SUBSCRIPTION AGREEMENT
----------------------
Netword, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
1. Subscription. The undersigned ("Subscriber") hereby
subscribes to purchase Units at the purchase price of $1.25 per Unit. Each Unit
includes one share (a "Share") of common stock, par value $.01 ("Common Stock"),
of Netword, Inc., a Delaware corporation (the "Company"), and a warrant (a
"Warrant") to purchase eight-tenths (.80) of one share of Common Stock at an
exercise price of $1.50 per share. The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares."
The Warrants will be exercisable immediately upon issuance and
will expire on June 30, 2004, subject to redemption by the Company, as described
below. The number of Units subscribed for is set forth on the signature page
hereof. Subscriber herewith delivers to the Company, Subscriber's check payable
to the Company in U.S. dollars (the "Payment") for the Units subscribed for, in
the amount equal to the product of U.S.$1.25 multiplied by the number of such
Units.
2. Representations, Warranties and Covenants of Subscriber.
Subscriber hereby represents, warrants and covenants to the Company that:
2.1 Subscriber has received and has fully read and considered
the Company's Amended and Restated Confidential Private Placement Memorandum,
dated July 14, 1999 (the "Memorandum"), including, without limitation, the
material set forth under "Risk Factors" and the sections of the Memorandum
describing the terms of the Offering. In evaluating the suitability of an
investment in the Company, Subscriber has not relied upon any representations or
other information (whether oral or written) received from the Company, its
officers, directors, agents, employees or representatives, except information
set forth in the Memorandum or obtained from the Company to verify such
information. Subscriber has been given the opportunity to ask questions and
receive answers concerning the terms and conditions of the Offering and to
obtain such additional information as Subscriber deemed necessary to verify the
accuracy of the information set forth in the Memorandum.
2.2 Subscriber is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act").
2.3 Subscriber is purchasing the Units for its own account for
the purpose of investment and not with a view to or for sale in connection with,
or for purposes of, any
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"distribution" thereof within the meaning of Section 2(11) of the Securities
Act, and no other person has or will have a direct or indirect beneficial
interest in the Units.
2.4 Subscriber understands that: (a) the offering and sale of
the Units is intended to be exempt from registration pursuant to Rule 506 of
Regulation D under the Securities Act, (b) the Shares, Warrants and Warrant
Shares may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, except pursuant to an (1) effective registration under the
Securities Act and applicable state securities laws, or (2) exemption from such
registration, in each case in compliance with all applicable federal and state
securities laws, (c) except as set forth below in Section 4 and Exhibit A
hereto, the Company is under no obligation to register the Shares, Warrants or
Warrant Shares or to assist Subscriber in complying with any exemption from the
registration thereof, (d) the Shares, Warrants and Warrant Shares will bear a
legend to such effects and (e) the Company will make a notation on its transfer
books to such effect.
2.6 Subscriber is aware that the purchase of the Units is a
speculative investment involving a high degree of risk and that there is no
guarantee that Subscriber will recover its investment in the Units or realize
any gain from such investment.
2.7 Subscriber (a) has sufficient liquid assets to pay the
full purchase price for the Units, (b) has adequate means of providing for
Subscriber's current and presently foreseeable future needs and possible
personal contingencies, (c) has no present need for liquidity of Subscriber's
investment in the Units, and (d) is able to bear the economic risks of the
investment in the Units (i.e., Subscriber can afford a complete loss).
2.8 Subscriber is not subscribing for the Units as a result
of, or subsequent to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or general meeting.
2.9 Subscriber understands that the Company is relying upon
the truth and accuracy of the representations, warranties and agreements of
Subscriber set forth herein in making its determination that the offering and
sale of the Units is exempt from registration under the Securities Act and state
securities laws.
2.10 The funds provided for this investment are either
separate property of Subscriber, community property over which Subscriber has
the right of control or are otherwise funds as to which Subscriber has the sole
right of management.
