1
Exhibit 10.18
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of November 24, 1999 by and
between FLONETWORK INC., a corporation incorporated under the laws of the
Province of Ontario, Canada (the "Company"), CG ASIAN-AMERICAN FUND, L.P., a
limited partnership organized under the laws of the Cayman Islands, and
Princeton Global Fund, L. P., a limited partnership organized under the laws of
the Cayman Islands (collectively, "Sycamore Ventures"), 1206832 ONTARIO INC., a
corporation incorporated under the laws of Ontario ("SOFTECH"), BANK OF MONTREAL
CAPITAL CORPORATION, incorporated under the laws of Canada ("BMCC"), VENTURES
WEST VI LIMITED PARTNERSHIP, a partnership organized under the laws of British
Columbia ("VWVI") (BMCC and VWVI collectively referred to as "Ventures West")
CNET, Inc., a corporation incorporated under the laws of the State of Delaware,
PAUL CHEN, MINA CHEN and PI-HSIA HSIAO and the other shareholders of the Company
listed on Annex I (together, the "Investors").
WHEREAS, concurrently herewith certain of the Investors are purchasing
from the Company, and the Company is selling to such Investors, Units comprised
of Class D Preferred Shares of the Company and Warrants, all upon the terms and
conditions of a Unit Purchase Agreement dated as of the date hereof (the "Share
Purchase Agreement") among the Company and such Investors.
WHEREAS, the Company has agreed to provide the Investors with certain
registration rights with respect to the common shares of the Company held by
such Investors as of the date hereof or issuable upon conversion or exercise of
certain securities held by such Investors as of the date hereof.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
"Holder" means any Investor owning Registrable Securities or any
assignee thereof in accordance with Section 11 of this Agreement; and
"Registrable Securities" means (1) all presently outstanding
common shares in the capital of the Company ("Common Shares"), (2) the Common
Shares issuable upon the conversion of the Company's redeemable, retractable
class A preferred shares (the "Class A Preferred Shares"), 5% cumulative,
voting, convertible class B preferred shares (the "Class B Preferred Shares"),
class C preferred shares (the "Class C Preferred Shares") or 10% non-cumulative,
voting, convertible class D preferred shares (the "Class D Preferred Shares")
presently outstanding and upon exercise of all warrants of the Company existing
as of or issued
2
on the date hereof (the "Warrants"), (3) the shares issuable pursuant to the
Option Agreement dated September 15, 1999 between the Company and CNET, Inc.
(the "CNET Option"), and (4) any other Common Shares issued in respect of such
shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that Common Shares
which are Registrable Securities shall cease to be Registrable Securities upon
(i) any sale pursuant to a Registration Statement or Rule 144 under the
Securities Act or (ii) any sale in any manner to a person or entity which by
virtue of Section 11 of this Agreement is not entitled to the rights provided by
this Agreement. Wherever reference is made in this Agreement to a request or
consent of holders of a certain percentage of Registrable Securities, the
determination of such percentage shall include Common Shares issuable upon
conversion of the Class A Preferred Shares, Class B Preferred Shares, Class C
Preferred Shares or Class D Preferred Shares even if such conversion has not
been effected and issuable upon exercise of the Warrants or the CNET Option even
if such exercise has not been effected.
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.
"Equity Securities" means all Common Shares and all securities directly
or indirectly convertible into or exercisable for Common Shares,
including, without limitation, the Warrants and the CNET Option.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus
supplement, including post-effective amendments, and all materials
incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Qualified Public Offering" means the completion of an offering of
securities of the Company to the public led by an underwriter chosen
solely by the board of directors of the Company pursuant to a
prospectus or registration statement filed with applicable securities
regulatory authorities including the Ontario Securities Commission
and/or the Commission, with gross proceeds from the sale of such
securities of at least Twenty Million Dollars (US) and which is priced
to reflect a pre-money valuation (understood as the total number of
fully diluted Equity Securities outstanding (including for this purpose
shares issuable under a stock option or purchase plan approved by the
Board of Directors of the Company) immediately prior to such offering
multiplied by the price per share at which such securities are sold to
the public in such offering) of not less than One Hundred Twenty-Five
Million Dollars (US).
