EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
BETWEEN
IPC INFORMATION SYSTEMS, INC.
AND
IXNET, INC.
DATED AS OF _______________ __, 1999
TABLE OF CONTENTS
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Page
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PRELIMINARY STATEMENTS........................................................................................-iii-
Section 1. Effectiveness of Agreement; Term..........................................-iii-
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1.1 Effective Date............................................................-iii-
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1.2 Shares Covered............................................................-iii-
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Section 2. Demand Registration.........................................................-2-
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2.1 Notice......................................................................-2-
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2.2 Registration Expenses.......................................................-3-
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2.3 Selection of Professionals..................................................-3-
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2.4 Third Person Shares.........................................................-3-
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2.5 Permitted Transferees.......................................................-3-
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2.6 Shelf Registration..........................................................-4-
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2.7 SEC Form....................................................................-4-
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2.8 Other Registration Rights...................................................-4-
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Section 3. Piggyback Registrations.....................................................-4-
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3.1 Notice and Registration.....................................................-4-
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3.2 Selection of Professionals..................................................-5-
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3.3 Registration Expenses.......................................................-5-
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Section 4. Registration Procedures.....................................................-6-
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4.1 Registration and Qualification..............................................-6-
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4.2 Underwriting................................................................-8-
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4.3 Blackout Periods for Shelf Registrations....................................-8-
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4.4 Listing.....................................................................-9-
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4.5 Holdback Agreements.........................................................-9-
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Section 5. Preparation; Reasonable Investigation......................................-10-
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Section 6. Indemnification and Contribution...........................................-10-
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Section 7. Benefits and Termination of Registration Rights............................-12-
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Section 8. Registration Expenses......................................................-12-
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Section 9. Miscellaneous..............................................................-13-
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9.1 No Inconsistent Agreements.................................................-13-
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9.2 Complete Agreement.........................................................-13-
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9.3 Authority..................................................................-13-
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9.4 Assignment.................................................................-13-
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9.5 Governing Law..............................................................-13-
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9.6 Notices....................................................................-13-
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9.7 Severability...............................................................-14-
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9.8 Remedies...................................................................-15-
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9.9 Waivers....................................................................-15-
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9.10 Amendment and Modification.................................................-15-
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9.11 General Interpretative Principles..........................................-15-
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9.12 Counterparts...............................................................-16-
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and
entered into as of ________ __, 1999, between IPC Information Systems, Inc., a
Delaware corporation ("IPC"), and IXnet, Inc., a Delaware corporation and a
wholly owned subsidiary of IPC (the "Company").
PRELIMINARY STATEMENTS
1. IPC currently owns all of the issued and outstanding shares of the
Company's common stock (the "Common Stock").
2. The Company is offering and selling to the public shares of its
Common Stock (the "IPO") by means of a Registration Statement on Form S-1 (File
No. 333-79079) initially filed with the Securities and Exchange Commission (the
"SEC") on May 21, 1999 (the "Registration Statement").
3. Immediately following the consummation of the IPO, IPC will own
approximately _____% of the outstanding shares of Common Stock (or approximately
______% if the underwriters exercise their over-allotment option in full in
accordance with the underwriting agreement relating to the IPO).
4. IPC and the Company desire to make certain arrangements to provide
IPC with registration rights with respect to shares of Common Stock it holds
after the consummation of the IPO.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
Section 1. Effectiveness of Agreement; Term.
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1.1 Effective Date. This Agreement shall become effective 180
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days after the closing of the IPO (the "Effective Date").
1.2 Shares Covered. This Agreement covers those shares of
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Common Stock that are held by IPC upon the effective date of the
Registration Statement and continue to be held by IPC as of the
Effective Date (subject to the provisions of Section 7, the "Shares").
The "Shares" shall include any securities issued or issuable with
respect to the Shares by way of a stock dividend or a stock split or in
connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. The
"Shares" shall not include any shares of Common Stock acquired by IPC
after the closing of the IPO.
