Exhibit 10.40

 

REGISTRATION RIGHTS AGREEMENT

               This Registration Rights Agreement (the "Agreement") is made and
entered into as of this 3rd day of February, 2006 by and among VitalStream
Holdings, Inc., a Nevada corporation (the "Company"), and the "Investors" named
in that certain Purchase Agreement by and among the Company and the Investors
dated the date hereof (the "Purchase Agreement") to the extent party thereto.

The parties hereby agree as follows:

               1. Certain Definitions.

As used in this Agreement, the following terms shall have the following
meanings:

               "Affiliate" means, with respect to any Person, any other Person
which directly or indirectly Controls, is Controlled by, or is under common
Control with, such Person.

               "Business Day" means a day, other than a Saturday or Sunday, on
which banks in Los Angeles, California are open for the general transaction of
business.

               "Common Stock" shall mean the Company's common stock, par value
$0.001 per share, and any securities into which such shares may hereinafter be
reclassified.

               "Control" (including the terms "controlling", "controlled by" or
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

               "Investors" shall mean the Investors party hereto and any
Affiliate or permitted transferee of any Investor who is a party to this
Agreement and subsequent holder of any Registrable Securities.

               "Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.

               "Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.

               "Register," "registered" and "registration" refer to a
registration made by preparing and filing a Registration Statement or similar
document in compliance with the 1933 Act (as defined below), and the declaration
or ordering of effectiveness of such Registration Statement or document.

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               "Registrable Securities" shall mean the (a) the Shares or other
securities issued or issuable to each Investor or its transferee or designee (i)
upon any distribution with respect to, any exchange for or any replacement of
such Shares or (ii) upon any conversion, exercise or exchange of any securities
issued in connection with any such distribution, exchange or replacement; (b)
securities issued or issuable upon any stock split, stock dividend,
recapitalization or similar event with respect to the foregoing; and (c) any
other security issued as a dividend or other distribution with respect to, in
exchange for, in replacement or redemption of, any of the securities referred to
in the preceding clauses; provided, that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by the
Investors pursuant to Rule 144(k).

               "Registration Statement" shall mean any registration statement of
the Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in such
Registration Statement.

               "Required Investors" means a group of Investors (i) that
collectively hold not less than 60% of the Registrable Securities, and (ii) that
includes each Investor that purchased Shares with a Purchase Price (as defined
in the Purchase Agreement) of $2,000,000 or more and continues to hold no fewer
than 1,000,000 Registrable Securities. For purposes of the purchase and holding
requirements of subsection (ii), the purchases and holdings of all Persons or
investment accounts directed or controlled by a single Person shall be
aggregated, and, with respect to such group of related Persons or investment
accounts, the inclusion requirement of subsection (ii) shall be satisfied if the
group of Investors includes the Person that directs or controls such related
Persons or accounts.

               "SEC" means the U.S. Securities and Exchange Commission.

               "Shares" means the shares of Common Stock issued to the Investors
pursuant to the Purchase Agreement.

               "1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

               "1934 Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

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               2. Registration.

                               (a) Registration Statement. As soon as
practicable following the closing of the purchase and sale of the securities
contemplated by the Purchase Agreement (the "Closing Date") but no later than
March 31, 2006 (the "Filing Deadline"), the Company shall prepare and file with
the SEC one Registration Statement on Form S-1 (or, if Form S-3 is then
available to the Company for the registration of the resale of the Shares, on
Form S-3) for a secondary or resale offering on a continuous basis pursuant to
Rule 415 of the Registrable Securities in an amount at least equal to the number
of Shares. Such Registration Statement shall include the plan of distribution
substantially in the form attached hereto as Exhibit A. Such Registration
Statement also shall cover, to the extent allowable under the 1933 Act and the
rules promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities. The
Registration Statement shall be provided in accordance with Section 3(c) to the
Investors and their counsel prior to its filing or other submission; provided,
however, in the event that the Company receives a notice that the Registration
Statement or amendment to the Registration Statement will not be reviewed by the
SEC, the Company may make immaterial updates to the prior version of the
Registration Statement or amendment and file such updated Registration Statement
or amendment without providing the Investors or their counsel an opportunity to
review the Registration Statement or amendment. If a Registration Statement
covering the Registrable Securities is not filed with the SEC on or prior to the
Filing Deadline, the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.0% of the
aggregate amount invested by such Investor for each 30-day period (or pro rata
for any portion thereof) following the date by which such Registration Statement
should have been filed for which no Registration Statement is filed with respect
to the Registrable Securities. Such payments shall be made on the last day of
each calendar month and shall be in lieu of any other monetary damages the
Investors may seek or obtain as a result of the respective delay; provided,
however, nothing herein shall prohibit an Investor from seeking specific
performance of the Company's obligations under this Agreement. Such payments
shall be made to each Investor in cash.