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of
securities of the Company (other than a registration statement on Form
S-8 or Form S-4, or their successors, or any other form for a similar
limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation).
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they
2
3
each may, from time to time, be in effect.
2. Requests for Registration. If the Company becomes a
publicly listed company in the United States, the following shall apply at any
time six months after the closing of the Company's Qualified Public Offering:
2.1 Subject to Section 2.2., if the Company receives a written
request from (i) Holders of at least 51% of the Registrable Securities then held
by Holders or (ii) in the case of a request made after a registration requested
pursuant to this paragraph has been effected hereunder, Holders of at least 25%
of the Registrable Securities then held by Holders, that the Company file a
registration statement under the Securities Act covering the registration of at
least 20% of the Registrable Securities then outstanding to be distributed
pursuant to an underwriting and having a reasonably anticipated aggregate
offering price, net of underwriting discounts and commissions, greater than
US$10,000,000 (based on the then current market price), then upon receipt of
such request the Company shall, within ten (10) days of the receipt thereof,
give written notice of such request to all Holders, and shall use its best
efforts to effect as soon as practicable, and in any event within 90 days of the
receipt of such request will file the registration under the Securities Act of
all Registrable Securities which the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company. The Company shall
keep each Registration Statement completed pursuant to this paragraph effective
for ninety (90) days plus any period for which sales are deferred pursuant to
Section 2.6 below.
2.2 Upon the written request by (i) Holders of at least 51% of
the Registrable Securities then held by Holders or (ii) in the case of a request
made after a registration requested pursuant to Section 2.1 has been effected
hereunder, Holders of at least 25% of the Registrable Securities then held by
Holders, that the Company file a registration statement on Form S-3, Form F-3 or
any similar short-form registration statement available to the Company under the
Securities Act covering the registration of Registrable Securities with a
reasonably anticipated aggregate offering price, net of underwriting discounts
and commissions, greater than US$2,500,000 (based on the then current market
price), then the Company shall, within ten (10) days of the receipt thereof,
give written notice of such request to all Holders, and shall use its best
efforts to effect as soon as practicable, and in any event within 90 days of the
receipt of such request will file, the registration under the Securities Act of
all Registrable Securities which the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company. The Company shall
keep each registration statement completed pursuant to this paragraph effective
for ninety (90) days plus any period for which sales are deferred pursuant to
Section 2.7 below.
2.3 If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to Section 2.1 or
2.2, as the case may be, and the Company shall include such information in its
written notice referred to in Section 2.1 or 2.2. The right of any Holder to
include its Registrable Securities in such registration pursuant to Section 2.1
or 2.2, as the case may be, shall be conditioned upon such other Holder's
participation in such underwriting on the terms set forth herein.
3
4
2.4 If the Company desires that any officers or directors of
the Company holding securities of the Company be included in any registration
for an underwritten offering requested pursuant to Section 2.1 or 2.2 or if
other holders of securities of the Company who are entitled, by contract with
the Company, to have securities included in such a registration (the "Other
Holders") request such inclusion, the Company may include the securities of such
officers, directors and Other Holders in such registration and underwriting on
the terms set forth herein. The Company shall (together with all Holders,
officers, directors and Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form (including, without limitation, customary indemnification and contribution
provisions on the part of the Company) with the managing underwriter.
Notwithstanding any other provision of this Section, if the managing underwriter
advises the Company that the inclusion of all shares requested to be registered
would adversely affect the offering, the securities of the Company held by
officers or directors of the Company (other than Registrable Securities held by
Holders) and the securities held by Other Holders (other than Registrable
Securities held by Holders) shall be excluded from such registration and
underwriting to the extent deemed advisable by the managing underwriter, and if
a further limitation on the number of shares is required, the number of shares
that may be included in such registration and underwriting shall be allocated
among all Holders of Registrable Securities requesting registration in
proportion, as nearly as practicable, to the respective number of Registrable
Securities held by them at the time of the request for registration. If any
Holder of Registrable Securities, officer, director or Other Holder who has
requested inclusion in such registration as provided above disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, and the securities so withdrawn shall also be
withdrawn from registration. If the managing underwriter has not limited the
number of Registrable Securities or other securities to be underwritten, the
Company may include securities for its own account in such registration if the
managing underwriter so agrees and if the number of Registrable Securities and
other securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
2.5 The Holders shall have the right to select the managing
underwriter(s) for any underwritten offering requested pursuant to Section 2.1
or 2.2, subject to the reasonable approval of the Company.
