EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 29,
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1999, by and among CMGI, Inc., a Delaware corporation, with its headquarters
located at 100 Brickstone Square, Andover, MA 01810 (the "Company"), and each of
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the undersigned (together with any assignee or transferee of all of their
respective rights hereunder, the "Initial Investors").
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WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"), the
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Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Initial Investors (i) shares of its Series C
Convertible Preferred Stock (the "Preferred Stock") that are convertible into
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shares (as converted, the "Conversion Shares") of the Company's common stock,
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par value $0.01 per share (the "Common Stock"), upon the terms and subject to
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the limitations and conditions set forth in the Certificate of Designations,
Preferences, and Rights with respect to the Preferred Stock (the "Certificate of
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Designation"); and
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B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, or any similar successor statute
(collectively, the "1933 Act"), and applicable state securities laws.
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Initial Investors hereby agree as follows:
1. DEFINITIONS.
A. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investors" means the Initial Investors and any transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
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415"), and the declaration or ordering of effectiveness of such Registration
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Statement by the United States Securities and Exchange Commission (the "SEC").
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(iii) "Registrable Securities" means the Conversion Shares issued or
issuable upon conversion of or otherwise pursuant to the Preferred Shares and
any securities issued or issuable as a dividend on or in exchange for or
otherwise in respect to any of the foregoing.
(iv) "Registration Period" means the earliest to occur of (i) the sale of
all the Registrable Securities under an effective Registration Statement or (ii)
the expiration of the holding period that would be applicable thereto under Rule
144(k) under the 1933 Act were the Registrable Securities not held by an
affiliate (as such term is defined in Rule 144 under the 1933 Act) (an
"Affiliate") of the Company.
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(v) "Registration Statement(s)" means a registration statement(s) of the
Company under the 1933 Act covering the resale of the Registrable Securities.
B. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
A. MANDATORY REGISTRATION. The Company shall prepare, and, on or prior
to the date which is one hundred twenty (120) days after the date of the Closing
under the Securities Purchase Agreement (the "Closing Date"), file with the SEC
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a Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of the Registrable Securities), covering the resale of the
Registrable Securities. The number of shares of Common Stock initially included
in such Registration Statement shall equal the number of Conversion Shares that
are then issuable upon conversion of the Preferred Stock, plus the maximum
number of Common Shares which may be
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issuable as a dividend on the Preferred Stock. The Registration Statement, to
the extent allowable under the 1933 Act and the rules and regulations
promulgated thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Preferred Stock to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
B. UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement pursuant to Section 2(A) hereof involves an underwritten offering, the
Company shall have the right to select one legal counsel and an investment
banker or bankers and manager or managers to administer the offering, which
investment banker or bankers or manager or managers and legal counsel shall be
reasonably satisfactory to the Investors.
C. ILLIQUIDITY PAYMENTS BY THE COMPANY. The Company shall use its best
efforts to obtain effectiveness of the Registration Statement as soon as
practicable. The Company agrees to make payments to the Investors ("Illiquidity
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Payments") for each Illiquidity Day (as defined below) in such amounts and at
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such times as provided in this Section 2(C) as partial relief for any damages
incurred by the Investors by reason of any delay in or reduction of their
ability to sell the Registrable Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity). An Illiquidity Day shall
be deemed to have occurred for each trading day that: (i) the Registration
Statement covering the Registrable Securities required to be filed by the
Company pursuant to Section 2(A) hereof is not declared effective by the SEC
after the date that is one hundred eighty (180) days after the Closing Date
(provided that such 180-day period shall be extended for any delays beyond the
periods provided herein which are solely attributable to changes required by the
Investors in the Registration Statement with respect to information relating to
the Investors, including, without limitation, changes to the plan of
distribution, the failure to supply information to be included in the selling
securityholder table of the prospectus or the failure of the Investors to
conduct their review of the Registration Statement pursuant to Section 3(H)
below in a reasonably prompt manner); (ii) sales of all of the Registrable
Securities cannot be made pursuant to the Registration Statement after the
initial date that the Registration Statement has been declared effective by the
SEC (including, without limitation, trading days when sales cannot be made by
