Exhibit 10.19
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 15th
day of April, 1998, by e-NET, INC., a Delaware corporation (the "Company"),
for the benefit of each Purchaser (individually a "Purchaser" and
collectively the "Purchasers") entering into that certain Common Stock
Purchase Agreement (the "Purchase Agreement") with the Company.
BACKGROUND
Pursuant to the Purchase Agreement, the Company has offered for sale up
to 750,000 shares (the "Shares") of the Company's Common Stock, par value
$.01 per share (the "Common Stock"). In order to induce the Purchasers to
purchase the Shares, the Company has agreed to provide the registration
rights set forth in this Agreement.
1. Securities Laws Representations and Covenants of Purchaser.
This Agreement is made for the benefit of the Purchasers in reliance
upon each Purchaser's representations to the Company, as the same are set
forth in Section 4 of the Purchase Agreement.
2. Registration Rights.
2.1 Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Form S-1, Form SB-1, Form S-2, Form SB-2 and Form S-3" shall mean
Form S-1, For m SB-1, Form S-2, Form SB-2 or Form S-3, respectively,
promulgated by the Commission or any substantially similar form then
in effect.
(c) The terms "Register", "Registered", and "Registration" refer to a
registration effected by preparing and filing a Registration Statement
in compliance with the Securities Act, and the declaration or ordering
by the Commission of the effectiveness of such Registration Statement.
(d) "Registrable Securities" shall mean the Shares and Warrant Shares so
long as such shares are ineligible for sale under subparagraph (k) of
Rule 144.
(e) "Registration Expenses" shall mean all expenses incurred by the
Company in com plying with Section 2, including, without limitation,
all federal and state registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company,
blue sky fees and expenses and, the expense of any special audits
incident to or required by any such Registration.
(f) "Registration Statement" shall mean Form S-1, Form SB-1, Form S-2,
Form SB-2 or Form S-3, whichever is applicable, unless otherwise
specified herein.
(g) "Rule 144" shall mean Rule 144 promulgated by the Commission pursuant
to the Securities Act.
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(h) "Purchasers" shall mean, collectively, the Purchasers, their
permitted assignees and transferees and, individually, a Purchaser
and any permitted assignee or transferee of such Purchaser.
(i) "Securities Act" shall mean the Securities Act of 1933, as amended.
(j) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities
pursuant to this Agreement.
(k) "Selling Shareholder" shall mean a holder of Registrable Securities
who requests Registration under Section 2.3 hereof or whose shares of
Common Stock become Registered pursuant to Section 2.2 hereof.
(l) "Warrant Shares" shall mean the shares of capital stock of the
Company underlying the Placement Agent Warrant.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement.
2.2 Required Registration
(a) On the date that is the earlier of (i) the date on which the
Company files its report on Form 10-K for its fiscal year
ended March 31, 1998 and (ii) ninety (90) days after the date
of the Closing, the Company shall file with the Commission a
Registration Statement for the purpose of Registering, upon
the effectiveness of such Registration Statement, the Shares.
(b) The Company shall use its best efforts to maintain with the
Commission a Registration Statement that is effective and
causes the Shares to be Registered under the Securities Act
until the date on which the Shares are eligible for resale or
other disposition under Rule 144 without regard to the volume
limitations thereof.
2.3 Piggyback Registration
(a) Until the time set forth in Section 2.3(g) hereof, each time
that the Company proposes to Register a public offering of its
Common Stock, other than (i) pursuant to a Registration
Statement on Form S-4 or Form S-8 or similar or successor
forms or (ii) on a Registration Statement filed in connection
with an exchange offer or other offer of Common Stock solely
to the then-existing shareholders of the Company, the Company
shall promptly give written notice of such proposed
Registration to all holders of Shares and Warrant Shares,
which shall offer such holders the right to request inclusion
of any Registrable Securities in the proposed Registration.
(b) Each holder of Shares or Warrant Shares shall have ten (10)
days or such longer period as shall be set forth in the notice
from the receipt of such notice to deliver to the Company a
written request specifying the number of shares of Registrable
Securities such holder intends to sell and the holder's
intended plan of disposition.
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(c) The Company shall have the exclusive right to select all underwriters
for any underwritten public offering of securities of the Company,
including all Shares and Warrant Shares. In the event that the
proposed Registration by the Company is, in whole or in part, an
underwritten public offering of securities of the Company, any request
under Section 2.3(b) shall contain the holder' agreement that the
Registrable Securities will be included in the underwriting on the
same terms and conditions as the shares of Common Stock, if any,
otherwise being sold through underwriters under such Registration.