3. Representations and Warranties of the Company. The Company
hereby represents and warrants to Subscriber that the Memorandum does not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
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4. Registration Rights. The Company grants Subscriber the
registration rights (the "Registration Rights") set forth in Exhibit A attached
hereto. By executing this Subscription Agreement, Subscriber accepts and agrees
to the Registration Rights.
5. Redemption of Warrant by the Company. Upon 30 days notice
to Subscriber, the Company may redeem all or a portion of the Warrant Shares
covered by each Warrant, at a price of $0.05 per Warrant Share (the "Redemption
Price"), at its option, at any time if (i) more than 12 months have elapsed
after the Common Stock is first subject to both bid and ask quotations in the
NQB Pink Sheets (or another inter-dealer quotation system) and (ii) at any time
after such 12 month period the average of the closing average of bid and asked
prices for the Common Stock is at least $2.50 per share for 20 consecutive
trading days during which the average daily trading volume in the Common Stock
is at least 10,000 shares.
6. Legend. Subscriber hereby accepts and acknowledges that a
legend, in substantially the following form, will be placed on the Shares and
Warrants and any Warrant Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR STATE SECURITIES LAW AND
MAY NOT BE TRANSFERRED OR SOLD UNLESS (I) REGISTERED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) AN
EXEMPTION FROM REGISTRATION IS AVAILABLE AT THE TIME OF SUCH TRANSFER
OR SALE.
7. Miscellaneous
7.1 All notices or other communications given or made
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail, return receipt requested, postage prepaid, if to
Subscriber, at the address set forth below Subscriber's signature on the
signature page hereof, and if to the Company at 000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000, Attention: President, with a copy to Kronish Xxxx
Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx Xxxxxx, Esq.
7.2 This Subscription Agreement shall be governed by and
construed in accordance with the laws of the state of New York applicable to
contracts made and wholly performed in that state and without regard to the
principles of conflicts of laws.
7.3 This Subscription Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof.
7.4 This Subscription Agreement may not be changed, modified,
extended, terminated or discharged orally, but only by an agreement in writing.
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7.5 This Subscription Agreement is not transferable or
assignable by Subscriber. Subscriber covenants and agrees that the securities
acquired pursuant hereto may be transferred only in accordance with applicable
federal and state laws, including the requirements of the Securities Act.
7.6 All references in this Subscription Agreement to the
"Subscriber" shall include all parties (other than the Company) who execute this
Subscription Agreement. If Subscriber is a corporation, partnership, trust or
two or more individuals purchasing jointly, Subscriber shall follow the specific
instructions for the Certificate of Corporate, Partnership, Trust and Joint
Purchases at page 7 hereof.
8. Acceptance of Subscription. Subscriber acknowledges that
the subscription made hereby is not binding upon the Company until the Company
accepts it. The Company has the right to accept or reject this subscription in
whole or in part in its sole and absolute discretion. If this subscription is
rejected in whole, the Company shall return the Payment to Subscriber, without
interest, and the Company and Subscriber shall have no further obligation to
each other by reason of this Subscription Agreement or the subscription made
hereby. In the event of a partial rejection of this subscription, a
proportionate amount of the Payment will be returned to Subscriber, without
interest.
9. Counterparts. This Subscription Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10. Severability. If any provision of this Subscription
Agreement shall be declared void or unenforceable by any judicial or
administrative authority, the validity of any other provision and of the entire
Subscription Agreement shall not be affected thereby.
11. Capitalized Terms. Capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in the Memorandum.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Subscription Agreement has been
executed by Subscriber and by the Company on the respective dates set forth
below.