reason of the Company's failure to properly supplement or amend the prospectus
included therein in accordance with the terms of this Agreement, but excluding
any trading days during an Allowed Delay (as defined herein)) and prior to the
expiration of the Registration Period; or (iii) the
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Common Stock is not listed or included for quotation on the Nasdaq National
Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq Smallcap"), the New York
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Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") or that
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trading thereon is halted, in each case after the initial date that the
Registration Statement has been declared effective by the SEC; provided that the
occurrence of more than one of the events described in clauses (i), (ii) and
(iii) on the same trading day shall constitute only one Illiquidity Day. Within
five (5) business days following the end of any calendar month in which an
Illiquidity Day has occurred, the Company shall pay to each holder of
Registrable Securities (other than holders of Registrable Securities which are
not entitled to such Illiquidity Payment due to such holders' Registrable
Securities not being included in a Registration Statement as a result of such
holders' failure to deliver information requested by the Company in a timely
manner pursuant to Section 4(A)) an amount in cash for each Illiquidity Day
occurring in such month equal to the product of (x) the sum of the purchase
price of the Preferred Stock outstanding as of the last day of such month and
the market price (based on the average of the closing bid prices of the Common
Stock on Nasdaq, or the securities market or exchange where the Common Stock is
then traded, for the last three trading days of such month) of the Conversion
Shares outstanding as of the last day of such month (other than Conversion
Shares held by holders of Registrable Securities which are not entitled to such
Illiquidity Payment due to such holders' Registrable Securities not being
included in a Registration Statement as a result of such holders' failure to
deliver information requested by the Company in a timely manner pursuant to
Section 4(A)) and (y) in the case of each of the initial sixty (60) Illiquidity
Days (calculated on a cumulative basis), 1/360th of the 12-month London
Interbank Offered Rate (as reported by Bloomberg) prevailing as of the last day
of such month (the "Prevailing Rate") and, in the case of any Illiquidity Days
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in excess of the sixtieth (60th) Illiquidity Day (calculated on a cumulative
basis), 1/360th of the sum of the Prevailing Rate plus 2% per annum.
D. PIGGY-BACK REGISTRATIONS. Subject to the last sentence of this Section
2(D), if at any time prior to the expiration of the Registration Period, the
Company shall determine to file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the 1933 Act
of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor who is entitled to registration rights under this Section
2(D) written notice of such determination and, if within ten (10) days after the
date of such written notice, such Investor
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shall so request in writing, the Company shall include in such Registration
Statement all or any part of the Registrable Securities such Investor requests
to be registered, except that if, in connection with any underwritten public
offering for the account of the Company the managing underwriter(s) thereof
shall impose a limitation on the number of shares of Common Stock which may be
included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate that such limitation is necessary
to facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited number of the
Registrable Securities with respect to which such Investor has requested
inclusion hereunder as the underwriter shall advise. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to
include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to demand registration rights in such Registration Statement or are not entitled
to pro rata inclusion with the Registrable Securities; and provided, further,
however, that any exclusion of Registrable Securities shall be made pro rata
with holders of other securities having the right to include such securities in
the Registration Statement other than (x) holders of securities entitled to
inclusion of their securities in such Registration Statement by reason of demand
registration rights or (y) Microsoft Corp. pursuant to that certain CMG Stock
Purchase Agreement dated December 10, 1996. No right to registration of
Registrable Securities under this Section 2(D) shall be construed to limit any
registration required under Section 2(A) hereof. If an offering in connection
with which an Investor is entitled to registration under this Section 2(D) is an
underwritten offering, then each Investor whose Registrable Securities are
included in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common Stock
included in such underwritten offering. Notwithstanding anything to the contrary
set forth herein, the registration rights of the Investors pursuant to this
Section 2(D) shall only be available in the event and at such times as the
Company fails to timely file, obtain effectiveness or maintain effectiveness of
any Registration Statement to be filed pursuant to Section 2(A) in accordance
with the terms of this Agreement; provided, however, that if the Company files a
Registration Statement pursuant to this Section 2(D), the Company shall take the
steps necessary to obtain the effectiveness of or shall take no steps to cause
the lapse in effectiveness of, as the case may be, of any such Registration
Statement even if a Registration Statement filed pursuant to
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Section 2(A) or this Section 2(D) becomes effective; provided, further, however,
that nothing contained in the preceding two provisos shall (i) be construed as
requiring the Company to register or maintain the registration of any of the
Registrable Securities pursuant to more than one Registration Statement; or (ii)
diminish the Company's obligation to register all of the Registrable Securities.