                               (b) Expenses. The Company will pay all expenses
associated with the registration of the Registrable Securities, including filing
and printing fees, the Company's counsel and accounting fees and expenses, and
fees and expenses (including reasonable counsel fees) associated with clearing
the Registrable Securities for sale under applicable state securities or "blue
sky" laws, listing fees, transfer taxes, fees of transfer agents and registrars,
fees and expenses of one counsel designated by Winslow Management Company, LLC
("Winslow") (with such fees to be included as part of, and not to exceed when
combined with all other fees associated with the Purchase Agreement and the
other Transaction Documents (as defined in the Purchase Agreement), the cap
described in Section 9.5 of the Purchase Agreement). The Company shall not be
required to pay any other fees or expenses of the Investors in connection with
the registration, including, without limitation, discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold.

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                               (c) Effectiveness.

                                              (i) The Company shall use its best
efforts to have the Registration Statement declared effective as soon as
practicable (including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 461 promulgated under the 1933 Act within
three (3) Business Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the SEC that a Registration Statement will not
be "reviewed," or not be subject to further review). The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within two (2) Business Days, after any Registration Statement is
declared effective and shall simultaneously provide the Investors with copies of
any related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A) a Registration Statement
covering the Registrable Securities is not declared effective by the SEC by June
15, 2006 (the "Effectiveness Deadline"), or (B) after a Registration Statement
has been declared effective by the SEC, sales cannot be made pursuant to such
Registration Statement for any reason (including without limitation by reason of
a stop order, or the Company's failure to update the Registration Statement),
but excluding the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions and except as temporarily excused for
the applicable period pursuant to subparagraphs (ii) and (iii) below, then the
Company will make pro rata payments to each Investor, as liquidated damages and
not as a penalty, in an amount equal to 1.0% of the aggregate amount purchase
price paid by such Investor for Shares that continue to be Registrable
Securities for each 30-day period (or pro rata for any portion thereof) during
which sales cannot be made pursuant to such registration statement following the
Effectiveness Deadline. Such payments shall be made within five (5) Business
Days of the end of each partial or full calendar month with respect to which
such payments are due and shall be in lieu of any other monetary damages the
Investors may seek or obtain as a result of the respective delay; provided,
however, nothing herein shall prohibit an Investor from seeking specific
performance of the Company's obligations under this Agreement. Such payments
shall be made to each Investor in cash.

                                              (ii) For not more than twenty (20)
consecutive days or for a total of not more than forty-five (45) days in any
twelve (12) month period, the Company may delay the disclosure of material
non-public information concerning the Company, by suspending the use of any
Prospectus included in any registration contemplated by this Section containing
such information, the disclosure of which at the time is not, in the good faith
opinion of the Chief Executive Officer and Chief Financial Officer of the
Company, upon advice of counsel, in the best interests of the Company (an
"Allowed Delay"); provided, that the Company shall promptly (a) notify 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, (b) advise the Investors in writing to cease all sales
under the Registration Statement until the end of the Allowed Delay and (c) use
its best efforts to terminate an Allowed Delay as promptly as practicable.