IPC and any Permitted Transferees (as defined in Section 2.5) are each
referred to herein as a "Holder" and collectively as the "Holders," and the
Holders of Shares proposed to be included in any registration under this
Agreement are each referred to herein as a "Selling Holder" and collectively as
the "Selling Holders."
Section 2. Demand Registration.
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2.1 Notice. Upon the terms and subject to the conditions set
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forth herein, upon written notice of any Holder holding at least 25% of
the Shares requesting that the Company effect the registration under
the Securities Act of 1933, as amended (the "Securities Act"), of any
or all of the Shares held by it, which notice shall specify the
intended method or methods of disposition of such Shares (which methods
may include, without limitation, a Shelf Registration (as such term is
defined in Section 2.6)) the Company will promptly give written notice
of the proposed registration to all other Holders and will use its
reasonable efforts to effect (at the earliest reasonable date) the
registration under the Securities Act of such Shares (and the Shares of
any other Holders joining in such request as are specified in a written
notice received by the Company within 20 days after receipt of the
Company's written notice of the proposed registration) for disposition
in accordance with the intended method or methods of disposition stated
in such request (each registration request pursuant to this Section 2.1
is sometimes referred to herein as a "Demand Registration"); provided,
however, that:
(1) the Company shall not be obligated to effect a
registration with respect to Shares pursuant to this Section 2
within 120 days after the effective date of a previous
registration, other than a Shelf Registration, effected with
respect to Shares pursuant to this Section 2;
(2) if, while a registration request is pending pursuant to
this Section 2, the Company determines in the good faith judgment
of the board of directors of the Company that such registration
would reasonably be expected to have a material adverse effect on
any existing proposal or plans by the Company or any of its
subsidiaries to engage in any material acquisition, merger,
consolidation, tender offer, other business combination,
reorganization, securities offering or other material
transaction, the Company may postpone for up to 120 days the
filing or effectiveness of such registration; provided, however,
that the Company may delay a Demand Registration hereunder only
once in any 12 month period;
(3) the Company shall not be obligated to register such
Shares unless the number of the Shares requested pursuant to this
Section 2 shall have an aggregate expected offering price of at
least $________ million; and
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(4) if a Demand Registration is an underwritten offering and
the managing underwriters advise the Company in writing that in
their opinion the number of Shares requested to be included in
such offering exceeds the number of Shares which can be sold in
an orderly manner in such offering within a price range
acceptable to the Holders of a majority of the Shares initially
requesting such registration or without materially adversely
affecting the market for the Common Stock, the Company shall
include in such registration the number of Shares requested to be
included therein which in the opinion of such underwriters can be
sold in an orderly manner within the price range of such offering
and without materially adversely affecting the market for the
Common Stock, pro rata among the respective Holders thereof on
the basis of the amount of Shares owned by each Holder requesting
inclusion of Shares in such registration; and
(5) the Holders may request no more than two Demand
Registrations during the term of this Agreement.
2.2 Registration Expenses. All Registration Expenses (as
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defined in Section 8) for any registration requested pursuant to this
Section 2 (including any registration that is delayed or withdrawn)
shall be paid by the Company.
2.3 Selection of Professionals. The Holders of a majority of
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the Shares included in any Demand Registration shall have the right to
select the investment banker(s) and manager(s) to administer the
offering; provided, however, that if such Holders select an investment
banker or manager that was not one of the managers of the IPO, such
investment banker or manager shall not administer such offering if the
Company reasonably objects thereto. The Holders of a majority of the
Shares included in any Demand Registration shall have the right to
select the financial printer, the solicitation and/or exchange agent
(if any) and one counsel for the Selling Holders. The Company shall
select its own outside counsel and independent auditors.
2.4 Third Person Shares. The Company shall have the right to
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cause the registration of securities for sale for the account of any
Person (as defined in Section 6(e) below) (including the Company) other
than the Selling Holders (the "Third Person Shares") in any
registration of the Shares requested pursuant to this Section 2 so long
as the Third Person Shares are disposed of in accordance with the
intended method or methods of disposition requested pursuant to this
Section 2.