E. ELIGIBILITY FOR FORM S-3. The Company represents and warrants that it
currently complies with the registrant eligibility and transaction requirements
for the use of Form S-3 for registration of the sale by the Initial Investors
and any other Investors of the Registrable Securities and the Company shall use
its best efforts to file all reports required to be filed by the Company with
the SEC in a timely manner so as to maintain such eligibility for the use of
Form S-3 until the expiration of the Registration Period.
F. ALLOCATION OF REGISTRABLE SECURITIES. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Person's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in the Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities then held by
such Investors.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the
Registrable Securities, the Company shall have the following obligations:
A. The Company shall prepare and file with the SEC on or prior to one
hundred twenty (120) days after the Closing Date, a Registration Statement with
respect to the number of Registrable Securities provided in Section 2(A), and
thereafter use its best efforts to cause such Registration Statement relating to
the Registrable Securities to become effective as soon as practicable after such
filing (but in no event later than one hundred eighty (180) days after the
Closing Date), and keep the Registration Statement effective pursuant to Rule
415 at all times until the expiration of the Registration Period and as a result
of the event or circumstance
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described in the foregoing clause, the legend with respect to transfer
restrictions required under the Agreement is removed. The Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading (except for an untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact made in reliance on and in conformity with written information
furnished to the Company by or on behalf of Investors specifically for use
therein).
B. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectuses used in connection with the Registration
Statements as may be necessary to keep the Registration Statement effective at
all times during the Registration Period except for Allowed Delays, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statements until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in the Registration Statement. In the
event the number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover all of the Registrable
Securities issued or issuable upon conversion of the Preferred Stock, the
Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover all of the Registrable Securities, in each case, as soon as
practicable, but in any event within twenty (20) business days after the
necessity therefor arises. The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
C. The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of each Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2(A), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement (other
than any portion thereof which contains information for which the Company has
sought confidential treatment), and
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(ii) such number of copies of a prospectus, including a preliminary prospectus,
and all amendments and supplements thereto and such other documents as such
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor. The Company will promptly notify
each Investor by facsimile of the effectiveness of each Registration Statement
or any post-effective amendment. The Company will promptly respond to any and
all comments received from the SEC, with a view towards causing each
Registration Statement or any amendment thereto to be declared effective by the
SEC as soon as practicable and shall file an acceleration request as soon as
practicable following the resolution or clearance of all SEC comments or, if
applicable, following notification by the SEC that any such Registration
Statement or any amendment thereto will not be subject to review.
D. The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statements under all other
securities or "blue sky" laws of all jurisdictions in the United States as the
Investors who hold a majority-in-interest of the Registrable Securities being
offered reasonably request, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(D), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its charter or bylaws, which in each case
the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders. The Company shall promptly
notify each Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the
securities or "blue sky" laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threatening of any proceeding for
such purpose.
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E. In the event of an underwritten offering of the Registrable Securities
being offered in the offering, the Company shall select underwriters for the
offering and shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering.
F. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in any
Registration Statement, as then in effect, includes an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and use its best efforts promptly to prepare
a supplement or amendment to any Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request; provided
that, at any time after the date which is 30 days after the Registration
Statement is declared effective by the SEC for not more than thirty (30)
consecutive calendar days (or a total of not more than ninety (90) calendar days
in any twelve (12) month period), the Company may delay the disclosure of
material non-public information concerning the Company (as well as prospectus or
Registration Statement updating) the disclosure of which at the time is not, in
the good faith opinion of the Company, in the best interests of the Company (an
"Allowed Delay"); provided, further, that the Company shall promptly (i) notify
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the Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such investor any
of the facts or circumstances regarding) material non-public information giving
rise to an Allowed Delay and (ii) advise the Investors in writing to cease all
sales under such Registration Statement until the end of the Allowed Delay. Upon
expiration of the Allowed Delay, the Company shall again be bound by the first
sentence of this Section 3(F) with respect to the information giving rise
thereto.
G. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of any Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.