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                               (ii) At any time (a) the Company is required to
amend the Registration Statement pursuant to Section 10(a)(3) under the
Securities Act, or (b) the Company is required to amend the Registration
Statement to describe a fundamental change in the information set forth in the
Registration Statement (including, without limitation, any transaction with
respect to which the Company is required to update the Registration Statement to
include financial statements and pro forma financial statements required by Rule
3-05 of Regulation S-X), the Company shall be allowed up to fifteen (15)
Business Days from the date the amendment is required in order to file an
amendment to the Registration Statement and until the sixtieth day following the
date the amendment is required in order to cause the amended Registration
Statement to be effective (such 60-day period, the "Update Delay"); provided,
that the Company shall promptly after the occurrence of the event requiring
amendment (a) notify 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) such
material non-public information giving rise to an Update Delay, (b) advise the
Investors in writing to cease all sales under the Registration Statement until
the end of the Update Delay and (c) use its best efforts to terminate an Update
Delay as promptly as practicable.

                               (d) Underwritten Offering. If the Company elects,
in its discretion, to engage an underwriter with respect to any offering
pursuant to a Registration Statement pursuant to Section 2(a) hereof, the
Company shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be reasonably
satisfactory to the Required Investors.

               3. Company Obligations. The Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with the
terms hereof, and pursuant thereto the Company will, as expeditiously as
possible:

                               (a) use its best efforts to cause such
Registration Statement to become effective and to remain continuously effective
for a period (the "Effectiveness Period") that will terminate upon the earlier
of (i) the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold and (ii) the date on
which all Registrable Securities covered by such Registration Statement may be
sold pursuant to Rule 144(k) and advise the Investors in writing when the
Effectiveness Period has expired;

                               (b) (i) prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep the Registration Statement effective for
the period specified in Section 3(a) and to comply with the provisions of the
1933 Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered thereby and (ii) respond as promptly as
reasonably practicable, and in no event later than ten (10) Business Days to any
comments received from the SEC with respect to the Registration Statement or any
amendment thereto (provided that the Company shall have twenty (20) Business
Days to respond to any SEC comment letter if such letter leads to a restatement
of any financial statements);

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                               (c) provide copies to and permit a single counsel
designated by the Investor holding the largest amount of the Registrable
Securities (which shall be Bingham McCutchen LLP, unless the Company is
otherwise notified) to review each Registration Statement and all amendments and
supplements thereto no fewer than three (3) Business Days prior to their filing
with the SEC and not file any document to which any such counsel reasonably
objects; provided, however, in the event that the Company receives a notice that
the Registration Statement or amendment to the Registration Statement will not
be reviewed by the SEC, the Company may make immaterial updates to the prior
version of the Registration Statement or amendment and file such updated
Registration Statement or amendment without providing such counsel an
opportunity to review the Registration Statement or amendment.

                               (d) furnish to the Investors and their legal
counsel (which may be by email or portable document format (pdf) file) (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company (but not later than two (2) Business Days after
the filing date, receipt date or sending date, as the case may be) one (1) copy
of any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and 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 of any
thereof which contains information for which the Company has sought confidential
treatment or which includes material nonpublic information (with any comment
related to the financial statements of the Company or related policies and
procedures being deemed to be per se material nonpublic information)), and (ii)
such number of copies of a Prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as each Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor that are covered by the related Registration
Statement;

                               (e) in the event the Company selects an
underwriter for the offering, the Company shall enter into and perform its
reasonable obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and contribution
obligations, with the underwriter of such offering;

                               (f) if required by the underwriter, the Company
shall furnish, on the effective date of the Registration Statement (except with
respect to clause (i) below) and on the date that Registrable Securities are
delivered to an underwriter, if any, for sale in connection with the
Registration Statement, (i) (A) in the case of an underwritten offering, an
opinion, dated as of the closing date of the sale of Registrable Securities to
the underwriters, from independent legal 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 and the Investors participating in such underwritten offering or
(B) in the case of an "at the market" offering, an opinion, dated as of or
promptly after the effective date of the Registration Statement to the
Investors, from independent legal counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is customarily
given in a public offering, addressed to the Investors, and (ii) a letter, dated
as of the effective date of such Registration Statement and confirmed as of the
applicable dates described above, 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 (including any Investor deemed to be an
underwriter);

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                               (g) use its best efforts to (i) prevent the
issuance of any stop order or other suspension of effectiveness and, (ii) if
such order is issued, obtain the withdrawal of any such order at the earliest
possible moment;