(d) Upon receipt of a written request pursuant to Section 2.3(b), the
Company shall promptly use its best efforts to cause all such
Registrable Securities to be Registered, to the extent required to
permit sale or disposition as set forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter of an
underwritten public offering determines and advises in writing that
the inclusion of all Registrable Securities proposed to be included
in the underwritten public offering, together with any shares
proposed to be sold by the Company for its own account and any
other issued and outstanding shares of Common Stock proposed to be
included therein by holders other than the holders of Registrable
Securities (such other holders' shares hereinafter collectively
referred to as the "Other Shares"), would interfere with the
successful marketing of the securities proposed to be included in
the underwritten public offering, including the price at which such
securities can be sold, then the number of such shares of persons
other than the Company that otherwise would be included in such
underwritten public offering shall be excluded from such
underwritten public offering in a number deemed necessary by such
managing underwriter, first by excluding, to the extent necessary,
other shares held by persons who have not exercised contractual
rights to include such Shares in the offering pursuant to the Prior
Registration Rights Agreements (as hereinafter defined), and then,
to the extent necessary, by excluding Registrable Securities
participating in such underwritten public offering, pro rata, based
on the number of shares of Registrable Securities each holder
proposed to include; and, then, excluding to the extent necessary,
other Shares proposes to be included by the holders of other Shares
who have exercised registration rights granted to them under
registration rights agreements of the Company in effect on the date
hereof or any other registration rights in effect on the date
hereof (collectively, the "Prior Registration Rights Agreements").
(f) All Shares and Warrant Shares that are not included in an
underwritten public offering pursuant to Section 2.3 shall be
withheld from the market by the holders thereof for a period, not
to exceed 12 months following a public offering, that the managing
underwriter reasonably determines is necessary in order to effect
the underwritten public offering. The holders of such Shares shall
execute such documentation as the managing underwriter reasonably
requests to evidence this lock-up.
(g) The registration rights provided by this Agreement shall expire
with respect to any Registrable Security upon the earliest to occur
of (i the effectiveness of a Registration Statement that includes
in the Registration effected thereby, at the request of a Selling
Shareholder, such Registrable Security; (ii) the
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date on which such Registrable Security is eligible for resale
under Rule 144 without regard to the volume limitations thereof,
and (iii) five years from the date hereof.
2.4 Preparation and Filing. If and whenever the Company is under an
obligation pursuant to the provisions of this Section 2 to use its best
efforts to effect the Registration of any Registrable Securities, the Company
shall, as expeditiously as practicable:
(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, using such form of
available Registration Statement as ins reasonably selected by the
Company (unless otherwise specified herein), and use its best
efforts to cause such Registration Statement to become and remain
effective, keeping each Selling Shareholder advised as to the
initiation, progress and completion of the Registration;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statements and the prospectus used
in connection therewith as may be necessary to keep such
Registration Statement effective for, in the case of a Req uired
Registration under Section 2.2, the period set forth in Section
2.2(b) and, in the case of a Piggyback Registration under Section
2.3, six months, and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
Registrable Securities covered by such Registration Statement;
(c) furnish to each Selling Shareholder such number of copies of any
summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Selling Shareholder may
reasonably request in order to facilitate the public sale or other
disposition of such Registrable Securities; provided, however, that
no such prospectus need be furnished more than, in the case of a
Required Registration under Section 2.2, six months after the
conclusion of a the period set forth in Section 2.2(b), and, in the
case of a Piggyback Registration under Section 2.3, six months
after the effective date of the Registration Statement related
thereto;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as each Selling
Shareholder shall reasonably request and do any and all other acts
or things which may be reasonably necessary or advisable to enable
such holder to consummate the public sale or other disposition in
such jurisdictions of such Registrable Securities; provided,
however, that the Company shall not be required to consent to
general service of process, qualify to do business as a foreign
corporation where it would not be otherwise required to qualify or
submit to liability for state or local taxes where it is not liable
for such taxes; and
(e) at any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 2.2(b) or
Section 2.3(b) hereof, as the case may be, notify each Selling
Shareholder of the happening of any event as a result of which the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the
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statements therein not misleading in the light of the
circumstances then existing and, at the request of such seller,
prepare, file and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of
such shares, 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 statement therein not
misleading in the light of the circumstances then existing. The
Company may delay amending or supplementing the prospectus for a
period of up to 90 days if the Company is then engaged in
negotiations regarding a material transaction that has not
otherwise been publicly disclosed, and the Selling Shareholders
shall suspend their sale of Shares until an appropriate supplement
or prospectus has been forwarded to them or the proposed
transaction is abandoned.