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H. The Company shall permit a single firm of counsel designated by the
holders whose shares make up at least a majority of the Registrable Securities
included in such Registration Statement to review such Registration Statement
and all amendments and supplements thereto (as well as all requests for
acceleration or effectiveness thereof) a reasonable period of time (but not less
than five (5) business days prior to the filing of such Registration Statement
or supplement or amendment thereto) prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects and will
not request acceleration of such Registration Statement without prior notice to
such counsel. The sections of such Registration Statement covering information
with respect to the Investors, the Investor's beneficial ownership of securities
of the Company or the Investors intended method of disposition of Registrable
Securities shall conform in all material respects to the information provided to
the Company by each of the Investors.
I. The Company shall make generally available to its security holders as
soon as practicable, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
J. At the request of a majority of the Investors, the Company shall
furnish, on the date that Registrable Securities are delivered to an underwriter
identified in the Registration Statement, if any, for sale in connection with
any Registration Statement or, if such securities are not being sold by an
underwriter identified in the Registration Statement, on the date of
effectiveness thereof (i) an opinion, dated as of such date, from counsel
representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering,
addressed to the underwriters identified in the Registration Statement, if any,
and the Investors and (ii) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters identified in the
Registration Statement, if any, and the Investors.
K. The Company shall make available for inspection by (i) any Investor,
(ii) any underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Initial Investors, and (iv) one firm of attorneys
retained by all such
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underwriters (collectively, the "Inspectors") all pertinent financial and other
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records, and pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed necessary by each
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Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence; provided, however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (b) the release of such Records is ordered pursuant
to a subpoena or other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(K). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and any Investor) shall be deemed
to limit the Investor's ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.
L. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor prior to making such
disclosure, and allow the Investor, at its expense, to undertake appropri-
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ate action to prevent disclosure of, or to obtain a protective order for, such
information.
M. The Company shall (i) cause all the Registrable Securities covered by
the Registration Statement to be listed on each national securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) to the extent the securities of the
same class or series are not then listed on a national securities exchange,
secure the designation and quotation of all the Registrable Securities covered
by the Registration Statement on Nasdaq or, if not eligible for Nasdaq on the
Nasdaq SmallCap and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. as such with respect to such Registrable Securities.
N. The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
O. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing underwriter or
underwriters, if any, or the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the Investors
may request, and, within three (3) business days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver to the transfer agent for the Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) an instruction in the form attached hereto as Exhibit 1
and an opinion of such counsel in the form attached hereto as Exhibit 2.
P. At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and any prospectus used in connection
with the Registration Statement as may be necessary in order to supplement the
plan of distribution set forth in such Registration Statement.
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Q. Any Registration Statement shall include a section entitled "Plan of
Distribution", which section shall include the description substantially in the
form attached hereto as Exhibit 3, subject to any comments or requirements of
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the SEC.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations.
A. Each Investor shall promptly furnish (but in no event later than three
(3) business days prior to the filing of any Registration Statement or
amendment(s) or supplement(s) thereto with respect to the Registrable
Securities) to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least six (6)
business days prior to the anticipated filing date of the Registration Statement
and any amendment(s) or supplement(s) thereto, the Company shall notify each
Investor of the information the Company requires from each Investor and such
investor shall supply or cause its representatives to supply such information
within three (3) business days; provided, however, any Investor which fails to
deliver to the Company the information referred to in the first sentence of this
paragraph prior to the filing of the Registration Statement or amendment(s) or
supplement(s) thereto shall bear the cost of any additional Registration
Statement or amendment(s) or supplement(s) thereto which the Company is required
to file due solely to such failure; provided, further, however, that the failure
of any Investor to provide such information shall not delay or otherwise prevent
the Company from the filing of the Registration Statement or amendment(s) or
supplement(s) thereto.
B. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
C. In the event all of the Investors determine to engage the services of
an underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the
13
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
D. Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(F) or 3(G),
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(F) or 3(G) or notice from the Company that
such supplement or amendment is not necessary and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
E. No Investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
F. At any time after the date which is thirty (30) days after the date
the Registration Statement is declared effective by the SEC, the underwriters in
connection with any firm commitment underwritten public offering of the Common
Stock resulting in gross proceeds to the Company of at least $125,000,000 led by
at least one underwriter of nationally recognized standing (a "Qualified Public
----------------
Offering") shall have the right to require that the Investors enter into an
- --------
agreement (a "Lock-Up Agreement") restricting the Investors from selling
-----------------
Registrable Securities pursuant to the Registration Statement in any public sale
for a period not to exceed ninety (90) days following the consummation of such
Qualified Public Offering (the "Underwriters Lock-Up Period"); provided that
---------------------------
such underwriters deem this to be reasonably necessary to effect such Qualified
Public Offering; and further, provided that all of the Company's directors,
executive officers and affiliates shall have also agreed to
14
similar restrictions. The Investors shall be subject to no more than one such
restriction in each twelve (12) month period during the Registration Period.
