a
material fact or omits a material fact required to be stated in the Registration
Statement or necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading, (a) if the Company does
not dispute the existence of such material misstatement or omission, the Company
shall file with the SEC an amendment to the Registration Statement responsive to
such alleged untrue statement or omission and provide the Investor, as promptly
as practicable, with copies of the Registration Statement and related
Prospectus, as so amended, (b) if the Company disputes the existence of any such
material misstatement or omission and the Investor has not unreasonably declined
to accept the opinion of the Company's independent counsel or the letter of the
Company's accountants, (i) the Company's independent counsel shall provide the
Investor's independent counsel with a written opinion stating that nothing has
come to their attention that would lead them to believe that the Registration
Statement or the related Prospectus, as of the date of such opinion, contains an
untrue statement of a material fact or omits a material fact required to be
stated in the Registration Statement or the related Prospectus or necessary to
make the statements contained therein, in light of the circumstances in which
they were made, not misleading and (ii) in the event the dispute relates to the
adequacy of financial disclosure and the Investor shall reasonably request, the
Company's independent auditors shall provide to the Company a letter outlining
the performance of such "agreed upon procedures" as shall be reasonably
requested by the Investor and the Company shall provide the Investor with a copy
of such letter, or (c) if the Company disputes the existence of any such
material misstatement or omission, and the dispute relates to the timing of
disclosure of a material event and the Company's independent counsel is unable
to provide the opinion referenced in clause (b)(i) above to the Investor, then
the Investment Agreement shall be suspended for a period of up to thirty (30)
days, at the end of which, if the dispute still exists between the Company's
independent counsel and the Investor's independent counsel, the Company shall
either (i) amend the Registration Statement as provided above, (ii) provide to
the Investor the Company's independent counsel opinion and a copy of the letter
of the Company's independent auditors referenced above, or (iii) the obligation
of the Investor to purchase shares of Common Stock pursuant to the Investment
Agreement shall be terminable by the Investor in its sole discretion.
Notwithstanding any other provision of the Transaction Documents other than this
Section 3(h)(iii), if the Investor's independent counsel believes in good faith
that the Registration Statement or prospectus contains any material misstatement
or omission (regardless of whether it has received an opinion or a comfort
letter), the Investor shall have the right but not the obligation in its sole
discretion from time to time to refrain from purchasing, in whole or in part,
any Shares during any Investment Period in which such condition exists.
(i) Without limiting the Company's obligations under the Investment
Agreement, the Company shall cooperate with the Holders to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registered Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in
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such denominations or amounts, as the case may be, as the Holders may reasonably
request and registered in such names of the Persons as the Holders may request.
(j) If requested by the Investor, the Company shall (i) as soon as
practical incorporate in a prospectus supplement or post-effective amendment
such information as the Investor reasonably determines should be included
therein relating to the sale and distribution of Registered Securities,
including, without limitation, information with respect to the offering of the
Registered Securities to be sold in such offering; (ii) make all required
filings of such prospectus supplement or post-effective amendment as soon as
practical after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by the
Investor.
(k) The Company shall use its best efforts to cause the Registered
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registered Securities.
(l) The Company shall make generally available to its security holders
as soon as practical, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the ▇▇▇▇ ▇▇▇) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of any Registration Statement.
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the SEC and any other regulatory authorities
of competent jurisdiction in connection with any registration hereunder.
(n) Immediately after the Registration Statement is declared effective
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registered Securities (with copies to
the Holders whose Registered Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
(o) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Holders of Registered Securities
pursuant to a Registration Statement.
(p) The Company shall hold in confidence and not make any disclosure of
information concerning a Holder provided to the Company unless and except to the
extent that (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 sought pursuant to a legal
process, including without limitation, subpoena, interrogatory, request for
documents or information, civil investigative demand, deposition or similar
process, or a court of competent
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jurisdiction or by a governmental, quasi-governmental, regulatory or
administrative entity; provided that the Company shall immediately notify such
Holder of existence, terms and circumstances of such request, and the Company
shall reasonably cooperate with such Holder in attempting to (a) prevent or
limit such disclosure and (b) obtain confidential treatment of any information
required to be disclosed, or (iv) such information has been made generally
available to the public other than by disclosure in violation of the Company's
obligations under the Transaction Documents or otherwise. The Company agrees
that it shall, upon learning that disclosure of such information concerning a
Holder is sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to such Holder and allow such
Holder, at the Holder's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
(q) The Company shall engage a transfer agent and registrar for all the
Registered Securities not later than the effective date of the first
Registration Statement filed pursuant hereto.
4. OBLIGATIONS OF THE HOLDERS.
Each Holder agrees that, upon receipt of any written notice from the
Company of the happening of any event of the kind described in Section 3(e) or
the first sentence of 3(d), such Holder will immediately discontinue disposition
of Registered Securities pursuant to any prospectus in the Registration
Statement(s) covering such Registered Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3(e) or the first sentence of 3(d).
5. EXPENSES OF REGISTRATION.
Subject to the limitations set forth in the Investment Agreement, all
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualification fees, printers and accounting fees, and fees and disbursements of
counsel for the Company and reasonable fees and disbursements of counsel for the
Holders shall be paid by the Company.
6. INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Holder, the directors,
officers, partners, employees, members, agents, representatives of, and each
Person, if any, who controls, any Holder within the meaning of the 1933 Act or
the Securities Exchange Act of 1934, as amended (the "1934 ACT"), (each, an
"INDEMNIFIED PERSON"), from and against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs (including the costs of
enforcing this provision), attorneys' fees and disbursements, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before
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any court or governmental, administrative or other regulatory agency, body or
the SEC, whether pending or threatened, whether or not an indemnified party is
or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may
become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registered Securities are
offered ("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which the statements therein were
made, not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact 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 by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registered Securities
pursuant to a Registration Statement (the matters in the foregoing clauses (i)
through (iii) being, collectively, "VIOLATIONS"). The Company shall reimburse
the Holders and each such controlling Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees and
disbursements or other reasonable 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 to the extent 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 any Indemnified Person
expressly for inclusion in the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(c); (ii) shall not be available to the extent
such Claim is based on (a) a failure of the Holder to deliver or to cause to be
delivered the current prospectus made available by the Company or (b) the
Indemnified Person's use of an incorrect prospectus despite being promptly
advised in advance by the Company in writing not to use such incorrect
prospectus; and (iii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld, delayed or conditioned. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registered Securities by the Holders pursuant to Section 8.
(b) In connection with any Registration Statement in which a Holder is
participating, each such Holder agrees, severally and not jointly, to indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, employees, agents and
representatives, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to
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which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
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 Holder expressly for inclusion in
such Registration Statement; and such Holder will reimburse the reasonable legal
expenses of one counsel or other expenses 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) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Holder, which consent shall not be unreasonably
withheld, delayed or conditioned; provided, further, however, that the Holder
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Holder as a
result of the sale of Registered Securities under 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 Registered Securities by the Holders pursuant to Section 8.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus 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.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement or threat of
commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires and can reasonably establish its
financial ability to meet its indemnity obligations, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses thereof to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The indemnifying
party shall pay for only one separate legal counsel for the Indemnified Persons
or the Indemnified Parties, as applicable, and such counsel shall be selected by
the Investor, if the Holders are entitled to indemnification hereunder, or the
Company, if the Company is entitled to indemnification hereunder, as applicable.
The Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
Claim by the indemnifying party and shall furnish to the indemnifying party all
information
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reasonably available to the Indemnified Party or Indemnified Person which
relates to such Claim. The indemnifying party shall keep the Indemnified Party
or Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. 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 prejudiced in its ability to defend such
action.
(d) 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 and when bills are received or Indemnified Damages are incurred.
(e) The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law or otherwise, 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 or
otherwise; 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 seller of Registered
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any seller of
Registered Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any Selling Holder of Registered Securities shall be
limited in amount to the net amount of proceeds received by such Selling Holder
from the sale of such Registered Securities under such Registration Statement.
8. ASSIGNMENT OF REGISTRATION RIGHTS.
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The Investor may assign some or all of its rights hereunder to an
affiliate or associate of the Investor or an entity or fund which has the same
principal investment adviser as the Investor without the consent of the Company,
and to others, with the written consent of the Company, which shall not be
unreasonably withheld (in each case, the "PERMITTED ASSIGNEE"). Notwithstanding
anything to the contrary contained in the Transaction Documents, the Investor
shall be entitled to pledge the Shares, the Warrant and the Warrant Shares in
connection with a bona fide margin account.
9. 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 the written consent of the Company
and the Investor. Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon each Holder and the Company.
10. MISCELLANEOUS.
(a) A Person is deemed to be a Holder of Registered Securities whenever
such Person owns of record such Registered Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registered Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registered Securities.
(b) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement (which must be given
subject to Section 3(h)(ii)) must be in writing, must be delivered by (i)
courier, mail or hand delivery or (ii) facsimile, and will be deemed to have
been delivered upon receipt. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
Secure Computing Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Esq.
If to the Investor:
Manchester Securities Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ and Mr. ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
Kleinberg, Kaplan, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 212-986-8866
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Each party shall provide five (5) days prior written notice to the other party
of any change in address, telephone number or facsimile number. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
(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) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY
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OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN
ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW. IF ANY PROVISION OF THIS AGREEMENT SHALL BE INVALID OR
UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF THE REMAINDER OF THIS AGREEMENT IN THAT
JURISDICTION OR THE VALIDITY OR ENFORCEABILITY OF ANY PROVISION OF THIS
AGREEMENT IN ANY OTHER JURISDICTION.
(e) This Agreement, the Warrant and the Investment Agreement (and the
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 and the Investment Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(f) Subject to the requirements of Section 8, this Agreement shall
inure to the benefit of and be binding upon the permitted 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 identical
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.
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(j) All consents and other determinations to be made by the Holders
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Holders holding a majority of the Registered Securities.
(k) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: INVESTOR:
SECURE COMPUTING CORPORATION MANCHESTER SECURITIES CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------- -----------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------- ---------------------
Title: S.V.P. Operations and CFO Title: Vice President
------------------------- --------------------
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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Norwest Shareowner Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Transfer Agent
RE: SECURE COMPUTING CORP.
Ladies and Gentlemen:
We are counsel to Secure Computing Corp., a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Common Stock Investment Agreement (the "INVESTMENT AGREEMENT") dated October 4,
1999 entered into by and among the Company and Manchester Securities Corp. (the
"INVESTOR") pursuant to which the Company may, from time to time, issue to the
Investor shares (the "SHARES") of the Company's common stock, par value $ 0.01
per share. On ____________ ___, 1999, the Company filed a Registration Statement
on Form S-1 (File No. [________]) (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "SEC") relating to the Shares.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge as
of the date hereof, after telephonic inquiry of a member of the SEC's staff,
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Shares are available for issuance and sale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
By: /s/▇▇▇▇ ▇▇▇▇
--------------------------
▇▇▇▇ ▇▇▇▇, Esq.
cc: Manchester Securities Corp.
Kleinberg, Kaplan, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
2.