                               (h) use its best efforts to register or qualify
or cooperate with the Investors and their counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions reasonably requested
by the Investors and do any and all other acts or things necessary or advisable
to enable the distribution in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto to (i) qualify
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(h), (ii) subject itself to general taxation in
any jurisdiction where it would not otherwise be so subject but for this Section
3(h), or (iii) file a general consent to service of process in any such
jurisdiction;

                               (i) if applicable, list all Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system, over-the-counter bulletin board or other
market on which similar securities issued by the Company are then listed;

                               (j) immediately notify the Investors, at any time
when a Prospectus relating to Registrable Securities is required to be delivered
under the 1933 Act, upon discovery that, or upon the happening of any event as a
result of which, the Prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and at the
request of any such holder, promptly prepare and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;

                               (k) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, and take such other actions as may be reasonably necessary to facilitate
the registration of the Registrable Securities hereunder; and

                               (l) with a view to making available to the
Investors the benefits of Rule 144 (or its successor rule) and any other rule or
regulation of the SEC that may at any time permit the Investors to sell shares
of Common Stock to the public without registration, the Company covenants and
agrees to: (i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) six months after
such date as all of the Registrable Securities may be resold pursuant to Rule
144(k) or any other rule of similar effect and (B) such date as all of the
Registrable Securities shall have been resold; (ii) file with the SEC in a
timely manner all reports and other documents required of the Company under the
1934 Act; and (iii) furnish to each Investor upon request, as long as such
Investor owns any Registrable Securities, (A) a written statement by the Company
that it has complied with the reporting requirements of the 1934 Act, (B) a copy
of the Company's most recent Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, and (C) such other information as may be reasonably requested in
order to avail such Investor of any rule or regulation of the SEC that permits
the selling of any such Registrable Securities without registration.

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               4. Due Diligence Review; Information. The Company shall make
available, during normal business hours, for inspection and review by the
Investors, advisors to and representatives of the Investors (who may or may not
be affiliated with the Investors, and who are reasonably acceptable to the
Company), and any underwriter participating in any disposition of shares of
Common Stock on behalf of the Investors pursuant to a Registration Statement or
amendments or supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by
the Investors or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement. Except for disclosures
to any Investor whose representative or Affiliate occupies a seat or has
observation rights with respect to the board of directors of the Company or any
of its subsidiaries, the Company shall not disclose material nonpublic
information to the Investors, or to advisors to or representatives of the
Investors, unless prior to disclosure of such information the Company identifies
such information as being material nonpublic information and provides the
Investors, such advisors and representatives with the opportunity to accept or
refuse to accept such material nonpublic information for review and any Investor
wishing to obtain such information enters into an appropriate confidentiality
agreement with the Company with respect thereto.

               5. Obligations of the Investors.

                               (a) Each Investor shall furnish in writing 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 (or to complete any amendment to any Registration Statement) and
shall execute such documents in connection with such registration as the Company
may reasonably request. At least ten (10) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Investor of the information the Company reasonably requires from such
Investor if such Investor elects to have any of the Registrable Securities
included in the Registration Statement. An Investor shall provide such
information to the Company at least four (4) Business Days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in the Registration
Statement. At least ten (10) Business Days prior to the anticipated filing date
of any pre-effective or post-effective amendment to any Registration Statement
(provided that, if any amendment is filed in response to comment receive by the
SEC, notice within two (2) Business Days the Company's receipt of the SEC
comment shall be sufficient), the Company shall notify each Investor of the
information the Company reasonably requires from such Investor if such Investor
elects to have any of the Registrable Securities included in the Registration
Statement. An Investor shall provide such information to the Company prior to
the later of (i) at least four (4) Business Days prior to the first anticipated
filing date of such Registration Statement, or (ii) two (2) Business Days after
a timely request therefor from the Company, in each case if such Investor elects
to have any of the Registrable Securities included in the Registration
Statement. If any Investor fails to provide information to the Company as
required by this subsection, at all or on a timely basis, and the Company
reasonably expects the Registration Statement or amendment in question to be an
effective version of the Registration Statement, the Company may exclude the
Investor's Registrable Securities from the Registration Statement or amendment
in question without penalty.

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                               (b) Each Investor, by its 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 a
Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from
such Registration Statement.

