1
REGISTRATION RIGHTS AGREEMENT
CYBERNET DATA SYSTEMS, INC.
2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the day of , 1998, by and between Cybernet Data Systems,
Inc., a Delaware corporation (the "Company"), and (the
"Holder").
W I T N E S S E T H:
WHEREAS, the Holder has agreed to purchase the (as such
terms are defined that certain Securities Purchase Agreement of even date
herewith between the Company and the Holder (the "Purchase Agreement")); and
WHEREAS, as additional consideration for the purchase of the by
the Holder, the Company desires to grant to the Holder registration rights with
respect to the Registrable Securities (as hereinafter defined);
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the or upon exercise of the ; and
(ii) any Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the Common Stock, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such person's
registration rights are not assigned; provided, however, that as to any
particular securities that are included in Registrable Securities, such
securities shall cease to be Registrable Securities when (i) such shares shall
have been sold to the public pursuant to a registered public offering or (ii)
such securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act of 1933, as amended (the "1933 Act").
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are exercisable or convertible into,
Registrable Securities;
1
3
2. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holder) its Common Stock under
the 1933 Act in connection with the public offering of such securities solely or
substantially for cash (other than a registration relating solely to a Company
stock plan or a registration on Form S-4 or on any other form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities),
the Company shall, at such time, promptly give the Holder written notice of such
registration in accordance with subparagraph 12(c) hereof. Upon the written
request of the Holder given within thirty (30) days after mailing of such notice
by the Company, the Company shall use its best efforts, subject to the
provisions of Paragraph 6, to cause to be registered under the Securities Act
all of the Registrable Securities that the Holder has requested to be
registered; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Paragraph 2 without
obligation to the Holder. Notwithstanding anything to the contrary contained in
this Agreement, the Company shall have the right to defer the initial filing or
effectiveness of the Registration Statement (A) for such reasonable period of
time until the Company receives or prepares financial statements for the fiscal
period most recently ended prior to such written request, if necessary to avoid
the use of stale financial statements, or (B) if the Company would be required
to divulge in such Registration Statement the existence of any fact relating to
a material business situation, transaction or negotiation not otherwise required
to be disclosed or if the Board of Directors of the Company shall determine in
good faith that the registration to be effected would not be in the best
interest of the Company. The Company may impose stop-transfer instructions with
respect to the Registrable Securities for any period of suspension of
effectiveness of the Registration Statement.
3. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holder,
keep such registration statement effective until this Agreement is terminated
pursuant to Paragraph 11 hereunder.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders covered by such registration statement such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents as
they may reasonably request in order to facilitate the disposition of such
Registrable Securities.
2
4
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders thereof,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. The Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify the Holder covered by such registration statement at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act 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 statements therein not misleading in the light
of the circumstances then existing. Upon such notification, the Holders shall
immediately cease making offers of Registered Securities and return all
prospectuses to the Company. The Company shall promptly provide the Holders with
revised prospectuses and, following receipt of the revised prospectuses, the
Holders shall be free to resume making offers of the Registered Securities.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(h) Use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock is then listed.
4. Provision of Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of the
Registrable Securities.
3
5
5. Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to
Paragraph 2 for the Holder thereof including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees
relating or apportionable thereto, but excluding the Holder's counsel fees,
underwriting discounts and commissions and to the extent appropriate a pro rata
portion of the nonaccountable expense allowance of underwriters relating to
Registrable Securities.
6. Underwriting Requirements. In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not be
required under Paragraph 2 to include any of the Holder's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder that is a holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and stockholders of the Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
7. Delay of Registration. The Holder shall have no right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Holder of such Registrable Securities, the officers and directors
of each the Holder, any underwriter (as defined in the 0000 Xxx) for the Holder
and each person, if any, who controls the Holder or underwriter within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended ("xxx
0000 Xxx"), against any losses, claims, damages or liabilities joint or several
to which they may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses,
4
6
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each the Holder, officer or
director, underwriter or 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
indemnity agreement contained in this subparagraph 8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any of the Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls the Holder, against any losses, claims, damages or
liabilities joint or several) to which the Company or any such director, officer
or controlling person may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by the Holder expressly for use in connection with such registration;
and each the Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subparagraph 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subparagraph 8(b) exceed the gross proceeds from the offering
received by the Holder.