Print Name of Subscriber: _____________________________________
Date: _____________________________________
_______________________________________
Signature of Individual Subscriber
_______________________________________
Print Name of Subscriber, if an entity
By:____________________________________ _____________________________________
Signature of authorized signatory of Print name and title of signatory
Subscriber which is an entity for any Subscriber which is an entity
_______________________________________
Social Security No. (for individuals)
Tax Identification No. (for entities)
_______________________________________ $____________________________________
Number of Units Purchased Payment Amount for Units Purchased
(Number of Units multiplied by $1.25)
_______________________________________ _____________________________________
Telephone No./ Facsimile No. Street Address
_____________________________________
City State Zip
Subscription Accepted by:
NETWORD, INC. as of _____________, 1999
By:___________________
Name:
Title:
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SPECIAL SUBSCRIPTION INSTRUCTIONS FOR CORPORATE,
PARTNERSHIP, LIMITED LIABILITY COMPANY,
TRUST AND JOINT PURCHASERS
If Subscriber is a corporation, partnership, limited liability
company, trust, or other entity or joint purchaser, the following additional
instructions must be followed. INFORMATION ADDITIONAL TO THAT REQUESTED BELOW
MAY ALSO BE REQUIRED BY THE COMPANY IN SOME CASES.
1. Certificate. Subscriber must date and sign the Certificate
below, and, if requested by the Company, Subscriber may also be required to
provide an opinion of counsel to the same effect as this Certificate or a copy
of (a) the corporation's articles of incorporation, bylaws and authorizing
resolution, (b) the partnership agreement, (c) the limited liability company's
certificate of formation or articles of organization, as applicable, and limited
liability company agreement, operating agreement or similar agreement governing
the rights and obligations of the members of the limited liability company, or
(d) the trust agreement, as applicable.
2. Subscription Agreement.
(a) Corporations. An authorized officer of the corporation
must date, sign, and complete the Subscription Agreement with information
concerning the corporation. The officer should print the name of the corporation
above his signature, and print his name and office below his signature.
(b) Partnerships. An authorized partner must date, sign,
and complete the Subscription Agreement with information concerning the
partnership. The partner should print the name of the partnership above his
signature, and print his name and the words "general partner" below his
signature.
(c) Limited Liability Companies. An authorized member or
manager must date, sign, and complete the Subscription Agreement with
information concerning the limited liability company. The member or manager
should print the name of the limited liability company above his signature, and
print his name and the word "member" or "manager" below his signature.
(d) Trusts. In the case of a trust, the authorized trustee
should date, sign, and complete the Subscription Agreement with information
concerning the trust. The trustee should print the name of the trust above his
signature, and print his name and the word "trustee" below his signature. In
addition, an authorized trustee should also provide information requested in the
Subscription Agreement as it pertains to him as an individual.
(e) Joint Ownership. In all cases, each individual must
date, sign, and complete the Subscription Agreement. Joint investors must state
if they are purchasing the Shares as joint tenants with the right of
survivorship, tenants in common, or community property, and each must execute
the Subscription Agreement signature page.
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CERTIFICATE FOR CORPORATE, PARTNERSHIP,
LIMITED LIABILITY COMPANY, TRUST, AND JOINT SUBSCRIBERS
If Subscriber is a corporation, partnership, limited liability
company, trust, joint purchaser, or other entity, an authorized officer,
partner, member, manager or trustee must complete, date, and sign this
Certificate.
CERTIFICATE
I hereby certify that:
1. Subscriber has been duly formed and is validly existing and
has full power and authority to invest in Netword, Inc.
2. The Subscription Agreement has been duly and validly
authorized, executed, and delivered by Subscriber and, upon acceptance
by Netword, Inc., will constitute the valid, binding, and enforceable
obligation of Subscriber.
Date: _______________ ___________________________________________________
Name of corporation, partnership, limited liability
company, trust or joint purchasers (please print)
___________________________________________________
Signature and title of authorized officer, partner,
member, manager, trustee, or joint purchaser
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EXHIBIT A
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1. Registrable Securities. In connection with the purchase of Units in
the Offering, the Company grants to Subscriber ( "Subscriber" and collectively
with all other subscribers of Units in the Offering, the "Subscribers") the
following registration rights with respect to the: (a) Shares and Warrant Shares
and (b) any other securities issued or issuable with respect to any of such
Shares or Warrant Shares by way of a stock dividend or stock split or in
connection with a combination, exchange, reorganization, recapitalization or
reclassification of the Company's securities or pursuant to a merger,
consolidation or other similar business combination involving the Company (the
"Registrable Securities"). As to any particular Registrable Securities, such
securities shall cease to constitute Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
been declared effective under the Securities Act and such securities shall have
been disposed of in accordance with a method of disposition contemplated by the
registration statement, (b) such securities shall have been sold in satisfaction
of all applicable conditions to the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto), (c) such securities shall
have been transferred, new certificates evidencing such securities without
legends restricting further transfer shall have been delivered by the Company,
and subsequent public distribution of such securities shall neither require
registration under the Securities Act nor qualification (or any similar filing)
under any state securities or "blue sky" law then in effect, or (d) such
securities shall have ceased to be outstanding.
