Exhibit 10.26
December , 1999
Internet Capital Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Gentlemen and Ladies:
The purpose of this letter agreement (the "Purchase Agreement") is to
confirm our agreement to purchase from Internet Capital Group, Inc. (the
"Company"), (A) convertible subordinated notes due 2004 ("Convertible Notes") in
the aggregate principal amount of $20,000,000 (the "Notes) and (B) a number of
shares, rounded down to the nearest whole number (the "Shares" and together with
the Notes, the "Securities"), of the Company's common stock, $.001 par value per
share (the "Common Stock"), equal to $20,000,000 divided by the purchase price
per share to be paid by us for the Shares.
The purchase price per note to be paid by us for the Notes will be the same
as the per note "Public Offering Price" as it appears on the cover of the final
prospectus relating to the Company's underwritten registered public offering of
Convertible Notes filed with the Securities and Exchange Commission on November
22, 1999 (the "Note Offering"), at the time such final prospectus is first filed
by the Company with the Securities and Exchange Commission pursuant to Rule
424(b) of the rules and regulations under the Securities Act of 1933, as amended
(the "Securities Act"). Our obligation to purchase the Notes is conditioned
solely upon the closing of the Note Offering. Delivery of and payment for the
Notes (the "Note Closing Date") will take place at the "Closing Time" as defined
in the Underwriting Agreement with respect to the Note Offering to be entered
into among the Company and the underwriters to be named therein. The
certificate for the Notes will be in definitive form, registered in our name.
The purchase price per share to be paid by us for the Shares will be the
same as the per share "Public Offering Price" as it appears on the cover page of
the final prospectus relating to the Company's underwritten registered public
offering of Common Stock filed with the Securities and Exchange Commission on
November 22, 1999 (the "Public Offering"), at the time such final prospectus is
first filed by the Company with the Securities and Exchange Commission pursuant
to Rule 424(b) of the rules and regulations under the Securities Act of 1933, as
amended (the "Securities Act"). Our obligation to purchase the Shares is
conditioned solely upon the closing of the Public Offering. Delivery of and
payment for the Shares (the "Share Closing Date") will take place at the
"Closing Time" as defined in the Underwriting Agreement with respect to the
Public Offering to be entered into among the Company and the underwriters to be
named therein. The certificate for the Shares will be in definitive form,
registered in our name. We will make payment of the purchase price for the
Securities to the Company by wire transfer of immediately available funds.
The Notes have been duly and validly authorized and, when issued and
delivered to and paid for by us pursuant to this Purchase Agreement, will be a
valid and binding obligation of ours enforceable against us in accordance with
their terms. The Shares have been duly and
validly authorized and, when issued and delivered to and paid for by us pursuant
to this Purchase Agreement, will be fully paid and nonassessable. The
certificates for the Securities will be in valid form and the holders of
outstanding Securities of the Company are not entitled to preemptive rights to
subscribe for the Securities.
We understand and acknowledge that the Securities have not been registered
under the Securities Act or any other applicable securities law, are being
offered in a transaction not requiring registration under the Securities Act
and, unless so registered, may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the Securities Act
and any other applicable securities law, pursuant to an exemption therefrom or
in a transaction not subject thereto.
We acknowledge that neither the Company nor any person representing the
Company has made any representations to us with respect to the Company or the
offering or sale of the Securities, other than the information contained in the
Company's registration statement on Form S-1 for the Public Offering and Note
Offering which has been delivered to us and upon which we are relying in making
our investment decision with respect to the Securities, and we have had access
to such financial and other information concerning the Company and the
Securities as we have deemed necessary in order to make a decision to purchase
the Securities, including an opportunity to ask questions of and receive
information from the Company.
We represent and warrant that we are a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act.
A "qualified institutional buyer" is any of the following entities, acting
for its own account or the accounts of other qualified institutional
buyers, that in the aggregate owns and invests on a discretionary basis at
least $100 million in securities of issuers that are not affiliated with
the entity:
(a) any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in
section 3(a)(2) of the Securities Act or a savings and loan
association or other institution referenced in section 3(a)(5)(A)
of the Securities Act or a foreign bank or savings and loan
association or equivalent institution), partnership, or
Massachusetts or similar business trust; or
(b) any entity, all of the equity owners of which are qualified
institutional buyers as described in clause (a) above, acting for
its own account or the accounts of other qualified institutional
buyers.
