Exhibit 4.1(b)
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") entered into as of January 13, 2000, by and among the Subscribers
set forth on the signature pages hereof (each, a "Subscriber," and collectively,
the "Subscribers") and Xceed, Inc., a Delaware corporation, with offices at 488
Madison Avenue, New York, New York 10022 (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to the Subscription Agreement, dated as of
the date hereof (the "Agreement"), by and among the Company and the Subscribers,
the Company has agreed to sell and the Subscribers have agreed to purchase up to
Thirty Thousand (30,000) shares of Series A Cumulative Convertible Preferred
Stock, par value $.05 per share (the "Preferred Stock"), of the Company at a
purchase price of $1,000 per share, with such other rights and preferences as
are set forth in the Certificate of Designation, Preferences and Rights of the
Preferred Stock (the "Certificate");
WHEREAS, the Preferred Stock is convertible into shares of the
Company's common stock, par value $.01 per share (the "Underlying Common
Shares"); and
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Subscribers' purchase of the Preferred Stock, the Company
has agreed to provide the Subscribers with certain registration rights with
respect to Underlying Common Shares and any shares of the Company's common stock
underlying warrants (the "Warrants") issued to the Subscribers on the date
hereof (such shares are referred to as the "Underlying Warrant Shares," and,
together with the Underlying Common Shares, the "Shares") as set forth in this
Registration Rights Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Agreement
and this Registration Rights Agreement, the Company and the Subscribers agree as
follows:
1. Certain Definitions. As used in this Registration Rights
Agreement, the following terms shall have the following respective meanings, and
terms not otherwise defined herein shall have their respective meanings as
assigned to them in the Agreement:
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Filing Date" means April 1, 2000.
"Holder" means the applicable Subscriber and any transferee of
the Warrants, the Preferred Stock, Shares or other Registrable Securities (as
defined herein), to whom the registration rights conferred by this Registration
Rights Agreement have been transferred in compliance with Section 13 of this
Registration Rights Agreement.
"Person" means and includes an individual, a partnership, a
joint venture, a corporation, a company, a limited liability company, a trust,
an unincorporated organization and a government or any department or agency
thereof.
"Prospectus" means any prospectus relating to the Shares as
filed with the Commission pursuant to Rule 424(b) under the Securities Act or,
if no such filing is required, any form of final prospectus relating to the
Shares included in the Registration Statement, as the case may be, at the time
the Registration Statement is declared effective by the Commission, in either
case, including all amendments and supplements to such prospectus or
Registration Statement, including post-effective amendments, and all material,
if any, incorporated by reference therein.
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The terms "register," "registered" and "registration" shall
refer to a registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" means all expenses incurred by the
Company in connection with the registration, qualification or compliance with
Section 2 of this Registration Rights Agreement, including without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements of counsel to Holders relating directly to review of the
Registration Statement and related documents, and the expense of any special
audits incident to or required by any such registration. With respect to fees
and expenses of counsel to the Holders, Registration Expenses shall include only
fees and disbursements for one (1) designated counsel for all the Holders of
Preferred Stock, which counsel shall be reasonably acceptable to the Company.
"Registration Statement" means any Piggyback Registration
Statement, the Shelf Registration Statement and any additional registration
statements contemplated by Section 2(b), including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.
"Registrable Securities" means any Shares or other securities
issued or issuable to the Holder upon the conversion of any Preferred Stock or
exercise of the Warrants.
"Regulation D" means Regulation D as promulgated pursuant to
the Securities Act, and as it may be subsequently amended.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all brokerage fees, underwriting
discounts and selling commissions applicable to the offer and sale of
Registrable Securities and all fees and disbursements of counsel for Holders not
included under "Registration Expenses."