If a Demand Registration in which the Company proposes to include
Third Person Shares is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the
number of Shares and Third Person Shares requested to be included in
such offering exceeds the number of Shares and Third Person Shares
which can be sold in an orderly manner in such offering within a price
range acceptable to the Holders of a majority of the Shares initially
requesting such registration or without materially adversely affecting
the market for the Common Stock, the Company shall not include in such
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registration any Third Person Shares unless all of the Shares
initially requested to be included therein are so included.
2.5 Permitted Transferees. As used in this Agreement,
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"Permitted Transferee" shall mean any transferee of Shares [from IPC],
whether direct or indirect, designated by IPC (or a subsequent Holder)
in a written notice delivered to the Company as provided for in Section
9.7. Any Permitted Transferee of the Shares shall be subject to, and
bound by, all of the terms and conditions herein applicable to Holders.
The notice required by this Section 2.5 shall be signed by both the
transferring Holder and the Permitted Transferee so designated and
shall include an undertaking by the Permitted Transferee to comply with
the terms and conditions of this Agreement applicable to Holders.
2.6 Shelf Registration. With respect to any Demand
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Registration, the requesting Holders may request the Company to effect
a registration of the Shares under a registration statement pursuant to
Rule 415 under the Securities Act (or any successor rule) (a "Shelf
Registration").
2.7 SEC Form. The Company shall use its reasonable efforts to
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cause Demand Registrations to be registered on Form S-3 (or any
successor form), and if the Company is not then eligible under the
Securities Act to use Form S-3, Demand Registrations shall be
registered on Form S-1 (or any successor form). The Company shall use
its reasonable efforts to become eligible to use Form S-3 and, after
becoming eligible to use Form S-3, shall use its reasonable efforts to
remain so eligible.
2.8 Other Registration Rights. The Company shall not grant to
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any Person the right to request the Company to register any equity
securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, unless such
rights are consistent with the rights granted under this Agreement.
Section 3. Piggyback Registrations.
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3.1 Notice and Registration. If the Company proposes to
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register any of its securities for public sale under the Securities Act
(whether proposed to be offered for sale by the Company or any other
Person), on a form and in a manner which would permit registration of
the Shares for sale to the public under the Securities Act (a
"Piggyback Registration"), it will give prompt written notice to the
Holders of its intention to do so, and upon the written request of any
or all of the Holders delivered to the Company within 20 days after the
giving of any such notice (which request shall specify the Shares
intended to be disposed of by such Holders), the Company shall use its
reasonable efforts to effect, in connection with the registration of
such other securities, the registration under the Securities Act of all
of the Shares which the Company has been so requested to register by
such Holders (which shall then become Selling Holders), to the extent
required to permit the disposition (in accordance with the same method
of disposition as the Company proposes to use to dispose of the other
securities) of the Shares to be so registered; provided, however, that:
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(1) if, at any time after giving such written notice of its
intention to register any of its other securities and prior to
the effective date of the registration statement filed in
connection with such registration, the Company shall determine
for any reason not to register such other securities, the Company
may, at its election, give written notice of such determination
to the Selling Holders (or, if prior to delivery of the Holders'
written request described above in this Section 3.1, the
Holders), and thereupon the Company shall be relieved of its
obligation to register such Shares in connection with the
registration of such other securities (but not from its
obligation to pay Registration Expenses to the extent incurred in
connection therewith as provided in Section 3.3), without
prejudice, however, to the rights (if any) of any Selling Holders
immediately to request (subject to the terms and conditions of
Section 2) that such registration be effected as a registration
under Section 2;
(2) the Company shall not be required to effect any
registration of the Shares under this Section 3 incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other employee benefit
plans of the Company;
(3) if a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such
registration exceeds the number which can be sold in such
offering without materially adversely affecting the marketability
of the offering or the market for the Common Stock, the Company
shall include in such registration (i) first, the securities the
Company proposes to sell, (ii) second, the Shares requested to be
included in such registration, pro rata among the Holders of such
Shares on the basis of the number of Shares owned by each such
Holder, and (iii) third, any other securities requested to be
included in such registration; and
(4) if a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities
entitled to demand registration thereof and the managing
underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such
registration exceeds the number which can be sold in such
offering without materially adversely affecting the marketability
of the offering or the market for the Common Stock, the Company
shall include in such registration (i) first, the securities
requested to be included therein by the holders demanding such
registration and the Shares requested to be included in such
registration by the Holders, pro rata among all of the holders of
all such securities (and Shares) on the basis of the number of
securities (and Shares) owned by each such holder, and (ii)
second, any other securities requested to be included in such
registration.