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, the
fees and disbursements of counsel for the Company, and the reasonable fees and
reasonable disbursements of up to one counsel selected by the Initial Investors
pursuant to Sections 2(B) and 3(H) hereof shall be borne by the Company
(provided that the reasonable fees and reasonable disbursements of the counsel
selected by the Initial Investors pursuant to Section 3(H) to be paid by the
Company in connection with the Registration Statement shall not exceed $15,000),
whether or not the Registration Statement is declared effective by the SEC.
6. INDEMNIFICATION. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
A. To the extent permitted by law, the Company will indemnify, hold
harmless and defend: (i) each Investor who holds such Registrable Securities,
(ii) the directors, officers, partners, employees, agents and each person who
controls any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), if any, (iii) any underwriter
--------
(as defined in the 1933 Act) for the Investors (subject to the Company receiving
customary indemnification from any such underwriter), and (iv) the directors,
officers, partners, employees and each person who controls any such underwriter
within the meaning of the 1933 Act or the 1934 Act, if any (each, an
"Indemnified Person"), against any joint or several losses, claims, damages,
------------------
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
------
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light
15
of the circumstances under which the statements therein were made, not
misleading; or (iii) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act, any other securities laws including without limitation,
any state securities laws, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Subject to the
----------
restrictions set forth in Section 6(C) with respect to the number of legal
counsel, the Company shall reimburse the Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with such Registration Statement or preliminary
or final prospectus or any such amendment thereof or supplement thereto; (ii)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld; and (iii) with respect to any preliminary
prospectus, shall not inure to the benefit of any Indemnified Person if the
untrue statement or omission or alleged untrue statement or omission of a
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, such corrected
prospectus was timely made available by the Company pursuant to Section 3(C)
hereof, and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a Violation and such
Indemnified Person, notwithstanding such advice, used it. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors.
B. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees severally and not jointly to indemnify,
hold harmless and defend, to the same extent and in the same manner set forth in
Section 6(A), the Company, each of its directors, each of its officers who signs
the Registration Statement, each person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (an "Indemnified
-----------
Party"), against any Claim to which any
- -----
16
of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim arises out of or is based upon any Violation by such
Investor, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement or preliminary or final prospectus or any such
amendment or supplement thereof or thereto; and subject to Section 6(C) such
Investor will reimburse any legal or other expenses promptly as such expenses
are incurred and are due and payable reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(B) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Agreement (including this Section 6(B) and Section 7) for only that amount
as does not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(B) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
C. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel reasonably satisfactory to the Indemnified Person
or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflict of
17
interest under applicable rules of professional conduct. The indemnifying party
shall pay for up to one separate legal counsel for the Indemnified Persons or
the Indemnified Parties, as applicable, and such legal counsel shall be selected
by Investors holding a majority-in-interest of the Registrable Securities
included in the Registration Statement to which the Claim relates (with the
approval of a majority-in-interest of the Initial Investors), if the Investors
are entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is actually prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
D. The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to law.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of such fraudulent misrepresentation, and (iii) contribution
(together with any indemnification or other obligations under this Agreement) by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities pursuant to such Registration Statement.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit the investors
to sell
18
securities of the Company to the public without registration ("Rule 144"), the
--------
Company agrees to:
A. make and keep public information available, as those terms are
understood and defined in Rule 144;
B. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(C) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
C. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be
automatically assignable by the Investors to any transferee of all or any
portion of Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, prior to such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being transferred
or assigned, (iii) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws, (iv) at or before the time
the Company receives the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein, (v) such transfer shall have
been made in accordance with the applicable requirements of the Securities
Purchase Agreement, (vi) such transfer shall have been conducted in accordance
with all applicable Federal and State securities laws and (vii) such transferee
shall be an "Accredited Investor" as that term defined in Rule 501 of Regulation
D promulgated under the 1933 Act.
