Exhibit 10.51
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this "Agreement") is made
and entered into as of September ___, 1999, by and among CAIS Internet, Inc., a
Delaware corporation (the "Company"), Xxx Xxx and Xxx Xxxxx (Xx. Xxx and Xx.
Xxxxx individually, the "Holder;" together, the "Holders"), including their
successors and permitted assigns.
WHEREAS, on September __, 1999, the Company, Business Anywhere, USA, Inc.,
a California corporation ("BAC"), and CIBA Merger Corp., a Delaware corporation
and a wholly owned subsidiary of the Company ("CIBA"), and the Holders entered
into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which
CIBA will be merged with and into BAC (the "Merger");
WHEREAS, the Holders are the sole shareholders of BAC's capital stock. At
the Effective Time of the Merger, the Holders shall receive shares of the
Company's Common Stock (as defined below) in connection with the Merger (the
"Shares");
WHEREAS, the Merger Agreement provides, among other things, that the
Company shall grant the Holders certain registration rights with respect to the
Shares, as more fully set forth herein;
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the consummation of the Merger and the other transactions
contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
there parties hereto agree as follows:
1. Definitions.
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As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"CAIS Prospectus" shall have the meaning set forth in Section 5(d)
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hereof.
"CAIS SEC Reports" shall have the meaning set forth in Section 5(d)
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hereof.
"Common Stock" shall mean the Common Stock, par value $.01 per share,
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of the Company.
"Company" shall have the meaning set forth in the preamble and also
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shall include the Company's successors.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended from time to time.
"Holder" and "Holders" shall have the meanings set forth in the
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preamble.
"Merger" shall have the meaning set forth in the preamble.
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"Offering" shall mean the sale of Common Stock in connection with any
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public offering by the Company.
"Other Holders" shall have the meaning set forth in Section 3(c)
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hereof.
"Person" shall mean an individual, partnership, limited liability
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company, corporation, trust, unincorporated organization or other entity, or a
government or agency or political subdivision thereof.
"Piggyback Notice" shall have the meaning set forth in Section 3(b)
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hereof.
"Piggyback Registration" shall have the meaning set forth in Section
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3(b) hereof.
"Piggyback Request" shall have the meaning set forth in Section 3(b)
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hereof.
"Prospectus" shall mean the prospectus included in a Registration
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Statement for the registration with the SEC of all or a portion of the
Registrable Securities, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement and by all
other amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Registrable Securities" shall mean the Shares issuable to the Holders
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as Initial Consideration or Additional Consideration (as defined in the Merger
Agreement) in connection with the Merger, excluding (i) Registrable Securities
for which a Registration Statement relating to the sale thereof shall have
become effective under the Securities Act and which have been sold or otherwise
distributed under such Registration Statement or (ii) Registrable Securities
which the Holder thereof may sell in any one three month period pursuant to Rule
144 under the Securities Act (or such successor rule as may be adopted).
"Registration Statement" shall mean a registration statement of the
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Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers some or all of the Registrable Securities, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all materials incorporated by reference therein.
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"SEC" shall mean the Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as amended
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from time to time.
"Shares" shall have the meaning set forth in the preamble.
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2. Lock-up Agreement.
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(a) Each Holder agrees that it shall not transfer, offer, pledge,
sell, contract to sell, grant any options for the sale of or otherwise dispose
of, directly or indirectly, any Shares held by such Holder through November 16,
1999. If requested by an underwriter of Common Stock, each Holder will reaffirm
the agreement set forth in this Section 2 in a separate writing in a form
satisfactory to such underwriter. The Company may impose stop-transfer
instructions with respect to the Shares, subject to the foregoing restriction
until the end of said period.