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No registration of the Shares effected under this Section 3
shall relieve the Company of its obligation to effect a registration of
Shares pursuant to Section 2.
3.2 Selection of Professionals. If any Piggyback Registration
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is an underwritten offering, the Company shall have the sole right to
select the investment banker(s) or manager(s) to administer the
offering. The Holders of a majority of the Shares included in any
Piggyback Registration shall have the right to select one counsel for
the Selling Holders. The Company shall select its own outside counsel
and independent auditors.
3.3 Registration Expenses. The Company will pay all of the
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Registration Expenses in connection with any registration pursuant to
this Section 3.
Section 4. Registration Procedures.
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4.1 Registration and Qualification. If and whenever the
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Company is required to use its reasonable efforts to effect the
registration of any of the Shares under the Securities Act as provided
in Sections 2 and 3, including an underwritten offering pursuant to a
Shelf Registration, the Company will as promptly as is practicable:
(1) prepare and file with the SEC a registration statement
with respect to such Shares and use its reasonable efforts to
cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any
amendments or supplement thereto, the Company shall furnish to
the counsel selected by the Holders of a majority of the Shares
covered by such registration statement copies of all such
documents proposed to be filed (which documents shall be subject
to the review and comment of such counsel);
(2) except in the case of a Shelf Registration, prepare and
file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act
with respect to the disposition of all of the Shares until the
earlier of (i) such time as all of such Shares have been disposed
of in accordance with the intended methods of disposition set
forth in such registration statement and (ii) the expiration of
three months after such registration statement becomes effective;
(3) in the case of a Shelf Registration, prepare and file
with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect to
the disposition of all Shares subject thereto for a period ending
on the earlier of (i) nine months after the effective date of
such registration statement and (ii) the date on which all the
Shares subject thereto have been sold pursuant to such
registration statement (the "Shelf Effective Period");
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(4) furnish to the Selling Holders and to any underwriter of
such Shares such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including
each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such
documents incorporated by reference in such registration
statement or prospectus and such other documents as the Selling
Holders or such underwriter may reasonably request;
(5) use its reasonable efforts to register or qualify all of
the Shares covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as the
Selling Holders or any underwriter of such Shares shall
reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable the Selling Holders
or any underwriter to consummate the disposition in such
jurisdictions of the Shares covered by such registration
statement, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign
corporation in any jurisdiction where it is not so qualified, or
to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(6) (i) furnish to the Selling Holders, addressed to them,
an opinion of counsel for the Company and (ii) use its reasonable
efforts to furnish to the Selling Holders, addressed to them, a
"cold comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially
the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public offerings of
securities and such other matters as the Selling Holders may
reasonably request, in each case, in form and substance and as of
the dates reasonably satisfactory to the Selling Holders;
(7) immediately notify the Selling Holders, at any time when
a prospectus relating to a registration pursuant to Section 2 or
3 is required to be delivered under the Securities 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
any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, and at the request of the
Selling Holders prepare and furnish to the Selling Holders 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
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therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(8) permit any Selling Holder, which Selling Holder, in its
sole and exclusive judgment, might be deemed to be an underwriter
or a controlling person of the Company, to participate in the
preparation of such registration or comparable statement and to
require the insertion therein of material, furnished to the
Company in writing, which in the reasonable judgment of such
Holder and its counsel should be included;
(9) make available members of management of the Company, as
selected by the Holders of a majority of the Shares included in
such registration, for assistance in the selling effort relating
to the Shares covered by such registration, including, but not
limited to, the participation of such members of the Company's
management in road show presentations.