                               (c) In the event the Company, at the request of
the Investors, determines to engage the services of an underwriter, such
Investor agrees to 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 managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the dispositions of the Registrable Securities.

                               (d) Each Investor agrees that, upon receipt of
any notice from the Company of either (i) the commencement of an Allowed Delay
pursuant to Section 2(c)(ii) or an Update Delay pursuant to Section 2(c)(iii) or
(ii) the happening of an event pursuant to Section 3(j) hereof, such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities, until the
Investor's receipt of the copies of the supplemented or amended prospectus filed
with the SEC and until any related post-effective amendment is declared
effective and, if so directed by the Company, the 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 the Investor's possession of the
Prospectus covering the Registrable Securities current at the time of receipt of
such notice.

                               (e) No Investor may participate in any third
party underwritten registration hereunder unless it (i) agrees to sell the
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 customary 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. Notwithstanding the foregoing, no
Investor shall be required to make any representations to such underwriter,
other than those with respect to itself and the Registrable Securities owned by
it, including its right to sell the Registrable Securities, and any
indemnification in favor of the underwriter by the Investors shall be several
and not joint and limited in the case of any Investor, to the net proceeds
received by such Investor from the sale of its Registrable Securities. The scope
of any such indemnification in favor of an underwriter shall be limited to the
same extent as the indemnity provided in Section 6(b) hereof.

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               6. Indemnification.

                               (a) Indemnification by the Company. The Company
will, notwithstanding any termination of this Agreement, indemnify and hold
harmless each Investor and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the 1933 Act, against any losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof; (ii) any blue sky application
or other document executed by the Company specifically for that purpose or based
upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or information
herein called a "Blue Sky Application"); (iii) 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; or (iv) any violation by the Company
or its agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its agents and relating to action or inaction
required of the Company in connection with such registration and will reimburse
such Investor, and each such officer, director, member, employee or agent and
each such controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information reasonably relied on by the Company and furnished by such Investor
or any such controlling person in writing specifically for use in such
Registration Statement or Prospectus. The Company shall notify the Investors
promptly of the institution of any proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement. Such indemnity
shall survive the transfer of the Registrable Securities by the Investors, but
the right to receive indemnification under this Agreement shall not be
transferable without the express written consent of the Company.

                               (b) Indemnification by the Investors. In
connection with any registration pursuant to the terms of this Agreement, each
Investor will furnish to the Company in writing such information as the Company
reasonably requests concerning the holders of Registrable Securities or the
proposed manner of distribution for use in connection with any Registration
Statement or Prospectus and agrees, severally but not jointly, to indemnify and
hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, stockholders and each person who controls the
Company (within the meaning of the 1933 Act) against any losses, claims,
damages, liabilities and expense (including reasonable attorney fees) resulting
from any untrue statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement or Prospectus or preliminary
prospectus or amendment or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the extent that
such untrue statement or omission is contained in any information reasonably
relied on by the Company and furnished in writing by such Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto. In no event shall the liability of an
Investor be greater in amount than the dollar amount of the proceeds (net of all
expense paid by such Investor in connection with any claim relating to this
Section 6 and the amount of any damages such Investor has otherwise been
required to pay by reason of such untrue statement or omission) received by such
Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.

--------------------------------------------------------------------------------

                               (c) Conduct of Indemnification Proceedings. Any
person entitled to indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless (a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to give notice
promptly as provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure to give notice
promptly shall materially adversely affect the indemnifying party in the defense
of any such claim or litigation. It is understood that the indemnifying party
shall not, in connection with any proceeding in the same jurisdiction, be liable
for fees or expenses of more than one separate firm of attorneys at any time for
all such indemnified parties. No indemnifying party will, except with the
consent of the indemnified party, not to be unreasonably withheld, consent to
entry of any judgment or enter into any settlement that (y) 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, or (z) imposes any monetary or other obligation or restriction on
the indemnified party.

                               (d) Contribution. If for any reason the
indemnification provided for in the preceding paragraphs (a) and (b) is
unavailable to an indemnified party or insufficient to hold it harmless, other
than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder of
Registrable Securities be greater in amount than the dollar amount of the net
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 6 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of the
Registrable Securities giving rise to such contribution obligation. The relative
fault of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.