(b) Notwithstanding anything in this Agreement to the contrary, in
connection with any Offering, each Holder agrees that, if requested by the
managing underwriter of the Offering, such Holder shall not (except pursuant to
a Piggyback Registration to the extent permitted hereunder), directly or
indirectly, sell, offer, contract to sell, grant any option to purchase,
transfer the economic risk of ownership in, make any short sale, pledge or
otherwise dispose of, any Shares, without the prior written consent of the
Company and the managing underwriters of the Offering for a period of ninety
(90) days from the effective date of the registration statement under the
Securities Act relating to such Offering and to the extent otherwise permissible
under the requirements for a tax-free Merger. This restriction shall be binding
upon any transferee of the Shares and the certificates for the Shares shall bear
a legend to such effect. In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the Shares until the end
of such period.
3. Piggyback Registrations.
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(a) Right to Piggyback. If the Company proposes to file any
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registration statement under the Securities Act for purposes of an Offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary Offerings of securities of the Company, but
excluding Registration Statements relating to employee benefit plans or other
compensatory arrangements or with respect to corporate reorganizations, or other
transactions under Rule 145 of the Securities Act) (a "Piggyback Registration"),
the Company will give prompt written notice to each Holder of its intention to
effect such a registration (each, a "Piggyback Notice") and, subject to the
terms hereof, the Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within ten (10) days after the date of delivery of the
Piggyback Notice; provided, however, that if, at any time after giving written
notice of its intention to register any shares and, prior to the effective date
of the Registration Statement filed in connection with such registration, the
Company shall determine for any reason not to register any
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such shares, the Company may, at its election, give written notice of such
determination to the Holders requesting inclusion therein, and thereupon, the
Company shall be relieved of any obligation to register any Registrable
Securities in connection with such terminated registration. If the Piggyback
Registration is an underwritten Offering on behalf of the Company, then the
Company shall not be required to include any Registrable Securities of a Holder
in such Offering unless such Holder enters into a customary form of underwriting
agreement in form and substance reasonably satisfactory to the underwriters and
the Company.
(b) Priority on Primary Registrations. If a Piggyback Registration is an
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underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such Offering within a price range
acceptable to the Company, the Company will include in such registration, (i)
first, the securities the Company proposes to sell, and (ii) second, other
securities requested to be included in such registration, including without
limitation the Registrable Securities, pro rata on the basis of the number of
shares of such securities owned by each holder thereof (subject to any other
priority arrangements existing under registration rights agreements to which the
Company is a party).
(c) Priority on Secondary Registration. If a Piggyback Registration is an
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underwritten secondary registration on behalf of holders of the Company's
securities other than the Holders (the "Other Holders"), and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such Offering within a price range
acceptable to the Company and the Other Holders requesting such registration,
the Company will include in such registration (i) first, the securities
requested to be included therein by the Other Holders requesting such
registration, (ii) second, the securities the Company proposes to sell, and
(iii) third, other securities requested to be included in such registration,
including without limitation, the Registrable Securities, pro rata on the basis
of the number of shares of such securities owned by each holder thereof (subject
to any other priority arrangements existing under registration rights agreements
to which the Company is a party).
(d) Selection of Underwriters. In the case of an underwritten Piggyback
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Registration, the Company shall have the right to select the investment
banker(s) and manager(s) to administer the Offering.