2.6 The Company is obligated to effect only two (2)
registrations pursuant to Section 2.1 and only six (6) registrations pursuant to
Section 2.2, provided, however, that the Company is not obligated to effect a
registration statement pursuant to Section 2.2 more than once in any six month
period. A Registration Statement shall not be counted until such time as such
Registration Statement has been declared effective by the Commission (unless the
Holders withdraw their request for such registration (other than as a result of
information concerning the business or financial condition of the Company which
is made known to the Holders after the date on which such registration was
requested) and elect to pay the registration expenses therefor pursuant to
Section 6).
2.7 Notwithstanding the foregoing, if the Company shall
furnish to the Holders requesting the filing of a registration statement
pursuant to this Section 2 a certificate
4
5
signed by the Chief Executive Officer of the Company stating that the Company is
engaged or has plans to engage in a registered public offering or is engaged in
any other activity which, in the good faith determination of the Company's Board
of Directors, would be adversely affected by the requested registration then the
Company shall have the right to defer such filing for a period of not more than
120 days after receipt of the request of the Investors; provided, however, that
the Company may not utilize this right for more than 120 days in total in any
twelve month period; and provided further that if the Company proposes to and
files a Registration Statement as to which Holders have rights under Section 3
hereunder, the Company shall have no obligation to effect such requested filing
and registration by the Holders at all (and the deferral provisions of this
Section 2.5 shall not be deemed to have been invoked by the Company).
3. Company Registration. (a) Whenever the Company proposes to
file a Registration Statement (other than a Registration Statement filed
pursuant to Section 2) at any time and from time to time, it will, prior to such
filing, give written notice to all Holders of its intention to do so; provided,
that no such notice need be given if no Registrable Securities of the Holders
are to be included therein as a result of a determination of the managing
underwriter pursuant to Section 3(b). Upon the written request of a Holder or
Holders given within 20 days after the Company provides such notice (which
request shall state the intended method of disposition of such Registrable
Securities), the Company shall cause all Registrable Securities which the
Company has been requested by such Holder or Holders to register to be
registered under the Securities Act in such registration; provided that the
Company shall have the right to postpone or withdraw any registration effected
pursuant to this Section 3 without obligation to any Holder.
(b) If the registration for which the Company gives notice
pursuant to Section 3(a) is a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 3(a). In such event, the right of any Holder to
include its Registrable Securities in such registration pursuant to Section 3
shall be conditioned upon such Holder's participation in such underwriting on
the terms set forth herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for the
underwriting by the Company. Notwithstanding any other provision of this Section
3, if the managing underwriter determines that the inclusion of all shares
requested to be registered would adversely affect the offering, the Company may
limit the number of Registrable Securities to be included in the registration
and underwriting. The Company shall so advise all Holders of Registrable
Securities requesting registration, and the number of shares that are entitled
to be included in the registration and underwriting shall be allocated in the
following manner. The securities of the Company held by holders other than
Holders and Other Holders shall be excluded from such registration and
underwriting to the extent deemed advisable by the managing underwriter, and, if
a further limitation on the number of shares is required, the number of shares
that may be included in such registration and underwriting shall be allocated
among all Holders and Other Holders requesting registration in proportion, as
nearly as practicable, to the respective number of Common Shares (on an as
converted basis) which they held at the time the Company gives the notice
specified in Section 3(a); provided that if the registration and underwriting is
being effected by the Company at the request of Other Holders pursuant to rights
similar to the rights of the Holders under Sections 2.1 and 2.2 hereof then the
5
6
Registrable Securities of the Holders shall be excluded from the registration
and underwriting before any shares of the Other Holders. If any Holder or Other
Holder would thus be entitled to include more securities than such Holder or
Other Holder requested to be registered, the excess shall be allocated among
other requesting Holders and Other Holders pro rata in the manner described in
the preceding sentence. If any Holder of Registrable Securities or any officer,
director or Other Holder disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company, and any
Registrable Securities or other securities so excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) Notwithstanding the foregoing, the Company shall not be
required, pursuant to this Section 3, to include any Registrable Securities of
any Holder in a Registration Statement if such Registrable Securities can then
be sold pursuant to Rule 144(k) under the Securities Act.