2. Registration Requirements. The Company shall use its
diligent best efforts to effect the registration of the Registrable Securities
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or facilitate the
sale or distribution of all the Registrable Securities in the manner (including
manner of sale) and in all states reasonably requested by the Holders under a
broad-based plan of distribution reasonably acceptable to the Holders. Such best
efforts by the Company shall include, without limitation, the following:
(a) Piggy-Back Registration. For so long as any
shares of Preferred Stock, Warrants or any Registrable Securities are
outstanding but in no event for more then two years following the
Filing Date, if at any time when there is not an effective Registration
Statement covering the Shares, the Company shall determine to prepare
and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than a
registration statement on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) and including any successor forms or their
then equivalents relating to equity securities (each, a "Piggyback
Registration Statement"), the Company shall send to each Holder of
Registrable Securities written notice of such determination (the
"Registration Notice") and, if within thirty (30) days after receipt of
such notice, any such Holder shall so request in writing (which request
shall specify the Registrable Securities intended to be disposed of by
such Holder), the Company will cause to be included in the Piggy-Back
Registration Statement all Registrable Securities which the Company has
been so requested to include by the Holder, provided that if at any
time after giving the Registration Notice and prior to the effective
date of the Piggy-Back Registration Statement, the Company shall
determine for any reason not to proceed or to delay registration of
such securities, the Company may, at its election, give written notice
of such determination to such Holder and, thereupon: (i) in the case of
a determination not to proceed, shall be relieved of its obligation to
include any Registrable Securities in connection with such registration
(but not from its
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obligation to pay the Registration Expenses in accordance with Section
3 hereof); and (ii) in the case of a determination to delay
registration, shall be permitted to delay registration of any
Registrable Securities requested to be included pursuant to this
Section 2(a) for the same period as the delay in registration of the
other securities included in the Piggy-Back Registration Statement. The
Company shall include in the Piggy-Back Registration Statement all or
any part of such Registrable Securities such Holder requests to be
registered; provided, however, that the Company shall not be required
to include in the Piggy-Back Registration Statement the number of
Registrable Securities held by a Holder that are eligible for sale
pursuant to Rule 144 under the Securities Act. In the event that the
Piggy-Back Registration Statement relates to an underwritten public
offering, if the managing underwriter(s) determines that marketing
factors require limitation or exclusion of the Registrable Securities
and objects to the inclusion of the Registrable Securities in the
Piggy-Back Registration Statement, then if the Company (after
consultation with the managing underwriter(s)) determines to include in
the Piggy-Back Registration Statement fewer or none of the Registrable
Securities of the Holders, then the number of Registrable Securities of
the Holders, to the extent permitted to be included in the Piggy-Back
Registration Statement, shall be reduced pro-rata among such Holders
(based upon the total number of Registrable Securities requested by the
Holders to be included in the Piggy-Back Registration Statement);
provided, however, that if securities are being offered for the account
of other Persons as well as the Company, such reduction shall not
represent a greater fraction of the number of Registrable Securities
intended to be offered by the Holders than the fraction of similar
reductions imposed on such other Persons (other than the Company). To
the extent that Registrable Securities of a Holder are included in a
Piggy-Back Registration Statement that relates to an underwritten
public offering, the right of such Holder to have its Registrable
Securities included therein shall be conditioned upon such Holder's
participation in and agreement with the terms of such underwriting.
Each Holder shall (together with the Company and such other Persons
including securities in the Piggy-Back Registration Statement) enter
into an underwriting agreement in customary form with the
underwriter(s) and shall use such Holder's commercially reasonable
efforts to prepare and provide all documents and opinions required to
be delivered thereunder in respect of their participation as selling
securityholders in the subject offering. In connection with the
foregoing, the Company and the Holder's shall also comply with the
provisions of Section 2(e) below. In the event that the managing
underwriter(s) permits inclusion of a Holder's Registrable Securities,
such Holder may be prohibited from selling other Registrable Securities
for a period of time following the effective date of the Piggy-Back
Registration Statement as required by the underwriter(s), such period
not to exceed 90 days from the effective date of the Piggy-Back
Registration Statement.
(b) Additional Registration. Not later than the
Filing Date, the Company shall file: (i) a registration statement on
Form S-3 with the Commission pursuant to Rule 415 under the Securities
Act covering the Registrable Securities (the "Shelf Registration
Statement"); (ii) such blue sky filings as shall be necessary (based
upon the determination of counsel to the Company or counsel to the
Holders reasonably acceptable to the Company) to enable the Holders to
resell their Registrable Securities in such jurisdictions as they
reasonably request in writing; and (iii) any required filings with the
National Association of Securities Dealers, Inc., the Nasdaq National
Market or such other exchange or market on which the Shares are traded.