We have determined our status as a "qualified institutional buyer" in
accordance with the following guidelines:
(i) In determining the aggregate amount of securities owned and
invested on a discretionary basis by us, the following
instruments and interests were excluded: bank deposit notes and
certificates of deposit; loan participations; repurchase
agreements; securities owned but subject to a repurchase
agreement; and currency, interest rate and commodity swaps.
2
(ii) The aggregate value of securities owned and invested on a
discretionary basis by us was deemed to be the cost of such
securities, except where we report our securities holdings in our
financial statements on the basis of their market value, and no
current information with respect to the cost of those securities
has been published. In the latter event, the securities were
valued at market.
(iii) In determining the aggregate amount of securities owned by us
and invested on a discretionary basis, securities owned by our
subsidiaries that are consolidated with us in our financial
statements prepared in accordance with generally accepted
accounting principles were included if the investments of such
subsidiaries are managed under our discretion.
We further represent and warrant that we are acquiring the Securities for
our own account, for investment purposes, not with a view to, or for offer or
sale in connection with directly or indirectly, any distribution in violation of
the Securities Act or any other applicable securities law and with no intention
of participating in the formulation, determination or direction of the basic
business decisions of the Company.
We understand and acknowledge that a legend in substantially the form of
Exhibit A hereto will be placed on the certificate for the Securities.
---------
The Company grants us registration rights as set forth on Exhibit B hereto
---------
(as if the undersigned were a "Holder" or "Purchaser" as defined therein), to be
effective as of the Closing Time, pursuant to which we will have registration
rights relating to the resale by us of the Shares. The registration rights
provided by Exhibit B are those provided to the Company's Strategic Partners
---------
We agree, for a period of 270 days after the Closing Time, not to offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
any of the Shares, Notes or securities exchangeable or exercisable for any of
the Notes, or publicly disclose the intention to make any such offer, sale,
pledge or disposition.
This Purchase Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, will constitute a valid and legally
binding agreement of the Company, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors' rights and
general principles of equity. This Purchase Agreement has been duly authorized
by us and, when executed and delivered by us, will constitute our valid and
legally binding agreement, enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization and similar laws of
general applicability relating to or affecting creditors' rights and general
principles of equity.
3
Please confirm that the foregoing terms correctly set forth our agreement
by signing and returning to us the duplicate copy of this letter enclosed
herewith.
Very truly yours,
INTERNET ASSETS, INC.
By: /s/ ▇▇▇▇▇ Al-Rezaihan
----------------------------------
Name: ▇▇▇▇▇ Al-Rezaihan
Title:
Agreed and accepted as of the
date first written above
INTERNET CAPITAL GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. Nassau
-------------------------------------
Name: ▇▇▇▇▇ ▇. Nassau
Title: Managing Director
4
EXHIBIT A
---------
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES ACT, AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THESE SECURITIES ARE SUBJECT TO TRANSFER RESTRICTIONS CONTAINED IN A LETTER
AGREEMENT DATED DECEMBER , 1999 BETWEEN THE COMPANY AND THE INITIAL
PURCHASER OF THESE SECURITIES, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT
THE OFFICES OF THE COMPANY.