19
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company, each of the Initial Investors (to the extent
such Initial Investor still owns Registrable Securities) and Investors who hold
a majority-in-interest of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS. A. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record or
beneficially such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Registrable Securities, the Company shall act upon the basis
of an instruction, notice or election received from the registered owner of such
Registrable Securities and the Company shall have no liability for following
instructions from the registered owner of the Registrable Securities and the
registered owner by providing such instructions agrees to indemnify the Company
in accordance with the provisions of Section 6(B).
B. Any notices required or permitted to be given under the terms hereof
shall be sent overnight by express mail or delivered personally or by courier
(including an overnight delivery service) or by facsimile and shall be effective
upon receipt, if delivered by overnight express mail, personally or by courier
(including an overnight delivery service) or by facsimile, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Attention: Chief Executive Officer
Facsimile: (978) 684-3618
With copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
20
919 Third Avenue
New York, NY 10022
Attention: Morris J. Kramer, Esq.
David J. Goldschmidt, Esq.
Facsimile: 212-735-2000
If to an Investor: to the address set forth immediately below such Investor's
name on the signature pages to the Securities Purchase Agreement.
C. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
D. This Agreement shall be enforced, governed by and interpreted in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts and the state courts
located in Delaware with respect to any dispute arising under this Agreement or
the transactions contemplated hereby and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such courts. The Company
and each Investor irrevocably waive any defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company and each Investor further
agree that service of process upon a party mailed by first class mail shall be
deemed in every respect effective service of process upon the party in any such
suit or proceeding. Nothing herein shall affect any party's right to serve
process in any other manner permitted by law. The Company and each Investor
agree a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.
E. This Agreement and the Securities Purchase Agreement (including all
schedules and exhibits thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.
F. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the
21
parties hereto and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
G. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
H. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
I. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
J. Except as otherwise provided herein, all consents and other
determinations to be made by the Investors pursuant to this Agreement shall be
made by Investors holding a majority-in-interest of the Registrable Securities.
K. Each of the parties shall pay its own costs and expenses in connection
with the transactions contemplated hereby, whether such transactions are
consummated, except as otherwise specifically provided herein.
L. This Agreement and the obligations of the parties hereunder shall
terminate on the earlier to occur of subclause (i) or (ii) of Section 3(A),
except for any liabilities or obligations under the following Sections 2(C),
3(C), 3(D), 3(J), 3(K), 3(L), 3(M), 5, 6, 7 and 11.
M. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
N. The Company acknowledges that a breach by it of its obligations under
this Agreement will cause irreparable harm to each Investor by vitiating the
intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened
22
breach by the Company of any of the provisions of this Agreement, that each
Investor shall be entitled, in addition to all other available remedies in law
or in equity, to an injunction or injunctions to prevent or cure any breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.
O. The Company agrees to indemnify and hold harmless each of the
Investors and their respective officers, directors, employees and agents for
loss, cost or damages (including reasonable attorney's fees) arising as a result
of or related to any breach or alleged breach by the Company of its obligations
under this Agreement or in connection with the enforcement by such Investor of
any of the Company's obligations hereunder, including the enforcement of this
indemnity.
IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.
CMGI, INC.
By: /s/ Andrew J. Hajducky III
----------------------------
Andrew J. Hajducky III
Executive Vice President, Chief Financial Officer and Treasurer
23
BUYERS:
Wingate Capital Ltd.
By: /s/ Kenneth A. Simpler
Name: Kenneth A. Simpler
Title: Vice President
Date:
FISHER CAPITAL LTD.
By: /s/ Kenneth A. Simpler
Name: Kenneth A. Simpler
Title: Vice President
Date:
Westgate International, L.P.
By: Martley International, Inc. D Attorney in Fact
By: /s/ Elliot Greenberg
Name: Elliot Greenberg
Title: Vice-President
Date:
The Liverpool Limited Partnership
By: Liverpool Associates, Ltd., its General Partner
By: /s/ Elliot Greenberg
Name: Elliot Greenberg
Title: Vice-President
Date:
24
Silver Oak Capital, L.L.C.
As agent for and on behalf of the entities listed on Schedule 1
By: /s/ Michael L. Gordon
---------------------------
Name: Michael L. Gordon
Title: Managing Member
Date: 6/29/99
RGC International Investors, LDC
Rose Glen Capital Management, L.P.
By: RGC General Partner Corp.
By: /s/ Wayne Bloch
Name: Wayne Bloch
Title: Managing Director
Date:
25