2. Limitations on Right to Request Registration. Notwithstanding
anything to the contrary set forth below, the Subscribers may require the
Company to effect the registration of Registrable Securities only if Subscribers
(a) (i) have not previously elected to include 50% or more of the Registrable
Securities in an effective registration statement described in the next
sentence, (ii) all of the Registrable Securities which were requested to be
included in the effective registration statement were so included, and (iii) the
Subscribers had the opportunity to include all of the Registrable Securities in
the effective registration statement or (b) have not previously requested a
registration statement pursuant to Section 3.1 which has become effective and in
which all Registrable Securities requested to be included were so included. A
registration statement shall not be deemed an effective registration statement
for purposes of clause (a) of the preceding sentence, unless (i) the
registration statement satisfies the requirements described in Section 3.5 and
(ii) at a time when each Subscriber received notice of the opportunity to
include Registrable Securities in the registration statement such Subscriber had
notice that (x) Subscribers holding 50% or more of the Registrable Securities
were requesting inclusion of Registrable Securities in such registration
statement and (y) any Subscriber who did not request inclusion of all of its
Registrable Securities in such registration statement would have no further
right to request registration of its Registrable Securities pursuant to Section
3.1 and Section 4.1.
3. Demand Registration Rights.
3.1 Request for Demand Registration. Subject to Section 2, at any time
after the 180th day following the completion of the Offering, Subscribers
holding at least 25% of the Registrable Securities then held by all of the
Subscribers shall have the right to request in writing that the Company effect
the registration under the Securities Act of all or part of such Subscribers'
Registrable Securities; provided, that if the managing underwriters of the first
underwritten
8
primary offering of equity securities of the Company so requests, Subscribers
shall not be entitled to make such a request until the earlier of the 181st day
following the effectiveness of the registration statement relating to such
offering or the first day when any affiliate or other 5% or greater stockholder
of the Company shall not be subject to limitations requested by such underwriter
on sales of securities equivalent to the Registrable Securities. The Company
will promptly give written notice of such requested registration to all other
Subscribers of Registrable Securities and thereupon the Company will use
commercially reasonable efforts to effect the registration under the Securities
Act of:
(a) the Registrable Securities which the Company has been so requested
to register by Subscribers;
(b) all other Registrable Securities which the Company has been
requested to register by the Subscribers thereof by written request
given to the Company within 30 days after the giving of such written
notice by the Company, all to the extent requisite to permit the
disposition of the Registrable Securities so to be registered; and
(c) such other securities of the Company which the Company, in its
discretion, may designate, whether such securities are to be sold by
the Company for its own account or are to be sold by other security
holders of the Company.
3.2. Priority in Demand Registrations. If the requested registration
pursuant to Section 3.1 involves an underwritten offering, and the managing
underwriter thereof shall advise the Company in writing that, in its opinion,
the number of securities requested to be included in such registration exceeds
the number which can be sold in (or during the time of) such offering or that
the inclusion would materially adversely affect the marketing of the securities
to be sold therein (such writing to state the basis of such opinion and the
approximate number of securities which may be included in such offering without
such effect), the Company will include in such registration, to the extent of
the number which the Company is advised can be sold in such offering, (a) first,
securities of the Company which are to be sold by the Company for its own
account, (b) second, Registrable Securities requested to be included in such
registration pursuant to Section 3.1 by the Subscribers (provided, however, that
if the Company is so advised that less than all such Registrable Securities can
be so sold in such offering, such Registrable Securities shall be included pro
rata in proportion to the respective holdings of such Registrable Securities by
the Subscribers, unless such Subscribers otherwise agree), and (c) third, other
securities of the Company to be sold by other security holders of the Company.