--------------------------------------------------------------------------------

               7. Miscellaneous.

                               (a) Amendments and Waivers. This Agreement may be
amended only by a writing signed by the Company and the Required Investors. The
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Required
Investors.

                               (b) Notices. All notices and other communications
provided for or permitted hereunder shall be made as set forth in Section 9.4 of
the Purchase Agreement.

                               (c) Assignments and Transfers by Investors. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the Investors and their respective successors and assigns. An Investor may
transfer or assign, in whole or from time to time in part, to one or more
persons its rights hereunder in connection with the transfer of Registrable
Securities by such Investor to such person, provided that such Investor complies
with all laws applicable thereto and provides written notice of assignment to
the Company promptly after such assignment is effected and the assignee executes
a counterpart to this Agreement assuming all rights and obligations of an
Investor hereunder.

                               (d) Assignments and Transfers by the Company.
This Agreement may not be assigned by the Company (whether by operation of law
or otherwise) without the prior written consent of the Required Investors,
provided, however, that the Company may assign its rights and delegate its
duties hereunder to any surviving or successor corporation in connection with a
merger or consolidation of the Company with another corporation, or a sale,
transfer or other disposition of all or substantially all of the Company's
assets to another corporation, without the prior written consent of the Required
Investors, after notice duly given by the Company to each Investor; provided
that such successor corporation assumes the Company's obligations hereunder..

                               (e) Benefits of the Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

                               (f) Counterparts; Faxes. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Agreement may also be executed via facsimile, which shall be deemed an original.

                               (g) Titles and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

--------------------------------------------------------------------------------

                               (h) Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof but shall
be interpreted as if it were written so as to be enforceable to the maximum
extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.

                               (i) Further Assurances. The parties shall execute
and deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained.

                               (j) Entire Agreement. This Agreement is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

                               (k) Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California without regard to
the choice of law principles thereof. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of California
located in Orange County or the United States District Court for the Central
District of California for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.

--------------------------------------------------------------------------------

                               (l) Independent Nature of Investors' Obligations
and Rights. Except as otherwise set forth in another written agreement or other
document signed by the respective Investor(s), (i) the obligations of each
Investor under this Agreement are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this Agreement, (ii)
nothing contained herein, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement, and (iii) except
as set forth in Section 7(a) of this Agreement, each Investor shall be entitled
to independently protect and enforce its rights, including without limitation,
the rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such
purpose. Each Investor has been represented by its own separate legal counsel in
their review and negotiation of this Agreement. Bingham McCutchen LLP does not
represent any of the Investors in this transaction other than Winslow. The
Company has elected to provide all Investors with the same terms for the
convenience of the Company and not because it was required or requested to do so
by the Investors.

                               (m) Remedies. In the event of a breach by the
Company or by an Investor, of any of their obligations under this Agreement,
each Investor or the Company, as the case may be, in addition to being entitled
to exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and each Investor agree that monetary damages
would not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.

 

 

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

The Company:

VITALSTREAM HOLDINGS, INC.

       

By:

/s/ Jack Waterman

   

--------------------------------------------------------------------------------

 

Name:

Jack Waterman

 

Title:

Chairman & CEO

 

 

 

[Signature Page to Registration Rights Agreement]

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The Investor:

Lagniappe Capital LLC

             

By:

/s/ Christopher M. Nawn

       

Name:

Christopher M. Nawn

 

Title:

Managing Partner

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

The Investor:

Columbia Acorn Fund

             

By:

/s/ Bruce Lauer

       

Name:

Bruce Lauer

 

Title:

Vice President of Columbia Acorn Trust

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

 

The Investor:

WINSLOW HEDGE FUND, L.P.,
a Delaware limited partnership

       

By:

WINSLOW GENERAL PARTNERS, L.L.C.,
a Delaware limited liability company

       

By:

/s/ Jackson W. Robinson

       

Name:

Jackson W. Robinson

 

Title:

Managing Member

     

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

 

 

The Investor:

JESSIE SMITH NOYES FOUNDATION

             

By:

/s/ Jackson W. Robinson

       

Name:

Jackson W. Robinson

 

Title:

Managing Member of Winslow Management
Company, LLC

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

DAVID M. FARRELL TRUST

             

By:

/s/ Jackson W. Robinson

       

Name:

Jackson W. Robinson

 

Title:

Managing Member of Winslow Management

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

 

The Investor:

FARRELL DISTRIBUTING CORPORATION
PENSION PLAN

             

By:

/s/ Jackson W. Robinson

       

Name:

Jackson W. Robinson

 

Title:

Managing Member of Winslow Management
Company, LLC

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

SCENIC HUDSON, INC.