Thereafter, the Company shall use its best efforts to: (i) respond
timely to all comments received from the Commission on the Shelf
Registration Statement and/or any documents incorporated by reference
therein; and (ii) cause such Shelf Registration Statement and any
filings incorporated therein to be declared effective as promptly as
practicable but in no event later than 60 days from the Filing Date. If
an additional Registration Statement is required to be filed because
the actual number of Registrable Securities exceeds the number of
shares of Common Stock included in the Shelf Registration Statement or
the Piggy-Back Registration Statement, the Company shall use its best
efforts to cause an additional Registration Statement (the "Additional
Registration Statement") to be filed and declared effective by the
Commission as soon as possible, but in no event later than 60 days
after the filing thereof.
(c) The Company and the Subscribers agree that the
Holders will suffer damages if one or more Registration Statements
covering all of the Registrable Securities are not filed on or prior to
the Filing Date and not declared effective by the Commission on or
prior to the 90th day after the Filing Date and maintained in the
manner contemplated herein during the Effectiveness Time or if certain
other events occur. The Company and the Holders further agree that it
would not be feasible at this time to
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ascertain the extent of such damages with precision. Accordingly, if:
(i) one or more Registration Statements covering all of the Registrable
Securities are not filed with the Commission on or prior to the Filing
Date; (ii) after 90 days from the Filing Date, such Registration
Statement or Statements have not been declared effective by the
Commission; or (iii) in the event that filing of the Additional
Registration Statement is necessary, and the Additional Registration
Statement is not declared effective with the time periods set forth in
Section 2(b) (any such failure or breach, being referred to as an
"Event," and the date following expiration of the applicable time
periods on which such Event occurs, being referred to as "Event Date"),
and such Event is in no manner the result of action or inaction on the
part of a Subscriber or Subsequent Holder, the Holders shall have, in
addition to, and without limiting, any other rights they may have at
law, in equity or under the Certificate, the Agreement or this
Registration Rights Agreement (including the right to specific
performance), the right to receive cash payment from the Company, as
liquidated damages, in an amount equal to 1.5% of the Aggregate Value
(as defined in the Certificate) of the shares of Preferred Stock held
by such Holder plus the Aggregate Value of any shares of Preferred
Stock that have been converted to the extent any of the Underlying
Common Shares issued upon such conversion have not been sold (or
previously included in a Registration Statement in the case of an Event
arising in connection with an Additional Registration Statement), for
each 30-day period (or portion thereof) from the Event Date until the
applicable Event is cured. Payments to be made pursuant to this Section
2(c) shall be due and payable immediately upon demand in immediately
available funds. In addition to the foregoing, if at any time after 120
days from the Filing Date, one or more Registration Statements covering
all of the Registrable Securities have not been declared effective by
the Commission, then upon demand of any Holder, the Company shall
redeem all or any specified portion of the Preferred Stock held by such
Holder at a redemption price equal to 125% of the Aggregate Value (as
defined in the Certificate) thereof, together with all other payments
due under this Section 2, the Certificate and the Agreement.
(d) If the Holders intend to distribute the
Registrable Securities covered by the Registration Statement by means
of an underwritten offering, the Holders shall so advise the Company.
The Holders will have the right to select the investment bankers for
such underwriting subject to such investment bankers being reasonably
satisfactory to the Company. If, in the opinion of the managing
underwriter of such offering, the inclusion of the Registrable
Securities requested to be registered hereunder would adversely affect
the marketing of such shares, after any shares otherwise intended to be
included by the Company or other holders of Common Stock have been
excluded, Registrable Securities to be included by the Holders shall be
excluded in such manner that the Registrable Securities to be included
shall be allocated among such Holders pro rata based on their ownership
of Registrable Securities.
(e) In the event that the Registrable Securities are
included in a Registration Statement relating to an underwritten
offering:
(i) the Company and the Holders shall enter into
such customaryagreements (including a customary underwriting
agreement) with the underwriter(s) and take all such other actions
reasonably requested in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities.