(10) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of
any order suspending or preventing the use of any related
prospectus or suspending the qualification of any securities
included in such registration statement for sale in any
jurisdiction, the Company shall use it reasonable efforts
promptly to obtain the withdrawal of such order; and
(11) use its reasonable efforts to cause Shares covered by
such registration statement to be registered with or approved by
such other government agencies or authorities as may be necessary
to enable the sellers thereof to consummate the disposition of
such Shares.
The Company may require the Selling Holders to furnish the Company with
such information regarding the Selling Holders and the distribution of
such Shares as the Company may from time to time reasonably request in
writing and as shall be required by law, the SEC or any securities
exchange on which any shares of Common Stock are then listed for
trading in connection with any registration.
4.2 Underwriting. If requested by the underwriters for any
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underwritten offering in connection with a registration requested
hereunder (including any registration under Section 3 which involves,
in whole or in part, an underwritten offering), the Company will enter
into an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties
by the Company and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and
contribution to the effect and to the extent provided in Section 6 and
the provision of opinions of counsel and accountants' letters to the
effect and to the extent provided in Section 4.1(g). The Company may
require that the Shares requested to be registered pursuant to Section
3 be included in such underwriting on the same terms and conditions as
shall be applicable to the other securities being sold through
underwriters under such registration; provided, however, that
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no Selling Holder that holds less than 50% of the then outstanding
shares of the Common Stock shall be required to make any
representations or warranties to the Company or the underwriters (other
than representations and warranties regarding such Holder and such
Holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with
respect thereto, except as otherwise provided in Section 6 hereof. The
Selling Holders shall be parties to any such underwriting agreement,
and the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters
shall also be made to and for the benefit of such Selling Holders.
4.3 Blackout Periods for Shelf Registrations.
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(1) At any time when a Shelf Registration effected pursuant
to Section 2 relating to the Shares is effective, upon written
notice from the Company to the Selling Holders that the Company
determines in the good faith judgment of the board of directors
of the Company that the Selling Holders' sale of the Shares
pursuant to the Shelf Registration would require disclosure of
material information which the Company has a bona fide business
purpose for preserving as confidential and the disclosure of
which would have a material adverse effect on the Company or the
Company is unable to comply with SEC requirements (an
"Information Blackout"), the Selling Holders shall suspend sales
of the Shares pursuant to such Shelf Registration until the
earlier of (i) the date upon which such material information is
disclosed to the public or ceases to be material, (ii) 90 days
after the board of directors of the Company makes such good faith
determination and (iii) such time as the Company notifies the
Selling Holders that sales pursuant to such Shelf Registration
may be resumed (the number of days from such suspension of sales
of the Selling Holders until the day when such sales may be
resumed hereunder is hereinafter called a "Sales Blackout
Period").
(2) If there is an Information Blackout and the Selling
Holders do not notify the Company in writing of their desire to
cancel such Shelf Registration, the period set forth in Section
4.1(c)(i) shall be extended for a number of days equal to the
number of days in the Sales Blackout Period.
4.4 Listing. In connection with the registration of any
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offering of the Shares pursuant to this Agreement, the Company shall
use its reasonable efforts to effect the listing of such Shares on any
securities exchange on which any shares of the Common Stock are then
listed or otherwise facilitate the public trading of such Shares.
4.5 Holdback Agreements.
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(1) The Company shall not effect any public sale or
distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the
seven days prior to and during the 90-day period beginning on the
effective date of any registration statement in connection with a
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Demand Registration (other than a Shelf Registration) or a
Piggyback Registration, except pursuant to registrations on
Form S-8 or any successor form, S-4 or any successor form or
unless the underwriters managing any such public offering
otherwise agree.