A-1
EXHIBIT B
---------
REGISTRATION RIGHTS
-------------------
1.1 Piggyback Registration.
----------------------
(a) If the Company at any time after the consummation of its
initial public offering proposes for any reason, whether for its own account or
the account of others, to register any of its securities under the Securities
Act, other than pursuant to a Special Registration Statement (as hereinafter
defined), it shall each such time promptly give written notice to the registered
Holders of the Eligible Securities (as defined in Section 1.1(c)) of its
intention to do so, and, upon the written request, given within twenty (20) days
after receipt of any such notice, of a Holder to register any of its Eligible
Securities, the Company shall (subject to Section 1.1(b)) use its best efforts
to cause all Eligible Securities with respect to which Holders shall have so
requested registration to be registered under the Securities Act promptly upon
receipt of the written request of such Holders for such registration, all to the
extent required to permit the sale or other disposition by the Holders of the
Eligible Securities so registered in the manner contemplated by such
registration statement. "Special Registration Statement" means a registration
statement on Forms S-8 or S-4 or any successor form or other registration
statement relating to shares of Common Stock issued in connection with an
acquisition of an entity or business or other business combination, or shares of
Common Stock issued in connection with stock option or other employee benefit
plans.
(b) In connection with any exercise by a Holder of its
"piggyback" registration rights pursuant to this Section 1.1 in connection with
any underwritten offering of securities of the Company, if the Company is
advised in writing (with a copy to the Holders requesting registration) by the
lead underwriter for the offering that, in such firm's opinion, a registration
of Eligible Securities at that time would interfere with the orderly sale and
distribution of the securities being sold by the Company for its own account,
then the number of shares that may be included in the underwriting shall be
allocated, first, to the Company, second, to each of the Holders requesting
inclusion of their Eligible Securities in such registration statement on a pro
rata basis based on the total number of Eligible Securities held by each such
Holder and, third, to any other shareholders requesting registration.
(c) For purposes of this Exhibit B, the following terms shall
have the following meanings: (i) "Common Stock" shall mean the shares of common
stock of Internet Capital or any successor corporation; (ii) "Company" shall
mean and include Internet Capital and any successor corporation; (iii) "Eligible
Securities" shall mean, on any date, (A) all shares of Common Stock or other
securities of the Company issued by way of a stock split, stock dividend,
recapitalization, merger or consolidation, (B) plus all shares of Common Stock
or other securities of the Company issued in respect of the Note and Warrant or
purchased under, or issued in respect of the Notes purchased under, the letter
agreement to which this Exhibit B is attached, (C) but exclusive of any
securities described in clauses (A) or (B) which have been (1) sold in a public
offering registered under Securities Act or (2) subsequently sold pursuant to
Rule
144 under the Securities Act; (iv) "Holders" shall mean each purchaser listed on
the signature page of the letter agreement to which this Exhibit B is attached
("Purchaser"), each Strategic Partner, as such term is defined in the Securities
Holders Agreement (the "SHA"), dated February 2, 1999 among Internet Capital and
the investors named therein, for so long as (and to the extent that) it owns any
Eligible Securities, each of their respective successors, assigns, and
transferees who become registered owners of Eligible Securities, and the holders
of Eligible Securities pursuant to the Convertible Note (the "Note") dated May
10, 1999 and the Common Stock Purchase Warrant (the "Warrant"), dated May 10,
1999; and (v) "Internet Capital" shall mean Internet Capital Group, Inc., a
Delaware corporation.
1.2 Demand Registration.
-------------------
(a) Any Purchaser or Strategic Partner may, at any time after
consummation of the Company's initial public offering of equity securities,
request in writing that the Company cause a registration statement to be filed
under the Securities Act (on any Form then available to the Company) with
respect to such of its Eligible Securities as it shall specify in such request,
provided that (i) the gross proceeds from such offering will be or are
reasonably expected to be not less than $5 million and (ii) such Purchaser or
Strategic Partner includes at least 25% of its Eligible Securities in its
request. The Company shall promptly give written notice of such request to the
other Holders of Eligible Securities and afford them the opportunity of
including in the requested registration statement such of their Eligible
Securities as they shall specify in a written notice given to the Company within
thirty (30) days after their receipt of the Company's notice of the request for
the filing of a registration statement. Following receipt of such notices, the
Company shall promptly use its best efforts to cause all Eligible Securities
with respect to which Holders shall have so requested registration to be
registered under the Securities Act, all to the extent required to permit the
sale or other disposition by the Holders of the Eligible Securities so
registered in the manner specified by such Holders in their notices and pursuant
to this Section.
(b) The Company shall not be required to file and cause to become
effective more than two (2) registration statements at the demand of any
Purchaser or Strategic Partner made under this Section 1.2.