(ii) the Company and the Holders shall make
such representations and warrantiesto the Holders (with respect to the
Company), to the Company (with respect to the Holders) and to the
underwriter(s), in form, substance and scope as are customarily made
in secondary underwritten offerings;
(iii) the Company shall cause to be
delivered to the Holders of Registrable Securities included in the
underwritten offering and to the underwriter(s) opinions of counsel to
the Company, dated as of the effective date of the Registration
Statement (which counsel and opinions, shall be reasonably
satisfactory in form, scope and substance to the managing
underwriter(s) and counsel of the Holders), addressed to the Holders
and the underwriter(s) covering the matters customarily covered in
opinions requested in secondary underwritten offerings;
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(iv) the Company shall cause to be
delivered, immediately prior to the effectiveness of the Registration
Statement, a "comfort" letter from the Company's independent certified
public accountants addressed to the Holders and the underwriter(s)
stating that such accountants are independent public accountants
within the meaning of the Securities Act and the applicable published
rules and regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are customarily
covered by letters of the independent certified public accountants
delivered in connection with secondary underwritten public offerings;
(v) if an underwriting agreement is
entered into, the same shall set forth in full the indemnification and
contribution provisions and procedures of Sections 6 and 7 with
respect to all parties to be indemnified pursuant to such sections;
(vi) the Company and the Holders shall
deliver such documents and certificates as may be reasonably requested
by the underwriter(s) to evidence compliance with clause (ii) above
and with any customary conditions contained in the underwriting
agreement, if any, or other agreement entered into by the Company in
connection with such underwritten offering; and
(vii) the Holders shall use their reasonable
commercial efforts to timely prepare and provide all information,
documentation and opinions addressed to the underwriter(s), in form,
scope and substance reasonably satisfactory to counsel to the
underwriter(s) as customarily required in secondary underwritten
offerings.
(f) The Company shall make available for inspection
during normal business hours and upon reasonable request by a
representative or representatives of the Holders, the underwriter(s)
participating in a proposed underwritten offering pursuant to a
Registration Statement, and the attorney and/or accountant retained by
such Holders or underwriter(s), customary financial and other records
for such purposes, pertinent corporate documents and properties of the
Company, and use its best efforts to cause the Company's officers,
directors and employees to supply information reasonably and
customarily requested in connection with such an underwritten offering,
in the case of an underwriting, and, in any event, in connection with
preparation of such a Registration Statement. The Holders (and each
representative, accountant and counsel thereto) shall keep all
information deemed by the Company to be "non-public" information which
is supplied to the Holders (and any representative, accountant and
counsel thereto) confidential unless and until such information is
included in the Registration Statement filed with the Commission.
3. Expenses of Registration. All Registration Expenses shall
be borne by the Company and all Selling Expenses shall be borne by the Holders.
4. Registration on Form S-3. The Company shall use its best
efforts to qualify under the Securities Act for registration on Form S-3 or any
comparable or successor form or forms.