3.3. Duration of Registration Statement. Subject to Sections 3.4, 4.1
and 5, the Company shall use commercially reasonable efforts to keep any
registration statement requested under Section 3.1 continuously effective,
supplemented and amended to the extent necessary to ensure that it is available
for resales of Shares and Warrant Shares, and to ensure that it conforms with
the requirements of the Securities Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period expiring on the
earlier to occur of: (a) the date when all Shares and Warrant Shares have been
sold, and (b) the first anniversary of the completion of the Offering.
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3.4 Delays in Registration. The Company may delay the filing of a
registration statement requested under Section 3.1 for up to 45 days if at the
time of a request under Section 3.1:
(a) the Company is a party to a transaction involving the purchase,
sale, conversion or issuance of securities of the Company and (i) such
transaction is subject to the trading restrictions of Regulation M promulgated
by the Commission under the Exchange Act, and (ii) in the Company's judgement,
the filing of a registration statement could result in a violation of such
restrictions;
(b) there is material undisclosed information concerning the Company
which has not been disclosed for business reasons; or
(c) the Company is about to commence an offering of securities of the
Company and the underwriter for the Company shall advise the Company in writing
(with a copy to the Subscribers) that, in its opinion, the offering contemplated
by the Company would be adversely affected by the sale of Registrable Securities
by the Subscribers.
3.5. Effective Registration Statement. A registration shall not be
deemed to have been effected pursuant to Section 3.1:
(a) unless a registration statement with respect thereto has become
effective; provided, however, that a registration which does not become
effective after the Company has filed a registration statement with respect
thereto solely by reason of the refusal to proceed of any of the Subscribers
shall be deemed to have been effected by the Company unless the Subscribers
shall have elected to pay, and have in fact paid in full within 30 days after
the Company has received notice of any Subscriber's refusal to proceed which
results in a termination of the registered offering, all expenses in connection
with such registration, (b) if after it has become effective, such registration
statement is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason which results in a termination of the registered offering, (c) if the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied or
waived, other than by reason of some act or omission by any of the Subscribers;
or (d) so long as the period in Section 3.3(a) has not expired, if a
registration statement is not available for use by the Subscribers whose
Registrable Securities are included in such registration statement for at least
270 calendar days during the one year period set forth in Section 3.3(b).
4. Incidental Registration Rights.
4.1 Incidental Registration Rights. If the Company at any time proposes
to register any of its equity securities under the Securities Act (other than by
a registration on the Registration Statement (defined in the Memorandum), Form
X-0, Xxxx X-0 or any successor or similar form, or any registration form which
does not permit secondary sales, whether or not for sale for its own account, it
will each such time give prompt written notice to all Subscribers of its
intention to do so and of Subscribers' rights under this Section 4.1. Upon the
written request of Subscribers made within 15 days after the receipt of any such
notice (which request shall specify
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the Registrable Securities intended to be disposed of by Subscriber), the
Company will use commercially reasonable efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by Subscribers; provided, however, that if, at any
time after giving written notice of its intention to register any Registrable
Securities 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 or to delay registration of the Registrable Securities, the
Company may, at its election, give written notice of such determination to
Subscribers and, thereupon, (a) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
registration expenses in connection therewith), and (b) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering the
other securities covered by the registration statement. Subscriber shall only be
entitled to participate in and shall only receive notice of incidental
registrations under this Section 4.1 until such time as the conditions of
Section 2 are satisfied.