4. Registration Procedures.
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In connection with the obligations of the Company with respect to the
Registration Statements pursuant to this Agreement, the Company shall:
(a) prepare and file with the SEC, a Registration Statement which shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith;
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(b) subject to the last three sentences of this Section 4(b) and
Section 4(i) hereof, (i) prepare and file with the SEC such amendments and post-
effective amendments to each such Registration Statement as may be required
under the Securities Act; (ii) cause each such Prospectus to be supplemented by
any required prospectus supplement, and as so supplemented, to be filed pursuant
to Rule 424 or any similar rule that may be adopted under the Securities Act;
and (iii) respond as promptly as practicable to any comments received from the
SEC with respect to the Registration Statement, or any amendment, post-effective
amendment or supplement relating thereto. Notwithstanding anything to the
contrary contained herein, the Company shall not be required to take any of the
actions described in clauses (i), (ii), or (iii) above with respect to each
particular Holder of Registrable Securities under a Piggyback Registration
unless and until the Company has received a Piggyback Notice from the Holder
that such Holder intends to make offers or sales under the Registration
Statement as specified in such Piggyback Notice. Once a Holder has delivered a
Piggyback Notice to the Company, such Holder shall promptly provide to the
Company such information as the Company reasonably requests in order to identify
such Holder and the method of distribution in a post-effective amendment to the
Registration Statement or a supplement to the Prospectus. Such Holder also shall
notify the Company in writing upon completion of such offer or sale or at such
time as such Holder no longer intends to make offers or sales under the
Registration Statement;
(c) furnish to each selling Holder of Registrable Securities, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Holder may reasonably request, in order to facilitate the public sale or
other disposition of the Registrable Securities; the Company consents to the use
of the Prospectus, including each preliminary Prospectus, by each such Holder of
Registrable Securities in connection with the Offering and sale of the
Registrable Securities covered by the Prospectus or the preliminary Prospectus;
(d) use its best efforts to register or qualify the Registration
Statement by the time the applicable Registration Statement is declared
effective by the SEC under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Securities shall reasonably
request in writing, keep each such registration or qualification effective
during the period such Registration Statement is required to be kept effective
as provided herein and all other acts and things that may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Securities owned by such Holder to
the extent required hereunder; provided, however, that the Company shall not be
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required to (i) qualify generally to do business in any jurisdiction or to
register as a broker or dealer in such jurisdiction where it would not otherwise
be required to qualify but for this Section 4(d), (ii) subject itself to
taxation in any such jurisdiction, or (iii) submit to the general service of
process in any such jurisdiction;
(e) notify each selling Holder of Registrable Securities promptly and,
if requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and
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supplements thereto become effective, (ii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(ii) if the Company receives any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction or
the initiation of any proceeding for such purpose, and (iv) of the happening of
any event during the period a Registration Statement is effective as a result of
which such Registration Statement or the related Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of the Prospectus), not
misleading;
(f) take all best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(g) furnish to each selling Holder of Registrable Securities, without
charge, at least one conformed copy of each Registration Statement and any post-
effective amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for such
numbers of shares and registered in such names as the selling Holder may
reasonably request at least two business days prior to any sale of Registrable
Securities;
(i) subject to the last three sentences of Section 4(b) hereof, upon
the occurrence of any event contemplated by Section 4(e)(iv) hereof, use its
best efforts promptly to prepare and file a supplement or prepare, file and
obtain effectiveness of a post-effective amendment to a Registration Statement
or the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will 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 the light of
the circumstances under which they were made, not misleading;
(j) make available for inspection by the Holders of the Registrable
Securities and any representatives, counsel or accountant retained by such
Holders, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by any
such representative, counsel or accountant in connection with a Registration
Statement; provided, however, that such records, documents or information which
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the Company determines, in good faith, to be confidential and notifies such
representatives, counsel or accountants in writing that such records, documents
or information are confidential shall not be disclosed by the representatives,
counsel or accountants unless (i) the disclosure of such records,
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documents or information is necessary to avoid or correct a material
misstatement or omission in a Registration Statement; (ii) the release of such
records, documents or information is ordered pursuant to a subpoena or order
from a court of competent jurisdiction; or (iii) such records, documents or
information have been generally made available to the public;
(k) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus, provide copies of such document (not
including any documents incorporated by reference therein unless requested) to
the selling Holders of Registrable Securities;
(l) use its best efforts to cause all Registrable Securities to be
listed on any securities exchange on which similar securities issued by the
Company are then listed;
(m) provide a CUSIP number for all Registrable Securities, not later
than the effective date of a Registration Statement;
(n) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering at least 12 months
that shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder; and
(o) use its best efforts to cause the Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable selling Holders to consummate
the disposition of such Registrable Securities.