5. Registration Procedures. In the case of each Registration
Statement (other than a Piggyback Registration Statement) filed by the Company
pursuant to this Registration Rights Agreement, the Company shall keep the
Holders advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company shall use its best efforts
to:
(a) Keep such Registration Statement continuously
effective for the period ending at the earlier of the following: (i)
twenty four (24) months after the effective date of the Registration
Statement (as such time period is extended pursuant to Section 5A
hereof), (ii) the time the Holders have completed their distribution of
the Shares; or (iii) the time all of the Registrable Securities are
eligible for distribution to the public by the Holder pursuant to Rule
144 under the Securities Act (or any similar provision then in force)
(the earliest of (i), (ii) and (iii) being referred to as the
"Effectiveness Time");
(b) Furnish such number of prospectuses, and
amendments and supplements thereto, and other documents incident
thereto as any Holder from time to time may reasonably request;
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(c) Prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement
as may be necessary to keep such Registration Statement effective for
the applicable period; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act applicable to it with respect to
the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
Registration Statement or supplement to such Prospectus;
(d) Promptly notify each Holder of Registrable
Securities included in the Registration Statement, counsel for the
Holders and the managing underwriters, if any, promptly, and (if
reasonably requested by any such Person) confirm such notice (a
"Notice") in writing: (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the
Commission for amendments or supplements to a Registration Statement or
related Prospectus or for additional information; (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purposes; (iv) if at any time the representations and warranties of the
Company contained in agreements contemplated by Section 2(d) cease to
be true and correct; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (vi) of
the happening of any event as a result of which the Prospectus included
in the Registration Statement (as then in effect) 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 the case of the Prospectus or any preliminary Prospectus,
in light of the circumstances under which they were made) not
misleading; and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate or that there exist circumstances not yet disclosed to the
public which make further sales under such Registration Statement
inadvisable pending such disclosure and post-effective amendment;
(e) Upon the occurrence of any event contemplated by
Section 5(d)(ii) through (vii) and immediately upon the expiration of
any Blocking Period (as defined in Section 5A), prepare, if the
occurrence of such event or period requires such preparation, a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that the Prospectus thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements made
therein not misleading;
(f) Make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement or the lifting of any suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction, at the earliest possible moment;
(g) To the extent applicable or otherwise required to
enable the Holders to resell their Registrable Securities, ensure that
the Registrable Securities subject to the Registration Statement shall
be registered or qualified for offer and sale under the securities or
blue sky laws of such jurisdictions as the Holder(s) or underwriter(s),
if any, reasonably request in writing; use its best efforts to keep
each such registration or qualification effective, including through
new filings or amendments or renewals, during the period such
Registration Statement is required to be kept effective hereunder and
do any and all other acts or things reasonably necessary or advisable
(based on the opinion of counsel to the Company or counsel, reasonably
acceptable to the Company, of the Holders or the underwriter(s), as the
case may be) to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration
Statement; provided, however, that the Company will not be required to
qualify to do business or take any action that would subject it to
taxation or general service of process in any jurisdiction where it is
not then so qualified or subject;
(h) Use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with
or approved by the National Association of Securities Dealers,
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Inc. as may be necessary to enable the Holders or the underwriters, if
any, to consummate the disposition of such Registrable Securities in
accordance with the chosen method or methods of distribution; and
(i) Cause all Registrable Securities included in such
Registration Statement to be listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement, on the
Nasdaq National Market, The Nasdaq SmallCap Market or such other
principal securities exchange or automated interdealer system on which
the same class of securities of the Company are then listed or traded.
5A. Suspensions of Effectiveness.
(a) The Company may suspend dispositions under the
Registration Statement and notify the Holders that they may not sell the
Registrable Securities pursuant to any Registration Statement or Prospectus (a
"Blocking Notice") if the Company's board of directors determines in its
reasonable good faith judgment that the Company's obligation to ensure that such
Registration Statement and Prospectus are current and complete would require the
Company to take actions that might reasonably be expected to have a materially
adverse detrimental effect on the Company and its stockholders; provided that
the Company shall diligently and expeditiously take all actions it reasonably
determines to be necessary or advisable to cause such Registration Statement and
Prospectus to be current and complete and to remove such suspension pursuant to
a Blocking Notice or the Notice described below or as a result of the
circumstances described in Section 5(d)(ii) through (vii). Each Holder agrees by
acquisition of the Registrable Securities that, upon receipt of a Blocking
Notice or "Notice" from the Company of the existence of any fact of the kind
described in the following sentence, such Holder shall not dispose of, sell or
offer for sale the Registrable Securities pursuant to the Registration Statement
until such Holder receives: (i) copies of the supplemented or amended
Prospectus, or until counsel for the Company shall have determined that such
disclosure is not required due to subsequent events; (ii) notice in writing (the
"Advice") from the Company that the use of the Prospectus may be resumed; and
(iii) copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus. Pursuant to the immediately preceding sentence, the
Company may provide such Notice to such Holder upon the determination by the
Company of the existence of any fact or the happening or any event that makes
any statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated by
reference therein untrue in any material respect, or that requires the making of
any additions to or changes in the Registration Statement or the Prospectus, in
order to make the statements therein not misleading in any material respect. If
so directed by the Company in connection with any such notice, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities that was current immediately prior to the
time of receipt of such notice.