4. Obligations of the Company. Whenever required under this
Agreement to effect the registration of any of the Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
4.1 Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Investors, keep such registration statement effective for up to ninety
(90) days.
4.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of the
Registrable Securities covered by such registration statement.
4.3 Furnish to the Holders of the Registrable Securities
covered by such registration statement such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of such Registrable Securities.
4.4 Use its best efforts to register and qualify the
Registrable Securities covered by such registration statement under such other
securities or Blue Sky laws of such states or jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
4.5 If the Company has delivered a Prospectus to the selling
Holders and after having done so the Prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
selling Holders and, if requested, the selling Holders shall immediately cease
making offers of Registrable Securities and return all Prospectuses to the
6
7
Company. The Company shall promptly provide the selling Holders with revised
Prospectuses and, following receipt of the revised Prospectuses, the selling
Holders shall be free to resume making offers of Registrable Securities.
4.6 In the event that, in the judgment of the Company, it is
advisable to suspend use of a Prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and to which the Company believes public disclosure would be
detrimental to the Company, the Company shall notify all selling Holders to such
effect, and, upon receipt of such notice, each such selling Holder shall
immediately discontinue any sales of Registrable Securities pursuant to such
Registration Statement until such selling Holder has received copies of a
supplemented or amended Prospectus or until such selling Holder is advised in
writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Notwithstanding anything
to the contrary herein, the Company shall not exercise its rights under this
Section to suspend sales of Registrable Securities for a period in excess of 120
days in any 12-month period.
5. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the selling Holders shall furnish to the Company such information regarding
them, the Registrable Securities held by them, and the intended method of
disposition thereof as shall be required to effect the registration of such
Holder's Registrable Securities.
6. Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2.1 and 2.2 of
this Agreement, including (without limitation) all registration, filing and
qualification fees, printers and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of counsel
for the selling Holders selected by them shall be borne by the Company,
provided, however, that if a registration under Section 2.1 or 2.2 is withdrawn
at the request of the Holders (other than as a result of information concerning
the business or financial condition of the Company which is made known to the
Holders after the date on which such registration was requested under Section
2.1 or 2.2, the requesting Holders shall pay the Registration expenses pro rata
in accordance with the number of their Registrable Securities included in such
registration.
7. Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to registrations pursuant
to Section 3 or 2.4 of this Agreement for each Holder (which right may be
assigned as provided in Section 10 of this Agreement), including (without
limitation) all registration, filing, and qualification fees, printers and
accounting fees relating or allocable thereto and fees and disbursements of
counsel up to US$7,500 for the selling Holders selected by them, but excluding
underwriting discounts and commissions relating to the Registrable Securities.
7
8
8. Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
8.1 To the extent permitted by law, the Company will indemnify
and hold harmless each Holder selling Registrable Securities pursuant to a
Registration Statement, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "1934 Act"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus (but only if such is not corrected in the final
prospectus) contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading (but
only if such is not corrected in the final prospectus), or (iii) any violation
or alleged violation by the Company in connection with the registration of such
Registrable Securities under the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law; and the Company will reimburse to each
such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 8.1 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
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
8.2 To the extent permitted by law, each Holder selling
Registrable Securities pursuant to a Registration Statement will indemnify and
hold harmless the Company, each of its directors, and officers, each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling Registrable Securities in such
registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, 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 by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse, as incurred, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 8.2 of this Agreement, in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 8.2 shall not apply to amounts paid in
8
9
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this Section 8.2 exceed the net proceeds from the offering received by
such Holder.