The Company may require each Holder of Registrable Securities to
furnish to the Company in writing such information regarding the proposed
distribution by such Holder of such Registrable Securities as the Company may
from time to time reasonably request in writing.
In connection with and as a condition to the Company's obligations
with respect to the Registration Statement, each Holder agrees that: (i) it
will not offer or sell its Registrable Securities under the Registration
Statement until it has provided a Piggyback Notice, if and to the extent
applicable, and has received copies of the supplemental or amended Prospectus
contemplated by Section 4(b) hereof and receives notice that any post-effective
amendment has become effective; or (ii) upon receipt of any written notice from
the Company of the happening of any event of the kind described in Section
4(e)(iv) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder
receives copies of the supplemental or amended Prospectus contemplated by
Section 4(i) hereof and receives notice that any post-effective amendment has
become effective, and, if so directed by the Company, such Holder will deliver
to the Company (at the expense of the
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Company) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. If at any time after any
Registration Statement becomes effective, the Company advises the Holders in
writing that due to the existence of material information that has not been
disclosed to the public and included in the Registration Statement it is thus
necessary to amend the Registration Statement, the Holders shall suspend any
further sale of Registrable Securities until the Registration Statement has been
amended (each such period being referred to herein as a "Suspension Period").
Notwithstanding anything to the contrary contained herein, the Company
shall have the right to postpone the filing of any Registration Statement
hereunder for a reasonable period of time if the Company furnishes the Holders a
certificate signed by the Chairman of the Board of Directors or the President of
the Company stating that in its good faith judgment, the Company's Board of
Directors (or the executive committee thereof) has determined that effecting the
registration at such time would adversely affect a material financing,
acquisition or disposition of assets or securities, merger or other comparable
transaction, or would require the Company to make public disclosure of
information the public disclosure of which would have a material adverse effect
upon the Company.
5. Investment Representations. With respect to the Shares, each Holder
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represents and warrants as follows:
(a) The Holder, by reason of his or her business and financial
experience, has such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of this type that he or she
is capable of (i) evaluating the merits and risks of an investment in Common
Stock and making an informed investment decision, (ii) protecting his or her own
interest and (iii) bearing the economic risk of such investment. If the Holder
retained a purchaser's representative with respect to the investment in Common
Stock that may be made pursuant to the Merger Agreement then the Holder shall,
prior to or at the Closing, (i) acknowledge in writing such representation and
(ii) cause such representative to deliver a certificate to the Company
containing such representations as are reasonably requested by the Company.
(b) The Holder is acquiring the Common Stock for investment for the
Holder's own account, not as a nominee or agent and not with the view to, or any
intention of, a resale or distribution thereof, in whole or in part, or the
grant of any participation therein. The Holder understands that the Common Stock
has not been registered under the Securities Act or state securities laws by
reason of a specific exemption from the registration provisions of the
Securities Act and applicable state securities laws that depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Holder's representations as expressed in this Agreement. The Holder further
understands that, except as expressly provided herein, the Company shall have no
obligation to register the Common Stock under the Securities Act or any state
securities laws or to take any action that would make available any exemption
from the registration requirements of such laws. The Holder hereby
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acknowledges that because of the restrictions on transfer or assignment of the
Common Stock to be issued in connection with the Merger the Holder may have to
bear the economic risk of the investment commitment in Common Stock for an
indefinite period of time.