(b) In the event: (i) the Company shall give any such Blocking
Notice or Notice, pursuant to Section 5A(a) or (ii) the Registration Statement
is suspended (including, but not limited to, suspensions resulting from the
delisting of the Common Stock or a stop order issued by the Commission) or
trading in the Common Stock on the Nasdaq National Market is suspended for a
period of time (excluding disruptions from business announcements that result in
any halt(s) in trading of not more than one day on each occasion) and other
suspension of trading on such market in general (each, a "Blackout Period"), the
time regarding the effectiveness of such Registration Statement set forth in
Section 5(a) and the Maturity Date (as defined in the Certificate) of the
Preferred Stock and the expiration date of the Warrants shall be extended by one
and one-half (1-1/2) times the number of days during the period (i) from and
including the date of the giving of such Blocking Notice or Notice to and
including the date when the Holders shall have received the copies of the
supplemented or amended Prospectus, the Advice and any additional or
supplemental filings that are incorporated by reference in the Prospectus or
(ii) from and including the date of such suspension to and including the date
when the Registration Statement is declared effective, as applicable. Delivery
of a Blocking Notice or Notice and the related suspension of any Registration
Statement or the occurrence of a Blackout Period shall not constitute a default
under this Registration Rights Agreement and shall not create any obligation to
pay liquidated damages under Section 2 hereof. However, if the Holder's ability
to sell under the Registration Statement is suspended for more than ten
consecutive trading days or for sixty (60) days (whether or not consecutive)
during any twelve (12) month period (an "Excess Blocking Period"), then the
Holders shall have the right to receive a 2.0% reduction in the Conversion Price
(as defined in the Certificate) of the Preferred Stock for each 30-day period
(or part thereof) following the beginning of an Excess Blocking Period until the
Excess Blocking Period terminates. In addition, if the Excess Blocking Period
continues
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for more than an aggregate of 180 days in any 360-day period, then at
Holder's option, the Company shall redeem Holder's Preferred Stock at a
redemption price equal to 130% of the Aggregate Value thereof, together with all
payments due under this Section and the Agreement.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder
whose securities are included in a Registration Statement, each of its officers,
directors, managers, members and partners, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Registration Rights Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or arising out of or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or any state securities law or in either case, any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based
solely on any untrue statement or omission (or alleged untrue statement or
omission) that is made in reliance upon and in conformity with written
information furnished to the Company by such Holder or the underwriter expressly
for use therein. The indemnity agreement contained in this Section 6(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, if Registrable
Securities held by it are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors, managers, members
and partners, and each person controlling such other Holder within the meaning
of Section 15 of the Securities Act and the rules and regulations thereunder
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or arising out of or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statement therein not misleading, and
will reimburse the Company and such other Holders and their directors, officers,
managers, members and partners, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
expressly for use therein; provided that no Holder shall be liable under this
indemnity for an amount in excess of the net proceeds received by such Holder
from the sale of the Registrable Securities pursuant to such registration
statement. The indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any such claims, losses, damages or
liabilities if such settlement is effected without the consent of such Holder
(which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under
this Article (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom; provided that
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counsel for the Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at the Indemnified Party's expense;
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 6 except to the extent that the Indemnifying Party is
materially and adversely affected by such failure to provide notice. The
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Party; provided, however, that if separate firm(s) of
attorneys are required due to a conflict of interest, then the Indemnifying
Party shall be liable for the reasonable fees and expenses of each such separate
firm. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
7. Contribution. (a) If the indemnification provided for in
Section 6 herein is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein (other than by reason
of the exceptions provided therein), then each such Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company on the one hand and the Holder or
underwriters, as the case may be, on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Holder or underwriters, as the case may be, on the other from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Holder or underwriters, as the case may be, on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations and (ii)
as between the Company on the one hand and the Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
the Holder in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations.
(b) The relative benefits received by the Company on the one
hand and the Holders or the underwriters, as the case may be, on the other shall
be deemed to be in the same proportion as the proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company from the initial sale of the Registrable Securities by the
Company to the Holders pursuant to this Registration Rights Agreement bear to
the net proceeds received by the Holders from the sale of Registrable Securities
pursuant to the Registration Statement or the total underwriting discounts and
commissions received by the underwriters as set forth in the table on the cover
page of the Prospectus, as the case may be. The relative fault of the Company on
the one hand and of the Holders or underwriters, as the case may be, on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, by the Holders or by the underwriters.