8.3 Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim as to which indemnity may be sought, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, 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
the defense thereof with counsel mutually satisfactory to the parties (which
approval shall not be unreasonably withheld); provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 8, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 8. 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 of such claim or
litigation, and no indemnified party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
8.4 The obligations of the Company and Holders under this
Section 8 shall survive the completion of any offering of Common Shares in a
registration statement under this Agreement, and otherwise.
9. Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Securities Act and any other rule or regulation of the Commission that may
at any time permit a Holder to sell Registrable Securities of the Company to the
public without registration or pursuant to a registration on Form S-3 or F-3,
the Company agrees to:
9.1 make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of Registrable Securities to the general public;
9
10
9.2 register its Common Shares under Section 12 of the 1934
Act, such action to be taken as soon as practicable after the end of the fiscal
year in which the first registration statement filed by the Company for the
offering of Registrable Securities to the general public is declared effective;
9.3 file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
1934 Act; and
9.4 furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Securities Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or as to its
qualification that it qualifies as a registrant whose Registrable Securities may
be resold pursuant to Form S-3 or Form F-3 (at any time after it so qualifies),
(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 in availing any Holder of any rule or
regulation of the Commission which permits the selling of any such Registrable
Securities without registration or pursuant to such form.
10. Transfers of Rights. This Agreement, and the rights and
obligations of each Holder hereunder, may be assigned by such Holder to (i) any
person or entity to which at least 50,000 Registrable Securities are transferred
by such Holder, (ii) to any partner or stockholder of such Holder or (iii) to
any person or entity to which all of the Registrable Securities of the selling
Holder are transferred; provided any such transferee agrees in writing with the
Company to be subject to this Agreement as a "Holder."
11. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Investors, enter into any agreement with any holder or
prospective holder of any Registrable Securities of the Company which would
allow such holder or prospective holder (a) to include such Registrable
Securities in any registration filed under Section 2 or Section 3 of this
Agreement, unless under the terms of such agreement, such holder or prospective
holder may include such Registrable Securities in any such registration only to
the extent that the inclusion of his Registrable Securities will not reduce the
amount of the Registrable Securities of the Holders which is included or (b) to
make a demand registration which could result in such registration statement
being declared effective within one hundred twenty (120) days of the effective
date of any registration effected pursuant to Section 2 of this Agreement.
12. Restricted Period. All Holders who are parties to this
Agreement shall agree not to offer, sell or otherwise transfer or dispose of any
of the Company's securities, or engage in hedging transactions with respect
thereto, for a period of one hundred eighty (180) days after a public offering
by the Company, and agree to sign any agreement to such effect in customary form
as requested by the Company's managing underwriter.
10
11
13. Canadian Public Offerings.
(a) In the event that the Company undertakes its initial
underwritten public offering of Common Shares in one or more provinces of
Canada, the Company shall, prior to the issuance of the Registrable Securities
and within 60 days of the date of issuance of a receipt issued by the last of
the provincial securities commissions of such provinces in respect of the final
prospectus filed in connection with such offering, qualify through the filing of
a prospectus the distribution of the Registrable Securities in each such
province of Canada.
(b) In the event that the Company undertakes its initial
underwritten public offering of Common Shares in one or more provinces of
Canada, it shall provide the Holders with the right to require the resale of its
Registrable Securities pursuant to any prospectus filed by the Company in one or
more provinces of Canada on the terms set forth in Section 3, mutatis mutandis.
14. Additional Registrable Securities. The definition of
"Registrable Securities" in Section 1.2 hereof may be amended to include
additional Common Shares or Common Shares issuable upon the conversion of any
other security of the Company if (i) the holders of a majority of Registrable
Securities consent to such amendment, (ii) the Company consents to such
amendment, and (iii) the holders of any such security of the Company agrees to
become a party hereunder and be bound by all of the provisions of this
Agreement.
15. General.
15.1 Termination. This Agreement shall terminate and be of no
further force and effect on that date which is 5 years after the Company's
Qualified Public Offering.