(c) The Holder will observe and comply with the Securities Act and all
applicable state securities and "blue sky" laws and the rules and regulations
promulgated thereunder, as now in effect and as from time to time amended, in
connection with any offer, sale, pledge, transfer or other disposition of Common
Stock. In furtherance of the foregoing, and in addition to any restrictions
contained in this Agreement, the Holder will not offer to sell, exchange,
transfer, pledge, or otherwise dispose of any of the Common Stock unless at such
time at least one of the following is satisfied:
(i) a Registration Statement under the Securities Act covering
the Common Stock proposed to be sold, transferred or otherwise disposed of,
describing the manner and terms of the proposed sale, transfer or other
disposition, and containing a current Prospectus, shall have been filed with the
SEC and made effective under the Securities Act;
(ii) such transaction shall be permitted pursuant to the
provisions of Rule 144;
(iii) counsel representing the Holder, satisfactory to the
Company, shall have advised the Company in a written opinion letter reasonably
satisfactory to the Company and its counsel, and upon which the Company and its
counsel may rely, that no registration under the Securities Act or any
applicable state securities law would be required in connection with the
proposed sale, transfer or other disposition; or
(iv) an authorized representative of the SEC shall have rendered
written advice to the Holder (sought by the Holder or counsel to the Holder,
with a copy thereof and of all other related communications delivered to the
Company) to the effect that the SEC would take no action, or that the staff of
the SEC would not recommend that the SEC take action, with respect to the
proposed sale, transfer or other disposition if consummated.
(d) The Holder understands that an investment in the Common Stock
involves substantial risks. The Holder has been given the opportunity to make a
thorough investigation of the proposed activities of the Company and, upon
request to the Company, has been furnished with materials relating to the
Company and its proposed activities, including, without limitation, a copy of
the Prospectus dated May 20, 1999 (the "CAIS Prospectus") and all reports filed
by the Company with the SEC since May 21, 1999 (the "CAIS SEC Reports"). The
Holder has been afforded the opportunity to obtain any additional information
deemed necessary by the Holder to verify the accuracy of any representations
made or information conveyed to the Holder. The Holder confirms that all
documents, records and books pertaining to his or her investment in Common Stock
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and requested by the Holder have been made available or delivered to the Holder.
The Holder has had an opportunity to ask questions of and receive answers from
the Company, or from a person or persons acting on the Company's behalf,
concerning the terms and conditions of his or her investment in the Common
Stock. The Holder has relied upon, and is making his or her investment decision
upon, the CAIS Prospectus, the CAIS SEC Reports, certain consent solicitation
materials distributed by BAC in connection with the Merger and other information
publicly available about the Company.
(e) The Holder understands that all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by the Holder shall be borne by the Holder.
6. Restrictive Legend. All certificates representing the Common Stock
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deliverable to the Holders pursuant to the Merger Agreement and any certificates
subsequently issued with respect thereto or in substitution therefor, unless a
sale, transfer or other disposition is executed pursuant to one or more of the
alternative conditions set forth in Section 5(c) shall have occurred, or unless
the conditions of paragraph (k) of Rule 144 promulgated under the Securities Act
shall have been satisfied, shall bear a legend substantially as follows, in
addition to any legend the Company determines is required pursuant to any
applicable legal requirement:
"The shares represented by this certificate may not be offered, sold,
pledged, transferred or otherwise disposed of except in accordance with the
requirements of the Securities Act of 1933, as amended, and the other
conditions specified in that certain Agreement and Plan of Merger dated as
of September __, 1999 and that certain Registration Rights and Lock-Up
Agreement dated as of September __, 1999, copies of which agreements CAIS
Internet, Inc. will furnish, without charge, to the holder of this
certificate upon written request therefor."
The Company, at its discretion, may cause a stop transfer order to be placed
with its transfer agent(s) with respect to the certificates for the Common Stock
but not as to the certificates for any part of the Common Stock as to which said
legend is no longer appropriate when one or more of the alternatives set forth
in Section 5(c) shall have been satisfied or the conditions of paragraph (k) of
Rule 144 promulgated under the Securities Act shall have been satisfied.
7. Affiliate Agreements. If and to the extent that a Holder is deemed
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to be an "affiliate" of the Company within the meaning of the Securities Act,
and as used for purposes of paragraphs (c) and (d) of Rule 145 of the SEC, then
the following terms of this Section 7 shall apply:
(a) The Holder agrees not to sell, transfer or otherwise dispose of
the Shares unless (i) such sale, transfer or other disposition is made pursuant
to an effective Registration Statement under the Securities Act, (ii) such sale,
transfer or other disposition is made in conformity with the requirements of
Rule 145(d) promulgated
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under the Securities Act, or (iii) such sale, transfer or other disposition is
executed pursuant to one or more of the alternative conditions set forth in
Section 5(c).