(c) In no event shall the obligation of any Indemnifying Party
to contribute under this Section 7 exceed the amount that such Indemnifying
Party would have been obligated to pay by way of indemnification if the
indemnification provided for under clauses (a) or (b) of Section 6 hereof had
been available under the circumstances.
(d) The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rated allocation (even if the Holders or the underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any
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such action or claim. Notwithstanding the provisions of this Section 7, no
Holder or underwriter shall be required to contribute any amount in excess of
the amount by which (i) in the case of such Holder, the total price at which the
shares of Common Stock offered by such Holder and distributed to the public, or
offered to the public, exceed the amount paid by such Holder for the underlying
Preferred Stock converted into such shares of Common Stock, (ii) in the case of
an underwriter, the total price at which the Registrable Securities purchased by
it and distributed to the public were offered to the public exceeds, in any such
case, the amount of any damages that the Holders or underwriter have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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.
8. Changes in Common Stock or Preferred Stock. If, and as
often as, there is any change in the Common Stock or Preferred Stock by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or Preferred Stock as so changed.
9. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Preferred Stock and the Shares to the public without
registration, at all times after ninety (90) days after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act;
(b) use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and
(c) furnish to each Holder forthwith upon request a
written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the
Company as such holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such Holder to sell any
Preferred Stock or Shares without registration.
10. Rule 416. The Company and the Subscribers each acknowledge
that an indeterminate number of Registrable Securities shall be registered
pursuant to Rule 416 under the Securities Act so as to include in such
Registration Statement any and all Registrable Securities which may become
issuable (i) to prevent dilution resulting from stock splits, stock dividends or
similar transactions and (ii) if permitted by law, by reason of reductions in
the Conversion Price (as defined in the Certificate) of the Preferred Stock in
accordance with the terms of thereof, including, without limitation, the terms
which case the Conversion Period Conversion Price (as defined in the
Certificate) to decrease as the price of the Common Stock decreases
(collectively, the "Rule 416 Securities"). In this regard, the Company agrees to
use all reasonable efforts to ensure that the maximum number of Registrable
Securities which may be registered pursuant to Rule 416 under the Securities Act
are covered by the Registration Statement and, absent guidance from the
Commission or other definitive authority to the contrary, the Company shall use
all reasonable efforts to affirmatively support and not to take any position
adverse to the position that the Registration Statement filed hereunder covers
all of the Rule 416 Securities.
11. Survival. The indemnity and contribution agreements
contained in Sections 6 and 7 and the representations and warranties of the
Company referred to in Section 2(e)(i) shall remain operative and in full force
and effect regardless of (a) any termination of this Registration Rights
Agreement or any underwriting agreement, (b) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of the Company and (c) the
consummation of the sale or successive resales of the Registrable Securities.
12. Information by Holder. Each Holder shall promptly furnish
to the Company such information regarding such Holder and the distribution
proposed by such Holder as the Company may reasonably
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request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Registration
Rights Agreement; provided, however, each Holder shall be given at least ten
(10) days to respond to such request. All information provided to the Company by
such Holder shall be accurate and complete in all material respects and such
Holder shall promptly notify the Company if any such information becomes
incorrect or incomplete. If such Holder does not timely provide such reasonably
requested information, such Holder shall not be entitled to the liquidated
damages contemplated by Section 2(c) to the extent that such delay in the
Registration Statement becoming effective is caused by such failure to timely
provide information unless such Holder shall be able to demonstrate to the
Company's satisfaction that such failure to timely provide did not
proportionately contribute to the event giving rise to the damages obligation.
13. Transfer or Assignment of Registration Rights. The rights
granted to the Subscribers by the Company under this Registration Rights
Agreement to cause the Company to register Registrable Securities, may be
transferred or assigned to a transferee or assignee together with any transfer
or assignment of the Registrable Securities, provided that the Company is given
written notice by any applicable Holder at the time of or within a reasonable
time after said transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and provided further that
the transferee or assignee of such rights agrees in writing to be bound by this
Registration Rights Agreement.