             

By:

/s/ Jackson W. Robinson

       

Name:

Jackson W. Robinson

 

Title:

Managing Member of Winslow
ManagementCompany, LLC

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Newlight Associates II, L.P.

             

By:

/s/ Robert F. Raucci,

       

Name:

Robert F. Raucci,

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Newlight Associates II, (BVI), L.P.

             

By:

/s/ Robert F. Raucci

       

Name:

Robert F. Raucci

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

 

The Investor:

Newlight Associates II-E, L.P.

             

By:

/s/ Robert F. Raucci

       

Name:

Robert F. Raucci

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

 

The Investor:

Husic Capital Management, L.P.

             

By:

/s/ Frank J. Husic

       

Name:

Frank J. Husic

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Nanocap Fund LP

             

By:

/s/ Paul B. Stephens

       

Name:

Paul B. Stephens

 

Title:

Managing Partner

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Nanocap Qualified Fund LP

             

By:

/s/ Paul B. Stephens

       

Name:

Paul B. Stephens

 

Title:

Managing Partner

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Walden VC II, L.P.

             

By:

/s/ Philip Sanderson

       

Name:

Philip Sanderson

 

Title:

General Partner

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Zeiler/Bailey Family Trust dated May 14, 1998

             

By:

/s/ John E. Zeisler

       

Name:

John E. Zeisler

 

Title:

Trustee

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

William McDonagh.

             

By:

/s/ William McDonagh.

       

Name:

William McDonagh.

 

Title:

 

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Jay Tyler

             

By:

/s/ Jay Tyler

       

Name:

Jay Tyler

 

Title:

 

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Frank D. Gerber Trust

             

By:

/s/ Frank D. Gerber

       

Name:

Frank D. Gerber

 

Title:

Trustee

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Ravi Chiruvolu

             

By:

/s/ Ravi Chiruvolu

       

Name:

Ravi Chiruvolu

 

Title:

 

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

Schottenfeld Qualified Associates, L.P.

             

By:

/s/ Richard Schottenfeld

       

Name:

Richard Schottenfeld

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

CROSSLINK VENTURES IV, LP
By: Crosslink Ventures Holdings, L.L.C.,
its General Partner

             

By:

/s/ Michael J. Stark

       

Name:

Michael J. Stark

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

CROSSLINK OMEGA VENTURES IV,
GmbH & CO. KG
By: Crosslink Verwaltungs GmbH,
its General Partner

             

By:

/s/ Michael J. Stark

       

Name:

Michael J. Stark

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

OFFSHORE CROSSLINK OMEGA
VENTURES IV, (a Cayman Islands Unit Trust)
By: Crosslink Ventures Holdings, L.L.C.,
its General Partner

             

By:

/s/ Michael J. Stark

       

Name:

Michael J. Stark

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

OMEGA BAYVIEW IV, L.L.C.

             

By:

/s/ Michael J. Stark

       

Name:

Michael J. Stark

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

The Investor:

CROSSLINK CROSSOVER FUND IV L.P.
By: Crossover Fund IV Management, L.L.C.,
its General Partner

             

By:

/s/ Michael J. Stark

       

Name:

Michael J. Stark

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

 

 

 

The Investor:

ELEVEN RINGS OPPORTUNITY FUND, L.P.
By: Eleven Rings Opportunity Fund, G.P.,
its General Partner

             

By:

/s/ Gary F. Hromadko

       

Name:

Gary F. Hromadko

 

Title:

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

--------------------------------------------------------------------------------

Exhibit A

Plan of Distribution

General

               The selling stockholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling shares of common
stock or interests in shares of common stock received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.