(b) The Company will give stop-transfer instructions to its
transfer agent with respect to the Shares and there will be placed on the
certificates representing such Shares, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate may only be transferred in
conformity with Rule 145(d) or in accordance with a written opinion of
counsel, reasonably acceptable to the issuer in form and substance, that
such transfer is exempt from registration under the Securities Act of
1933."
The legend and stop order set forth above shall be removed (by delivery of a
substitute certificate without such legend) if the Holder delivers to the
Company (i) satisfactory written evidence that the Shares have been sold in
compliance with Rule 145 (in which case, the substitute certificate will be
issued in the name of the transferee), or (ii) an opinion of counsel, in form
and substance reasonably satisfactory to the Company, to the effect that public
sale of the Shares by the Holder is no longer subject to Rule 145.
8. Indemnification; Contribution.
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(a) Indemnification by the Company. The Company agrees to indemnify
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and hold harmless each Holder and each Person, if any, who controls any Holder
within the meaning of Section 15 of the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement (or
any amendment thereto) pursuant to which such Holder's Registrable Securities
were registered under the Securities Act, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency, body or third party, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, if such settlement is effected
with the written consent of the Company which shall not be unreasonably
withheld; and
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(iii) against any and all expense (including reasonable fees and
disbursements of counsel), as reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each case whether or
not a party, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under subparagraph (i) or (ii) above.
provided, however, that the indemnity provided pursuant to this Section 8(a)
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does not apply to any Holder with respect to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use in a Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto).
(b) Indemnification by the Holder. Each Holder severally agrees to
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indemnify and hold harmless the other selling Holder and the Company, and its
directors and officers (including each director and officer of the Company who
signed the Registration Statement), and each Person, if any, who controls the
Company or any other selling Holder within the meaning of Section 15 of the
Securities Act, to the same extent as the indemnity contained in Section 8(a)
hereof (except that any settlement described in Section 8(a)(ii) shall be
effected with the written consent of such Holder), but only insofar as such
loss, liability, claim, damage or expense arises out of or is based upon any
untrue statement or omission, or alleged untrue statement or omission, made in a
Registration Statement (or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to the Company by such
selling Holder expressly for use in such Registration Statement (or amendment
thereto) or such Prospectus (or any amendment or supplement thereto). In no
event shall the liability of any Holder under this Section 8(b) be greater in
amount than the dollar amount of the proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. Each indemnified party
shall give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party (i) shall not relieve
it from any liability that it may have under the indemnity agreement provided in
Section 8(a) or (b) above, unless and to the extent it did not otherwise learn
of such action and the lack of notice by the indemnified party results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
shall not relieve, in any event, the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided under
Section 8(a) or (b) above. If the indemnifying party so elects within a
reasonable time after receipt of such notice, the indemnifying party may assume
the defense of such action or proceeding at such indemnifying party's own
expense with counsel chosen by the indemnifying party and approved by the
indemnified parties defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
-------- -------
or parties reasonably
12
determine that a conflict of interest exists where it is advisable for such
indemnified party or parties to be represented by separate counsel or that, upon
advice of counsel, there may be legal defenses available to them that are
different from or in addition to those available to the indemnifying party, then
the indemnifying party shall not be entitled to assume such defense and the
indemnified party or parties shall be entitled to one separate counsel at the
indemnifying party's expense. If an indemnifying party is not entitled to assume
the defense of such action or proceeding as a result of the proviso to the
preceding sentence, such indemnifying party's counsel shall be entitled to
conduct such indemnifying party's defense and counsel for the indemnified party
or parties shall be entitled to conduct the defense of such indemnified party or
parties, it being understood that both such counsel will cooperate with each
other to conduct the defense of such action or proceeding as efficiently as
possible. In such event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for the fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
(d) Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
this Section 8 is held to be unenforceable for any reason even though it is
applicable in accordance with its terms, the Company and the selling Holders
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by the
Company and the selling Holders, in such proportion as is appropriate to reflect
the relative fault of and benefits to the Company on the one hand and the
selling Holders on the other, (in such proportions that the selling Holders are
severally, not jointly, responsible for the balance) in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relative equitable considerations.