(c) Promptly after receipt by an indemnified party under this Paragraph 8
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Paragraph 8, deliver to the indemnifying party
a written notice of the commencement thereof and the
5
7
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that any indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such actions, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Paragraph 8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Paragraph 8.
(d) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to subparagraph 8(a) or 8(b)
but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the 1933 Act, the
1934 Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee, agent or
counsel of the Company, or any controlling person of the Company), on the one
hand, and the Holders (including for this purpose any contribution by or on
behalf of an indemnified party), on the other hand, shall contribute to the
losses, liabilities, claims, damages, and expenses to which any of them may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Holders, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company and the Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses shall also be considered. The
relative benefits received by the Company, on the one hand, and the Holders, on
the, other hand, shall be deemed to be in the same proportion as the total
proceeds from the offering received by each of the Company on the one hand and
the Holders, on the other hand.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Holders, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and Holders agree that it would be unjust and inequitable
if the respective obligations of the Company and the Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to in this
subparagraph 8(d). No person guilty of a fraudulent misrepresentation (within
the meaning of subparagraph 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this subparagraph 8(d), each person, if any,
who controls a Holder within the meaning
6
8
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer,
director, stockholder, employee, agent and counsel of the Holders shall have the
same rights of contribution as the Holder, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act and each officer, director, employee, agent and counsel of the
Company, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this subparagraph 8(d). Anything in this
subparagraph 8(d) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This subparagraph 8(d) is intended to supersede any
right to contribution under the 1933 Act, the 1934 Act, or otherwise.
(e) The obligations of the Company and Holders under this Paragraph 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
9. Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 under the 1933 Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company agrees to:
(a) make and keep public information 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; and
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act.
10. Market Stand-Off' Agreement. The Holder hereby agrees that it shall
not, to the extent requested by the Company and an underwriter of Common Stock
(or other securities) of the Company, sell or otherwise transfer or dispose
(other than to donees who agree to be similarly bound) of any Registrable
Securities during a reasonable and customary period of time, as agreed to by the
Company and the underwriters, not to exceed 180 days, following the effective
date of a registration statement of the Company filed under the 1933 Act;
provided, however, that:
(a) such agreement shall be applicable only to the first such registration
statement of the Company which covers shares (or securities) to be sold on its
behalf to the public in an underwritten offering; and
(b) Xxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxxx, all executive officers, directors,
and shareholders who own or are deemed to own Common Stock in an amount equal to
or in excess of that number of shares of Common Stock owned or deemed to be
owned by Globix Corporation and all other persons with registration rights
(whether or not pursuant to this Agreement) enter into similar agreements.
7
9
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder thereof until the end of such reasonable and customary period.
11. Termination of Registration Rights. The Company's obligations pursuant
to this Agreement shall terminate as to the Holder of Registrable Securities on
the earlier of (i) when the Holder can remove the restrictive legend on the
Holder's shares pursuant to Rule 144(k) under the 1933 Act (or any such
successor rule) at anytime after an initial public offering or (ii) on the fifth
anniversary of the date hereof.
12. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its obligations
under this Agreement, the Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the provisions
of this of this subparagraph 12(c):
(i) if to the Company:
Cybernet Data Systems, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000.
Copy to:
Xxxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxx Xxxx & Ball P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(ii) if to the Holder:
At the address set forth in the Purchase Agreement
Copy to:
8
10
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of the Registrable Shares subject to the terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) 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 this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not restrictions, promises
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
9
11
\
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
CYBERNET DATA SYSTEMS, INC.
By:
------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President and CEO
HOLDER:
By:
------------------------------------
Title:
Print Name:
10