(2) If the Holders of Shares notify the Company in
writing that they intend to effect an underwritten sale of
Shares registered pursuant to a Shelf Registration pursuant
to Section 2 hereof, the Company shall not effect any public
sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable
for its equity securities, during the 90-day period
beginning on the date such notice is received, except
pursuant to registrations on Form S-8 or any successor form,
S-4 or any successor form or unless the underwriters
managing any such public offering otherwise agree.
(3) If the Company completes an underwritten
registration with respect to any of its securities (whether
offered for sale by the Company or any other Person) on a
form and in a manner that would have permitted registration
of the Shares, then, except pursuant to such registration,
the Holders shall not effect any public sales or
distributions of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable
for such securities, until the termination of the holdback
period required from the Company by any underwriters in
connection with such previous registration, but in no event
more than 180 days from the effective date of such
registration.
Section 5. Preparation; Reasonable Investigation. In connection with
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the preparation and filing of each registration statement registering the Shares
under the Securities Act and each sale of the Shares thereunder, the Company
will give the Selling Holders and the underwritters, if any, and their
respective counsel and accountants, access to its financial and other records,
pertinent corporate documents and properties of the Company and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Selling Holders and such underwriters
or their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
Section 6. Indemnification and Contribution.
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(1) In the event of any registration of any of the
Shares hereunder, unless otherwise agreed to by the managing
underwriter of an underwritten offering, the Company will
enter into customary indemnification arrangements to
indemnify and hold harmless each of the Selling Holders,
each of their respective directors and officers, each Person
who participates as an underwriter in the offering or sale
of such securities, each officer and director of each
underwriter, and each Person, if any, who controls each such
Selling Holder or any such underwriter within the meaning of
the Securities Act (collectively, the "Covered Persons")
against any losses, claims, damages,
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liabilities and expenses, joint or several, to which such
Person may be subject under the Securities Act or otherwise
insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof)
arise out of are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in
any related registration statement filed under the
Securities Act, any preliminary prospectus or final
prospectus included therein, or any amendment or supplement
thereto, or any document incorporated by reference therein,
or (ii) 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, and the Company
will reimburse each such Covered Person, as incurred, for
any legal or any other expenses reasonably incurred by such
Covered Person in connection with investigating or defending
any such loss, claim, liability, action or proceeding;
provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such
preliminary prospectus or final prospectus, amendment or
supplement in reliance upon and in conformity with written
information furnished to the Company by such Selling Holder
or such underwriter specifically for use in the preparation
thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf
of any such Covered Person and shall survive the transfer of
such securities by the Selling Holders. The Company also
shall agree to provide for contribution as shall reasonably
be requested by the Selling Holders or any underwriters in
circumstances where such indemnity is held unenforceable.
(2) Each of the Selling Holders, by virtue of
exercising its respective registration rights hereunder,
agrees and undertakes to enter into customary
indemnification arrangements to indemnify and hold harmless
(in the same manner and to the same extent as set forth in
clause (a) of this Section 6) the Company, its directors and
officers, each Person who participates as an underwriter in
the offering or sale of such securities, each officer and
director of each underwriter, and each Person, if any, who
controls the Company or any such underwriter within the
meaning of the Securities Act, with respect to any statement
in, or omission from, such registration statement, any
preliminary prospectus or final prospectus included therein,
or any amendment or supplement thereto, if such statement or
omission is contained in written information furnished by
such Selling Holder to the Company specifically for
inclusion in such registration statement or prospectus;
provided, however, that the obligation to indemnify shall be
individual, not joint and several, for each Selling Holder
and shall be limited to the net amount of proceeds received
by such Selling Holder from the sale of Shares pursuant to
such registration statement. Such indemnity shall remain in
full force and effect regardless of any investigation made
by or on behalf of the Company or any such director, officer
or Person and shall survive the transfer of the registered
securities by the Selling Holders.