(c) If the Holders of the Eligible Securities making such demand
propose to sell their Eligible Securities in a firm commitment underwriting and
the managing underwriter advises such Holders that not all Eligible Securities
of such Holders can be included in such offering, then the requisite number of
Eligible Securities shall be excluded from registration on a basis pro rata
among the Holders of the Eligible Securities requesting such registration on the
basis of the number of Eligible Securities held by each of them. If by virtue
of this Section 1.2(c), more than 50% of the Eligible Securities which a
Purchaser or Strategic Partner has demanded be registered are excluded from the
registration statements then such Purchaser or Strategic Partner shall not be
deemed to have exercised a demand registration right under this Section 1.2.
(d) Provided the Company has honored its obligations under
Section 1.1, no demand registration right granted in this Section may be
exercised by any Purchaser or
B-2
Strategic Partner during any period of time beginning on the date the Company
(i) files a registration statement with the Securities and Exchange Commission
registering any of its securities for sale to the public or (ii) files a
registration statement upon the demand of any other Strategic Partner pursuant
to this Section 1.2, and ending on the earlier to occur of (A) 90 days after the
date on which such registration statement is declared effective by the
Securities and Exchange Commission or otherwise becomes effective, and (B) the
180th day after the date of such filing.
(e) The demand registration rights granted in this Section 1.2
shall expire, if not exercised prior thereto, on the date on which more than 90%
of all Eligible Securities (as of the date of this Agreement) shall have been
publicly sold by the Holders thereof in a public offering registered under the
Securities Act of 1933 or pursuant to Rule 144 thereunder.
1.3 Form S-3 Registrations. In addition to the rights provided the
----------------------
Holders of registrable securities in Sections 1.1 and 1.2 above, if the
registration of Eligible Securities under the Securities Act can be effected on
Form S-3 (or any similar form promulgated by the Commission), then upon the
written request of one or more Holders of Eligible Securities, the Company will
so notify each Holder of Eligible Securities, including each Holder who has a
right to acquire Eligible Securities, and then will, as expeditiously as
possible, use its best efforts to effect qualification and registration under
the Securities Act on Form S-3 of all or such portion of the Eligible Securities
as the Holder or Holders shall specify pursuant to this Section 1.3, provided
that the Company shall have no obligation to file a registration statement under
this Section 1.3 unless the gross proceeds from the offering will be or are
reasonably expected to be not less than $500,000.
1.4 Registration Procedures. If and whenever the Company is under an
-----------------------
obligation pursuant to the provisions of this Exhibit B to use its best efforts
to effect the registration of any Eligible Securities the Company shall, as
expeditiously as practicable:
(a) prepare and file with the Securities and Exchange Commission
a registration statement with respect to such Eligible Securities and use its
best efforts to cause such registration statement to become effective;
(b) prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective under the Securities Act until the earlier of
such time as all securities covered thereby have been sold or one hundred and
eighty (180) days after such registration statement becomes effective, as such
period may be extended pursuant to Section 1.5, and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all Eligible Securities covered by such registration statement for such
period;
(c) furnish to each selling stockholder such numbers of copies of
each prospectus (including each preliminary prospectus) in conformity with the
requirements of the
B-3
Securities Act, and such other documents as such seller may reasonably request
in order to facilitate the public sale or other disposition of such Eligible
Securities;
(d) use its best efforts to register or qualify the Eligible
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as the managing underwriter, if any, or if there
is no managing underwriter, the Holders of at least 25% of the Eligible
Securities, shall request (provided that the Company shall not be required to
consent to general service of process for all purposes in any jurisdiction where
it is not then qualified) and do any and all other acts or things which may be
reasonably necessary or advisable to enable such seller to consummate the public
sale or other disposition in such jurisdictions of such Eligible Securities;
(e) notify each seller of the Eligible Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act within the appropriate period
mentioned in clause (b) of this Section 1.4, of 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 a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of any such seller prepare and furnish to such seller 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 Eligible
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
then existing; and
(f) furnish on the date that such Eligible Securities are delivered to