15.2 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
15.3 Specific Performance. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each Investor shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
15.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York (without
reference to the conflicts of law provisions thereof) and the parties hereto
accept the non-exclusive jurisdiction of the federal and state courts of the
State of New York.
15.5 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two calendar days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one
11
12
calendar day after being sent via a reputable nationwide overnight courier
service guaranteeing next calendar day delivery, in each case to the intended
recipient as set forth below:
(a) in the case of the Company, to it at:
FloNetwork Inc.
260 King Street East
Building B
Toronto, Ontario
M5A 1K3
Attention: Wilson Lee, Chief Financial Officer
Facsimile: (416) 369-9037
with copies to:
Blake, Cassels & Graydon
Box 25, Commerce Court West
Toronto, Ontario
M5L 1A9
Attention: Chris Hewat
Facsimile: (416) 863-2653
and to
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: John A. Burgess
Facsimile: (617) 526-5000
(b) in the case of CG Asian-American Fund, L.P., Princeton Global Fund,
L.P., Kilin To, John R. Whitman, Whitman Children Irrevocable Trust,
Kit C. Wong, Simon Wong, Richard Chong, Michael Horgan, Peter Gerry,
David Lichtenstein and Subir Ray, to it, him, or her at:
Sycamore Management Corp.
989 Lenox Drive, Suite 208
Lawrenceville, New Jersey 08648
Attention: Kit C. Wong
Facsimile: (609) 219-0101
12
13
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Samuel B. Fortenbaugh III
Facsimile: (212) 309-6273
(c) in the case of Kit-Yee Lam, to her at:
308 Ivy Hill Ct.
Muttontown, New York 11753
Facsimile: (516) 938-0940
(d) in the case of Telepeak Investment Limited, to it at:
Technology Link Capital Corp.
111 South Bedford Street, Suite 101
Burlington, MA 01803-5145
Attention: I-Hwa Shiue
Facsimile: (781) 359-9705
(e) in the case of SOFTECH, to it at:
McLean Watson Capital Inc.
Suite 1410, Box 129
1 First Canadian Place
Toronto, Ontario
M5X 1A4
Attention: Glenn Rumbell
Fax (416) 363-2010
13
14
with a copy to:
LaBarge Weinstein
Xerox Tower
333 Preston Street
11th Floor
Ottawa, Ontario K1S 5N4
Attention: Randy Taylor
Telephone: (613) 231-3000
Facsimile: (613) 231-3900
(f) in the case of BMCC, to it at:
Bank of Montreal Capital Corporation
c/o Ventures West Management TIP Inc.
Suite 1200, 20 Adelaide Street East
Toronto, Ontario M5C 2T6
Attention: Ted Anderson
Facsimile: 416-861-0866
with a copy to LaBarge Weinstein at the address above;
(g) in the case of VWVI, to it at:
Ventures West VI Limited Partnership
c/o Ventures West Management VI Ltd.
Suite 1200, 20 Adelaide Street East
Toronto, Ontario M5C 2T6
Attention: Ted Anderson
Facsimile: 416-861-0866
with a copy to LaBarge Weinstein at the address above;
(h) in the case of CNET, to it at:
150 Chestnut St.
San Francisco, CA 94111;
14
15
(i) in the case of Paul Chen and Pi-Hsia Hsiao, to them at:
5400 Fallingbrook Drive
Missisauga, Ontario
L5V 1P7
Facsimile: (416) 369-9037;
(j) in the case of a notice to Mina Chen, to her at:
Doubleday Publishing
1540 Broadway
New York, New York 10036; and
(k) in the case of any other Investor, at the address set forth on Annex I
hereto.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
15.6 Complete Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
15.7 Amendments and Waivers. Any term of this Agreement may be amended
or terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least a majority of the Registrable Securities held by all of the Holders;
provided, that this Agreement may be amended with the consent of the holders of
less than all Registrable Securities only in a manner which applies to all such
holders in the same fashion. Any such amendment, termination or waiver effected
in accordance with this Section shall be binding on all parties hereto, even if
they do not execute such consent. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
15.8 Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
15
16
15.9 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
15.10 Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
[SIGNATURE PAGE FOLLOWS]
16
17
IN WITNESS WHEREOF, the undersigned have executed, or caused to be
executed on their behalf by an agent thereunto duly authorized, this Agreement
as of the date first above written.