4.2 Priority in Incidental Registrations. If a registration pursuant to
Section 4.1 involves an underwritten offering, and the managing underwriter
thereof shall advise the Company in writing that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in (or during the time of) such offering or that the inclusion
would materially adversely affect the marketing of the securities to be sold
therein, the Company will include in such registration, to the extent of the
number which the Company is advised can be sold in such offering, (a) first,
securities of the Company which are to be sold by the Company for its own
account, (b) second, other securities of the Company to be sold by other
security holders of the Company, and (c) third, Registrable Securities requested
to be included in such registration pursuant to Section 4.1 by the Subscribers
(provided, however, that if the Company is so advised that less than all such
Registrable Securities can be so sold in such offering, such Registrable
Securities shall be included pro rata in proportion to the respective holdings
of such Registrable Securities by the Subscribers, unless such Subscribers
otherwise agree).
5. Suspension of Registration. The Company may suspend the
effectiveness of a registration statement, or, without suspending such
effectiveness, instruct the Subscribers that no sales of Registrable Securities
included in such registration statement may be made if, in the Company's
reasonable judgment, the Company would be required to disclose any actions taken
or proposed to be taken by the Company, which disclosure would have a material
adverse effect on the Company or on such actions (a "Suspension Period") by
providing the Subscribers with written notice of such Suspension Period and the
reasons therefor. The Company shall use its reasonable efforts to provide such
notice a reasonable number of days prior to the commencement of a Suspension
Period, provided that in any event the Company shall provide such notice no
later than the commencement of such Suspension Period. The Suspension Period
shall not exceed 90 days in any calendar year. In addition, the Company shall
not be required to keep any registration statement effective, or may without
suspending such effectiveness instruct the holders of Registrable Securities
included in such registration statement not to sell such Registrable Securities,
during any period during which the Company is instructed, directed, ordered or
otherwise requested by any governmental agency or self-regulatory organization
to stop or suspend such trading or sales ("Supplemental Suspension Period") and
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such Supplemental Suspension Period shall not be included in the calculation of
the Suspension Period referred to above. The Company shall give prompt written
notice to Subscribers of the termination of any Suspension Period or
Supplemental Suspension Period.
6. Underwriters. Subject to the approval by the Company, which shall
not be unreasonably withheld or delayed, the managing underwriter or
underwriters of any registration effected pursuant to Section 3.1 shall be
selected by Subscribers holding a majority of the Registrable Securities held by
Subscribers requesting registration in such registration statement. The
underwriter shall be deemed approved by the Company if the Company has not
objected to the selection of such underwriter within two weeks.
The managing underwriter or underwriters of any registration effected
pursuant to Section 4.1 shall be selected by the Company.
7. Subscriber may not include any of its Registrable Securities in a
registration statement unless and until Subscriber furnishes to the Company in
writing, within 20 business days after receipt of a request therefor, (a) the
information specified in item 507 of Regulation S-K under the Securities Act and
(b) any other information or documentation reasonably requested by the Company,
in each case, for use in connection with any such registration statement or
prospectus or preliminary prospectus included therein. Subscriber agrees to
furnish promptly to the Company, for so long as any registration statement which
includes any of Subscriber's Registrable Securities is effective, all
information required to be disclosed in order to make the information previously
furnished to the Company by Subscriber not materially misleading.
8. The Company and Subscriber, as applicable, further covenant and
agree as follows:
8.1 The Company will prepare and (as promptly thereafter as practicable
and in any event within 45 days after the end of the period within which
requests for registration pursuant to Section 3.1 may be given to the Company)
file with the Commission the requisite registration statement to effect
registration of the Registrable Securities and thereafter use commercially
reasonable efforts to cause such registration statement to become effective;
provided, however, that the Company may discontinue any registration of its
securities which are not Registrable Securities (and, under the circumstances
specified in Sections 3 and 4, its securities which are Registrable Securities)
at any time prior to the effective date of the registration statement relating
thereto.
8.2 The Company will prepare and file with the Commission such
amendments and supplements to any registration statement which includes
Subscriber's Registrable Securities and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration statement
for the time period specified in Section 3.3 and any additional period required
pursuant to Section 3.5.