the underwriters for sale pursuant to such registration or, if such Eligible
Securities are not being sold through underwriters, on the date that the
registration statement with respect to such Eligible Securities becomes
effective, (i) an opinion, dated such date, of the independent counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and at the request of any Holder or Holders of Eligible
Securities requesting registration pursuant to this Exhibit B, to the Holder or
Holders making such request, stating that such registration statement has become
effective under the Securities Act and that (1) no stop order suspending the
effectiveness thereof has been issued and, to the best knowledge of such
counsel, no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act; (2) the registration statement, the
related prospectus, and each amendment or supplement thereto, comply as to form
in all material respects with the requirements of the Securities Act and the
applicable rules and regulations of the Securities and Exchange Commission
thereunder (except that such counsel need express no opinion as to financial
statements contained therein); (3) such counsel has no reason to believe that
either the registration statement or the prospectus, or any amendment or
supplement thereto, contains any 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 not misleading (except that such counsel need express no
opinion as to financial statements contained therein); (4) the description in
the registration statement or the prospectus, or any amendment or supplement
thereto, of all legal and governmental matters and all contracts and other legal
documents or instruments are accurate
B-4
and fairly present the information required to be shown; (5) such counsel does
not know of any legal or governmental proceedings, pending or contemplated,
required to be described in the registration statement or prospectus, or any
amendment or supplement thereto, which are not described as required, nor of any
contracts or documents or instruments of a character required to be described in
the registration statement or prospectus, or any amendment or supplement
thereto, or to be filed as exhibits to the registration statement which are not
described and filed as required, and (6) such other legal matters with respect
to such registration as the underwriters, if any, and any such Holder or Holders
requesting such opinion may reasonably request; and (ii) in the case of an
underwritten offering, a comfort letter, dated such date, from the independent
certified public accountants of the Company, addressed to the underwriters and
the Company's Board of Directors in the customary form.
1.5 Delay in Registration. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company reserves the right to delay any such
registration pursuant to this Exhibit B for a period of not more than one
hundred and twenty (120) days, or to withhold efforts to cause such registration
statement to become effective for a period of not more than one hundred twenty
(120) days, if the Board of Directors of the Company determines in good faith
that such registration might (A) interfere with or affect the negotiation or
completion of any material transaction that is being contemplated by the
Company, or (B) involve initial or continuing disclosure obligations materially
adverse to the best interests of the Company's shareholders. If, after a
registration statement becomes effective, the Company advises the Holders of the
registrable securities covered by such registration statement that the Company
considers it appropriate for the registration statement to be amended, the
Holders of such shares shall suspend any further sales of their registered
shares until the Company advises them that the registration statement has been
amended. The time periods referred to this Exhibit B shall be extended for an
additional number of business days during which the rights to sell shares was
suspended.
1.6 Information to be Furnished by Holders of Eligible Securities.
-------------------------------------------------------------
Each prospective seller of Eligible Securities, registered or to be registered
under any registration statement shall furnish to the Company such information
and execute such documents regarding the Eligible Securities held by such seller
and the intended method of disposition thereof as the Company shall reasonably
request in connection with the action to be taken by the Company.
1.7 Expenses of Registration.
------------------------
(a) All expenses incurred by the Company in complying with this
Exhibit B (other than the underwriting discounts and commissions), including,
without limitation: (i) all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers, Inc.);
(ii) the fees and expenses of complying with securities and blue sky laws; (iii)
expense allowances of the underwriters; (iv) printing expenses; (v) fees and
disbursements of Company counsel and of one counsel for the participating
Holders together, which counsel is reasonably acceptable to the Holders; and
(vi) the fees and expenses of the independent public accountants (including the
expense of any special audits in connection with any such registration), are
hereinafter called "Registration Expenses." All underwriting
B-5
discounts and commissions applicable to the Eligible Securities covered by any
such registration, are herein called "Selling Expenses."