/s/ Paul Chen
-----------------------------------------------
PAUL CHEN
/s/ Mina Chen
-----------------------------------------------
MINA CHEN
/s/ Pi-Hsia Hsiao
-----------------------------------------------
PI-HSIA HSIAO
FLONETWORK INC.
By: /s/ Wilson Lee
------------------------------------------
Name: WILSON LEE
Title: CFO
CG ASIAN-AMERICAN FUND, L.P.
by the General Partner of its General Partner,
Sycamore Management Corp.
By: /s/ Kit Wong
------------------------------------------
Name: KIT WONG
Title: Vice President
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
18
PRINCETON GLOBAL FUND, L.P.
by the General Partner of its General Partner,
Princeton Global Capital Management
Company, Ltd.
By: /s/ Subir K. Ray
------------------------------------------
Name: Subir K. Ray
Title: Director
1206832 ONTARIO INC.
By: /s/ Glenn Rumbell
------------------------------------------
Name:
Title:
BANK OF MONTREAL CAPITAL CORPORATION
by its manager, Ventures West Management
TIP Inc.
By: /s/ Edward Anderson
------------------------------------------
Name:
Title:
By: /s/ Mark Dubowitz
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
19
VENTURES WEST VI LIMITED PARTNERSHIP
by its general partner, Ventures West
Management VI, Ltd.
By: /s/ Edward Anderson
------------------------------------------
Name:
Title:
By: /s/ Mark Dubowitz
------------------------------------------
Name:
Title:
TELEPEAK INVESTMENT LIMITED
Telepeak Investments Ltd.
By: /s/ I-Hwa Shuie
------------------------------------------
Name: I-HWA SHUIE
Title: President
/s/ Kilin To
-----------------------------------------------
KILIN TO
/s/ John R. Whitman
-----------------------------------------------
JOHN R. WHITMAN
/s/ Kit C. Wong
-----------------------------------------------
KIT C. WONG
/s/ Kit C. Wong Attorney-in-fact
-----------------------------------------------
SIMON WONG
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
20
/s/ Kit C. Wong Attorney-in-fact
-----------------------------------------------
RICHARD CHONG
/s/ Kit C. Wong Attorney-in-fact
-----------------------------------------------
MICHAEL HORGAN
/s/ Peter G. Gerry
-----------------------------------------------
PETER GERRY
/s/ David Lichtenstein
-----------------------------------------------
DAVID LICHTENSTEIN
/s/ Subir Ray
-----------------------------------------------
SUBIR RAY
/s/ John R. Whitman
-----------------------------------------------
WHITMAN CHILDREN IRREVOCABLE TRUST
CNET, INC.
By: /s/ Shelby W. Bonnie
------------------------------------------
Name: Shelby W. Bonnie
Title: Vice Chairman
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
21
/s/ Kit-Yee Lam
-----------------------------------------------
KIT-YEE LAM
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
22
ONTARIO TEACHERS' PENSION PLAN BOARD
By: /s/ R. Zigrossi
------------------------------------------
Name: ROSEMARY ZIGROSSI
Title: Portfolio Manager, Venture Capital
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
23
ANNEX I
ADDITIONAL INVESTORS
NAME AND ADDRESS OF INVESTOR
Telepeak Investment Limited
Kilin To
John R. Whitman
Whitman Children Irrevocable Trust
Kit C. Wong
Simon Wong
Richard Chong
Michael Horgan
Peter Gerry
David Lichtenstein
Subir Ray
Kit-Yee Lam
Ontario Teachers' Pension Plan Board
Address: 5650 Yonge St., 5th Floor
North York, Ontario
M2M 4H5
Attention: Portfolio Manager, Venture Capital
with a copy to: Legal Counsel, Investments
Facsimile: (416) 730-3771