14. Representations and Warranties of the Company. The Company
represents and warrants that there are no agreements, understandings or
commitments, oral or written, between the Company and the holders of its
securities pursuant to which such holders have a right to require the Company to
register or qualify any of its securities under the Securities Act or any
applicable state securities laws.
15. Miscellaneous.
(a) Entire Agreement. This Registration Rights Agreement
contains the entire understanding and agreement of the parties with respect to
the subject matter hereof, and may not be modified or terminated except by a
written agreement signed by the parties.
(b) Notices. Any notice, demand or request required or
permitted to be given by either the Company or the Holders pursuant to the terms
of this Registration Rights Agreement shall be in writing and shall be deemed
given when delivered personally, by overnight courier service or by facsimile,
with a hard copy to follow by overnight or two day courier, addressed to the
other party at the address of the party set forth at the end of this
Registration Rights Agreement or such other address as a party may request by
notifying the other in writing. Copies of all notices to the Holders or to the
Company shall be sent to the address set forth on Schedule I to the Subscription
Agreement or to such other address as the Holders or the Company, as applicable,
may hereafter designate.
(c) Gender of Terms. All terms used herein shall be deemed to
include the feminine and the neuter, and the singular and the plural, as the
context requires.
(d) Governing Law; Consent of Jurisdiction. This Registration
Rights Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to principles of
conflicts of law or choice of law except for matters arising under the
Securities Act or the Securities Exchange Act of 1934, as amended, which matters
shall be construed and interpreted in accordance with such laws. The Company and
the Holders hereby agree that all actions or proceedings arising directly or
indirectly from or in connection with this Registration Rights Agreement shall
be litigated only in the Supreme Court of the State of Delaware or the United
States District Court of Delaware located in New Castle County, Delaware. The
Company and the Holders consent to the jurisdiction and venue of the foregoing
courts and consent that any process or notice of motion or other application to
either of said courts or a judge thereof may be served inside or outside the
State of Delaware by registered mail, return receipt requested, directed to the
such party at its address set forth in this Registration Rights Agreement (and
service so made shall be deemed complete five (5) days after the same has been
posted as aforesaid) or by personal service or in such other manner as may be
permissible under the rules of said courts. The parties hereto hereby waive any
right to a trial by jury in connection with any litigation.
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(e) Severability. Notwithstanding any provision of this
Registration Rights Agreement, neither the Company nor any other party hereto
shall be required to take any action which would be in violation of any
applicable law. The invalidity or unenforceability of any provision of this
Registration Rights Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of any other provision of this Registration Rights
Agreement in such jurisdiction or the validity, legality or enforceability of
this Registration Rights Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
(f) Further Assurances. Each of the parties hereto shall
execute such documents and other papers and perform such further acts as may be
reasonably required or deemed necessary to carry out the provisions of this
Registration Rights Agreement and the transactions contemplated hereby.
(g) Titles. The titles used in this Registration Rights
Agreement are used for convenience of reference only and are not to be
considered in construing or interpreting this Registration Rights Agreement.
(h) Counterparts. This Registration Rights Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts and all of which
together constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed as of the date first above
written.
XCEED, INC.
By: /s/ Werner Haase
--------------------
Name: Werner Haase
Title: Chief Executive Officer
PECONIC FUND, LTD.
By: RAMIUS CAPITAL GROUP, LLC
Its: Investment Advisor
By: /s/ Jeffrey M. Solomon
--------------------------
Name: Jeffrey M. Solomon
Title: Managing Officer
LEONARDO, L.P.
By: ANGELO, GORDON & CO., L.P.
Its: General Partner
By:/s/ Michael L. Gordon
------------------------
Name: Michael L. Gordon
Title: Chief Operating Officer
HTFP INVESTMENT L.L.C.
By: PROMETHEAN ASSET MANAGEMENT,
L.L.C.
Its: Investment Advisor
By:/s/ James F. O'Brien, Jr.
----------------------------
Name: James F. O'Brien, Jr.
Title: Managing Member