8.3 Following the effective date of any registration statement which
includes any of Subscriber's Registrable Securities, the Company shall furnish
Subscriber such number of prospectuses as Subscriber shall reasonably request.
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8.4 The Company shall pay all costs, fees and expenses in connection
with the preparation and filing of any registration statement which includes any
of Subscriber's Registrable Securities, including, without limitation, the
Company's legal and accounting fees and printing expenses and legal expenses up
to a maximum of $5,000 of one counsel for the Subscribers, such counsel to be
selected by Subscribers holding a majority of the Registrable Securities held by
Subscribers requesting inclusion in the registration statement. Except as
provided in the preceding sentence, Subscriber shall pay its own legal expenses.
8.5 The Company will use commercially reasonable best efforts to
qualify or register the Registrable Securities included in any registration
statement for offering and sale under the securities or blue sky laws in all
jurisdictions within the United States as are requested by Subscribers of 50% or
more of the securities included in the registration statement or their
underwriters, as the case may be; provided, that the Company shall not be
obligated to execute or file any general consent to service of process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
8.6 The Company and Subscriber shall enter into reasonable, customary
and reciprocal agreements to indemnify and hold one another harmless in
connection with any registration statement which includes any of Subscriber's
Registrable Securities; provided, that the indemnification by each Subscriber
shall be several and not joint, shall be limited to the information supplied by
such Subscriber in writing for inclusion in such registration statement and
shall provide for maximum Subscriber liability limited to the net proceeds
received by such Subscriber.
8.7 Subscriber shall enter into customary holdback agreements, if
required by any underwriter, in connection with any registration statement which
includes any of Subscriber's Registrable Securities; provided, that Subscriber
shall be accorded lock-up treatment no less favorable than affiliates or other
substantial stockholders of the Company.
8.8 If requested by the underwriters for any underwritten offering of
Subscriber's Registrable Securities, Subscriber shall become a party to the
underwriting agreement between the Company and the underwriters and shall make
such representations and warranties to and agreements with the Company and the
underwriters as are reasonably required by the Company and the underwriters, as
the case may be, and customarily contained in underwriting agreements of this
type, which shall be limited to: (a) representations and warranties relating
solely to the number of Registrable Securities held by such Subscriber, such
Subscriber's intended method of distribution and any other information required
to be included in such registration statement unique to such Subscriber; and (b)
indemnities, provided, that, any indemnification by each Subscriber shall be
several and not joint, shall be limited to the information supplied by such
Subscriber in writing for inclusion in such registration statement and shall
provide for maximum Subscriber liability limited to the net proceeds received by
such Subscriber.
8.9 The Company shall notify Subscriber at any time when a prospectus
relating to a registration statement covering Subscriber's Registrable
Securities is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein
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or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of Subscriber
promptly prepare to furnish to Subscriber a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made.
8.10 The Company shall notify Subscribers promptly after the Company
shall receive notice or obtain knowledge thereof of the issuance of any stop
order by the Commission suspending the effectiveness of any registration
statement or amendment thereto or the initiation or threatening of any
proceeding for that purpose, and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal promptly if such stop
order should be issued.
8.11 Subscriber agrees that upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 8.9 or of any
Suspension Period or Supplemental Suspension Period pursuant to Section 5,
Subscriber will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until Subscriber's receipt, as the case may be, of the copies of the
supplemented or amended prospectus contemplated by Section 8.9 or notice of the
termination of such Suspension Period or Supplemental Suspension Period. If so
directed by the Company, Subscriber will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in the
Subscriber's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice of an event described
in Section 8.9.
8.12 These registration rights may only be amended with the approval of
the Company and Subscribers holding 75% of the Registrable Securities held by
Subscribers.
8.13 The benefits of these registration rights may be transferred by a
Subscriber to anyone to whom such Subscriber sells all or otherwise transfers or
a part of his Registrable Securities and the transferee shall become a
Subscriber; provided, that, the transferee agrees in writing to comply with the
obligations of a Subscriber with respect to these registration rights.
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