               The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:

·

ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

·

block trades in which the broker-dealer will attempt to sell the shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction;

·

purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

·

an exchange distribution in accordance with the rules of the applicable
exchange;

·

privately negotiated transactions;

·

through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

·

broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

·

a combination of any such methods of sale; and

·

any other method permitted pursuant to applicable law.

--------------------------------------------------------------------------------

               The selling stockholders may, from time to time, pledge or grant
a security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders may also transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

               The selling stockholders may also sell shares by means of short
sales to the extent permitted by United States securities laws. Short sales
involve the sale by a selling stockholder, usually with a future delivery date,
of shares of common stock that the seller does not own. Covered short sales are
sales made in an amount not greater than the number of shares subject to the
short seller's warrant, exchange right or other right to acquire shares of
common stock. A selling stockholder may close out any covered short position by
either exercising its warrants or exchange rights to acquire shares of common
stock or purchasing shares in the open market. In determining the source of
shares to close out the covered short position, a selling stockholder will
likely consider, among other things, the price of shares of common stock
available for purchase in the open market as compared to the price at which it
may purchase shares of common stock pursuant to its warrants or exchange rights.

               Naked short sales are any sales in excess of the number of shares
subject to the short seller's warrant, exchange right or other right to acquire
shares of common stock. A selling stockholder must close out any naked position
by purchasing shares. A naked short position is more likely to be created if a
selling stockholder is concerned that there may be downward pressure on the
price of the shares of common stock in the open market.

               The existence of a significant number of short sales generally
causes the price of the shares of common stock to decline, in part because it
indicates that a number of market participants are taking a position that will
be profitable only if the price of the shares of common stock declines.
Purchases to cover naked short sales may, however, increase the demand for the
shares of common stock and have the effect of raising or maintaining the price
of the shares of common stock.

               The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities that require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

               The selling stockholders also may resell all or a portion of the
shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule.

--------------------------------------------------------------------------------

               The selling stockholders and any underwriters, broker-dealers or
agents that participate in the sale of the common stock or interests therein may
be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.

               To the extent required, the shares of our common stock to be
sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agents, dealers or underwriters, and
any applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
prospectus.

Expenses, Indemnification and Registration Obligations

               We are paying the expenses incurred in connection with preparing
and filing this prospectus and the registration statement to which it relates,
other than selling commissions. We have not retained any underwriter, broker or
dealer to facilitate the offer or sale of the shares offered hereby. We will pay
no underwriting commissions or discounts in connection therewith.

               We have agreed to indemnify the selling stockholders against
liabilities, including liabilities under the Securities Act and state securities
laws, relating to the registration of the shares offered by this prospectus. The
selling stockholders may indemnify any broker-dealers that participate in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.

               We have agreed with the selling stockholders to keep the
registration statement of which this prospectus constitutes a part effective
until the earlier of (i) such time as all of the shares covered by this
prospectus have been disposed of pursuant to and in accordance with the
registration statement or (ii) the date on which the shares may be sold pursuant
to Rule 144(k) of the Securities Act.

Passive Market Making

               We have advised the selling stockholders that while they are
engaged in a distribution of the shares offered pursuant to this prospectus,
they are required to comply with Regulation M promulgated under the Securities
Exchange Act of 1934, as amended. With certain exceptions, Regulation M
precludes the selling stockholders, any affiliate purchasers and any
broker-dealers or other persons who participate in the distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase,
any security that is subject to the distribution until the entire distribution
is complete. Regulation M also restricts bids or purchases made in order to
stabilize the price of a security in connection with the distribution of that
security. We do not intend to engage in any passive market making or
stabilization transactions during the course of the distribution described in
this prospectus. All of the foregoing may affect the marketability of the shares
offered pursuant to this prospectus.

--------------------------------------------------------------------------------

Limitations

               We have advised the selling stockholders that, to the extent
necessary to comply with governing state securities laws, the offered securities
should be offered and sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, we have advised the selling
stockholders that the offered securities may not be offered or sold in any state
unless they have been registered or qualified for sale in the applicable state
or an exemption from the registration or qualification requirement is available
with respect to such offers or sales.