Notwithstanding the foregoing, with respect to the proposed Registration
of Registrable Securities pursuant to Section 2.3 hereof, the Company may
withdraw or cease proceeding with any proposed Registration of Registrable
Securities if it has withdrawn or ceased proceeding with the proposed
Registration of Common Stock of the Company with which the Registration of
such Registrable Securities was to be included.
2.5 Expenses. The Company shall pay all Registration Expenses incurred
by the Company in complying with this Section 2.
2.6 Information Furnished by Purchaser. It shall be a condition
precedent to the Company's obligations under this Agreement as to any Selling
Shareholder that each Selling Shareholder furnish to the Company in writing
such information regarding such Selling Shareholder and the distribution
proposed by such Selling Shareholder as the Company may reasonably request.
2.7 Indemnification.
2.7.1 Company's Indemnification of Purchasers. The Company shall
indemnify each selling Shareholder, each of its officers, directors and
constituent partners, and each person controlling (within the meaning of
the Securities Act) such Selling Shareholder, against all claims,
losses, damages or liabilities (or actions in respect thereof) suffered
or incurred by any of them, to the extent such claims, losses, damages
or liabilities arise out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus
or any related Registration Statement incident to any such Registration,
or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the
Company and relating to actions or inaction required of the Company in
connection with any such Registration; and the Company will reimburse
each such Selling Shareholder, each of its officers, directors and
constituent partners and each person who controls any such Selling
Shareholder, for any reasonable, documented legal and other expenses
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 2.7.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if
settlement is effected without the consent of the Company (which consent
shall not unreasonably be withheld); and provided, further, that the
Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based upon
any untrue (or alleged untrue) statement or omission based upon written
information furnished to the Company by such Selling Shareholder,
underwriter, controlling
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person or other indemnified person and stated to be for use in connection
wit the offering of securities of the Company.
2.7.2 Selling Shareholder's Indemnification of Company. Each
Selling Shareholder shall indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities
covered by a Registration Statement, each person who controls the
Company or such underwriter within the meaning of the Securities Act,
and each other Selling Shareholder, each of its officers, directors and
constituent partners and each person controlling such other Selling
Shareholder, against all claims, losses, damages and liabilities (or
actions in respect thereof) suffered or incurred by any of them and
arising out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in such Registration Statement
or related prospectus, or any omission (or alleged omission) to state
therein a material fact required to be sated therein or necessary to
make the statements therein not misleading, or any violation by such
Selling Shareholder of any rule or regulation promulgated under the
Securities Act applicable to such Selling Shareholder and relating to
actions or inaction required of such Selling Shareholder in connection
with the Registration of the Registrable Securities pursuant to such
Registration Statement; and will reimburse the Company, such other
Selling Shareholders, such directors, officers, partners, persons,
underwriters and controlling persons for any reasonable, documented
legal and other expenses incurred in connection with inves tigating or
defending any such claim, loss, damage, liability or action; provided,
however, that such indemnification and reimbursement shall be to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
Registration Statement or prospectus in reliance upon and in conformity
with written information furnished to the Company by such Selling
Shareholder and stated to be for use in connection with the offering of
Registrable Securities.
2.7.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 2.7 of notice of the commencement
of any action which may give rise to a claim for indemnification
hereunder, such indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party under this Section 2.7, notify
the indemnifying party in writing of the commencement thereof and
generally summarize such action. The indemnifying party shall have the
right to participate in and to assume the defense of such claim, and
shall be entitled to select counsel for the defense of such claim with
the approval of any parties entitled to indemnification, which approval
shall not be unreasonably withheld. Notwithstanding the foregoing, the
parties entitled to indemnification shall have the right to employ
separate counsel (reasonably satisfactory to the indemnifying party) to
participate in the defense thereof, but the fees and expenses of such
separate counsel shall be at the expense of such indemnified parties
unless the named parties to such action or proceedings include both the
indemnifying party and the indemnified parties and the indemnifying
party or such indemnified parties shall have been advised by counsel
that there are one or more legal defenses available to the indemnified
parties which are different from or additional to those available to the
indemnifying party (in which case, if the indemnified parties notify the
indemnifying party in writing that they elect to employ separate counsel
at the reasonable expense of the indemnified party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection with any
such action or proceeding or separate or substantially similar or
related action or proceeding in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable,
documented fees and expenses of more than one separate counsel at any
time for all indemnified parties, which counsel shall be designated in
writing by the Purchasers of a majority of the Registrable Securities).