The relative benefits to the indemnifying party and indemnified parties shall be
determined by reference to, among other things, the total proceeds received by
the indemnified parties and indemnifying parties in connection with the Offering
to which such losses, claims, damages, liabilities or expenses relate. The
relative fault of the indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether the action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or the indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), no selling Holder shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such selling Holder were offered to
the public exceeds the amount of any damages that such
13
selling Holder has otherwise been required to pay by reason of such untrue
statement or omission.
Notwithstanding the foregoing, 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. For purposes of this Section 8(d), each Person,
if any, who controls a Holder within the meaning of Section 5 of the Securities
Act and directors and officers, if any, of a Holder shall have the same rights
to contribution as such Holder, and each director of the Company, each officer
of the Company who signed the Registration Statement and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
9. Rule 144 Sales.
--------------
(a) The Company covenants that it will file the reports required to
be filed by the Company under the Securities Act and the Securities Exchange
Act, as amended, so as to enable any Holder to sell the Registrable Securities
pursuant to Rule 144 under the Securities Act, to the extent such securities are
otherwise transferable.
(b) In connection with any sale, transfer or other disposition by
any Holder of any Registrable Securities pursuant to Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend, and enable
certificates for such Registrable Securities to be for such number of shares and
registered in such names as the selling Holders may reasonably request at least
two business days prior to any sale of Registrable Securities.
10. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders of a
majority in amount of the outstanding Registrable Securities. Notice of any
amendment, modification or supplement to this Agreement adopted in accordance
with this Section 10(a) shall be provided by the Company to each Holder of
Registrable Securities at least thirty (30) days prior to the effective date of
such amendment, modification or supplement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery,
(i) if to the Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 10(b), which address initially is, with respect to the Holders, the
address set forth next to such Holder's name on the
14
signature page of, or notice provisions in, the Merger Agreement, or (ii) if to
the Company, at 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention:
Xxxxxxx X. Xxxxx, XX.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; or at
the time delivered if delivered by an air courier guaranteeing overnight
delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns as permitted
hereunder of each of the parties and, except as provided in Section 8 hereof, no
other Person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of the Shares from a Holder shall be deemed a successor
or assign by reason of such purchase. The benefits and obligations of a Holder
under this Agreement may be assigned (only by a written instrument signed by
such Holder and such assignee) to a Person then holding or acquiring an
aggregate of at least [50,000] Shares. If any successor or such an assignee of
any Holder shall acquire Registrable Securities, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California without giving effect to
the conflicts of law provisions thereof.
(g) Specific Performance. The parties hereto acknowledge that there
--------------------
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any other party under this
Agreement in accordance with the terms and conditions of this Agreement in any
court of the United States or any State thereof having jurisdiction.
(h) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
15
(i) Additional Actions and Documents. The parties hereto shall take
--------------------------------
or cause to be taken such further actions, shall execute, deliver and file, or
cause to be executed, delivered or filed, such further documents and
instruments, and shall obtain such consents as may be necessary or as the other
party may reasonably request, without the payment of further consideration, in
order fully to effectuate the purposes, terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CAIS INTERNET, INC.
By: /s/ Xxxxxxx X. Xxxxx, XX
_________________________
Name:
Title:
/s/ Xxx Xxx
____________________________
Xxx Xxx
Address: 0000 Xxxxxxx
Xxxxxx, XX 00000
/s/ Xxx Xxxxx
____________________________
Xxx Xxxxx
Address:
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