(b) The Company shall pay all Registration Expenses in connection
with all piggyback registrations under Section 1.1 and all demand registrations
under Section 1.2 plus up to one (1) S-3 registration per year pursuant to
Section 1.3. All Selling Expenses in connection with each registration pursuant
to this Exhibit B and any legal fees and expenses of additional special counsel
for the sellers shall be borne by the seller or sellers therein in proportion to
the number of Eligible Securities included by each in such registration, or in
such other proportions as they may agree upon.
1.8 Indemnification.
---------------
(a) The Company shall indemnify and hold harmless each Holder of
Eligible Securities, its executive officers, directors and controlling persons
(within the meaning of the Securities Act) and each person who participates as
an underwriter or controlling person of an underwriter (within the meaning of
the Securities Act) with respect to a registration statement pursuant to this
Exhibit B against any loss, claims, damages or liabilities to which any of them
may become subject under the Securities Act or otherwise insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement of any material fact contained in a
registration statement including Eligible Securities owned by such Holder, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse any of them for any legal
or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable hereunder to a
particular Holder in any such case if any such loss, claim, damage, or liability
arises out of or is based upon any untrue statement or omission made in such
registration statement, prospectus or amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company for such purpose by such Holder or by its representative or by any
underwriter on behalf of such Holder or if the untrue statement or omission is
corrected in a supplement or amendment to the prospectus provided by the Company
to such Holder in a timely fashion in accordance with this Exhibit B which was
not used by such Holder.
(b) Each Holder of Eligible Securities joining in any
registration statement of the Company pursuant to this Exhibit B shall indemnify
and hold harmless the Company, its executive officers, directors, and
controlling persons (within the meaning of the Securities Act) and each person
who participates as an underwriter or controlling person of an underwriter
(within the meaning of the Securities Act) with respect to a registration
statement pursuant to Exhibit B against any losses, claims, damages, or
liabilities to which any of them may become subject under the Securities Act or
otherwise insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of any
material fact contained in such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated
B-6
therein or necessary to make the statements therein not misleading, made in
reliance upon and in conformity with written information furnished to the
Company by such Holder or by its representative or by any underwriter on behalf
of such Holder for such purpose, and will reimburse any of them for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending, any such loss, claim, damage, liability or action provided, however,
that the total amount payable by a Holder under this Section 1.8(b) shall not
exceed the net proceeds received by such Holder in such registered offering.
(c) Promptly after receipt by an indemnified party under this
Section 1.8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
notify the indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to assume the defense thereof with
counsel mutually satisfactory to the parties. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to notify the indemnifying party will not relieve such
party of any liability that such party may have to any indemnified party other
than under this Section 1.8.
(d) If the indemnification provided for in this Section 1.8 is
unavailable to or insufficient to hold harmless an amount in excess of the
proceeds received by such Holder in the offering.
1.9 Underwriting Agreement. If Eligible Securities are sold pursuant
----------------------
to a registration statement in an underwritten offering pursuant to this Exhibit
B, the Company and the Holders participating therein agree to enter into an
underwriting agreement containing customary representations and warranties with
respect to the business and operations of an issuer of, or, as the case may be,
the seller of the securities being registered and customary covenants and
agreements to be performed by such issuer or seller, including, without limiting
the generality of the foregoing, customary provisions with respect to
indemnification by the Company of the underwriter(s) of such offering.
1.10 "Market Stand-Off" Agreement. Each Holder hereby agrees that it
----------------------------
shall not, to the extent requested by the Company or an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any Eligible
Securities for up to that period of time following the effective date of a
registration statement of the Company filed under the Securities Act as is
requested by the managing underwriters of such offering, not to exceed one
hundred and eighty (180) days.
1.11 Subsequent Registration Rights. The Company shall not grant any
------------------------------
registration rights to any other person that are more favorable to such person
than the registration rights granted to the Holders hereunder without the prior
written consent of the Holders of at least a majority of the Eligible
Securities.
1.12 Assignment. The registration rights granted hereunder may be
----------
assigned by a Holder to any person who acquires such Holder's Eligible
Securities in accordance with the
B-7
SHA, if such Holder is party thereto, and the Amended and Restated Certificate
of Incorporation and Bylaws of the Company.
B-8