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2.7.4 Contribution. If the indemnification provided for in this
Section 2.7 from an indemnifying party is unavailable to an indemnified
party hereunder in respect to any losses, claims, damages, liabilities,
or expenses referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified
party in connection with the statements or omissions which result in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material factor the omission or alleged omission to state
a material fact relates to information supplied by such indemnifying
party or indemnified party and the parties' relative intent, knowledge,
access to information supplied by such indemnifying party or indemnified
party and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include any documented legal or other fees or expenses or defending any
action, suit, proceeding or claim, or in collecting such indemnity or
reimbursement from the indemnifying party.
3. Covenants of the Company.
The Company agrees to:
(a) Notify the holders of Registrable Securities included in a
Registration Statement of (i) the issuance by the Commission
of any stop order suspending the effectiveness of such
Registration Statement and (ii) upon learning of the
initiation of any proceedings for the purpose of suspending
such effectiveness, the existence of such proceedings. The
Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible time.
(b) If the Common Stock is then listed on a national securities
exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange. If the Common Stock
is not then listed on a national securities exchange, use its
best efforts to facilitate the reporting of the Registrable
Securities on Nasdaq.
(c) Take all other reasonable actions necessary to expedite and
facilitate disposition of the Registrable Securities by the
holders thereof pursuant to the Registration Statement.
(d) With a view to making available to the holders of Registrable
Securities 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 the Purchasers to sell
securities to the Company to the public without registration,
the Company agrees to:
(i) make and keep adequate current public information with
respect to the Company available, as those terms are
understood and defined in Rule 144, at all times after 90
days after the effective date of the first Registration
Statement filed by the company for the offering of its
securities to the general public;
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(ii) file with the Commission in a timely manner all reports
and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934
(the "1934 Act"); and
(iii) furnish to each holder of Shares, so long as such holder
of Shares owns any Shares, forthwith upon written
request (a) a written statement by the Company as to
whether it has complied with the reporting requirements
of Rule 144, the Securities Act and the 1934 Act, (b) 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 (c) such other information as
may be reasonably requested and as is publicly available
in availing the holders of Shares of any rule or
regulation of the Commission which permits the selling
of any such securities without registration.
(e) Prior to the filing of a Registration Statement or any
amendment thereto (whether pre-effective or post-effective),
and prior to the filing of any prospectus or prospectus
supplement related thereto, the Company will provide each
Selling Shareholder with copies of all pages thereto, if any,
which reference such Selling Shareholder.
4. Miscellaneous.
(a) This Agreement shall be governed by and construed under the
laws of the Commonwealth of Pennsylvania without regard to
any otherwise applicable principles of conflicts of laws.
(b) This Agreement may not be assigned by a Purchaser other than
to the purchaser or transferee of more than 5,000 of the
Purchaser's Shares, which purchaser or transferee shall be a
permitted assign hereunder and under the Purchase Agreement.
Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon,
the successors, permitted assigns, heirs, executors and
administrators of the parties hereto.
(c) This Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects
hereof and no party shall be liable or bound to any other
party in any manner by any representations, warranties,
covenants or agreements except as specifically set forth
herein or therein. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the
parties hereto and their respective successors and permitted
assigns, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly
provided herein.
(d) In the event that any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified so as to make it valid, legal and
enforceable and to retain as nearly as practicable the intent
of the parties, and the validity legality, and enforceability
of the remaining provisions shall not in any way be affected
or impaired thereby. To the extent permitted by law, the
parties waive the benefit of any provision of law that
renders any provision of the Agreement invalid or
unenforceable in any respect.
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(e) Except as otherwise provided herein, any term of this
Agreement may be amended, and the observance of any term of
this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely),
with the written consent of the Company and the Purchaser.
(f) All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively
given upon personal delivery, on the first business day
following mailing by overnight courier, or on the fifth day
following mailing by registered or certified mail, return
receipt requested, postage prepaid, addressed to the Company
at its address as set forth in the Purchase Agreement and to
the Purchaser at its address as shown on the books of the
Company.
(g) The titles of the paragraphs and subparagraphs of this
Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.
(h) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one instrument.
(i) No waiver by any party to this Agreement of any one or more
defaults by any other party or parties in the performance of
any of the provisions hereof shall operate or be construed as
a waiver of any future default or defaults, whether of a like
or different nature. Except as expressly provided herein, no
failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or future exercise
thereof or the exercise of any other right, power or remedy.
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