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(3) Any Person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying
party of any claim with respect to which it seeks
indemnification (provided, however, that the failure to give
prompt notice shall not impair any Person's rights to
indemnification hereunder to the extent such failure has not
prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties
may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be
subject to any liability for any settlement made by the
indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party
who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties
with respect to such claim.
(4) Indemnification and contribution similar to that
specified in the preceding subdivisions of this Section 6
(with appropriate modifications) shall be given by the
Company and the Selling Holders with respect to any required
registration or other qualification of such Shares under any
federal or state law or regulation of governmental authority
other than the Securities Act.
(5) "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity, or
any department, agency or political subdivision thereof.
Section 7. Benefits and Termination of Registration Rights. The Holders
-----------------------------------------------
may exercise the registration rights granted hereunder in such manner and
proportions as they shall agree among themselves. The registration rights
hereunder shall remain in effect with respect to all Shares for a period of five
(5) years from the date of the closing of the IPO; provided, however, they shall
cease to apply to any particular Shares and such securities shall cease to be
Shares hereunder when: (a) a registration statement with respect to the sale of
such Shares shall have become effective under the Securities Act and such Shares
shall have been disposed of in accordance with such registration statement; (b)
such Shares shall have been sold to the public pursuant to Rule 144 under the
Securities Act (or any successor provision); (c) such Shares shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration or
qualification of them under the Securities Act or any similar state law then in
force; (d) such Shares shall have ceased to be outstanding or (e) when such
Shares become eligible for sale pursuant to Rule 144(k) under the Securities Act
(or any successor provision).
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Section 8. Registration Expenses. As used in this Agreement, the term
---------------------
"Registration Expenses" means all expenses incident to the Company's performance
of or compliance with the registration requirements set forth in this Agreement
including, without limitation, the following: (a) all registration and filing
fees; (b) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares to be disposed of
under the Securities Act; (c) the fees, disbursements and expenses of one
counsel for the Selling Holders in connection with the registration of the
Shares to be disposed of under the Securities Act; (d) all expenses in
connection with the preparation, printing and filing of the registration
statement, any preliminary prospectus or final prospectus, any other offering
document and amendments and supplements thereto and the mailing and delivering
of copies thereof to the underwriters and dealers; (e) the cost of printing and
producing any agreements among underwriters, underwriting agreements, and blue
sky or legal investment memoranda, any selling agreements and any amendments
thereto or other documents in connection with the offering, sale or delivery of
the Shares to be disposed of; (f) all expenses in connection with the
qualification of the Shares to be disposed of for offering and sale under state
securities laws, including the fees and disbursements of counsel for the
underwriters in connection with such qualification and in connection with any
blue sky and legal investment surveys; (g) the filing fees incident to securing
any required review by the Nasdaq National Market and any securities exchange on
which the Common Stock is then traded or listed of the terms of the sale of the
Shares to be disposed of and the trading or listing of all such Shares on the
Nasdaq National Market and each such exchange; (h) the costs of preparing stock
certificates; (i) the costs and charges of the Company's transfer agent and
registrar; and (j) the fees and disbursements of any custodians, solicitation
agents, information agents and/or exchange agents. Registration Expenses shall
not include underwriting discounts and underwriters' commissions attributable to
the Shares being registered for sale on behalf of the Selling Holders, which
shall be paid by the Selling Holders.
Section 9. Miscellaneous.
-------------
9.1 No Inconsistent Agreements. The Company shall not on or
--------------------------
after the date of this Agreement enter into any agreement with respect
to its securities that violates or subordinates the rights expressly
granted to the Holders in this Agreement. The Company shall not take
any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the Holders of
Shares to include such Shares in a registration undertaken pursuant to
this Agreement; except, however, to the extent a conflict exists with
the [ ] between IPC and [ ], the terms of the latter agreement
shall prevail.
9.2 Complete Agreement. Except as otherwise set forth in this
------------------
Agreement, this Agreement shall constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and shall
supersede all prior agreements and understandings, whether written or
oral, between the parties with respect to such subject matter.
9.3 Authority. Each of the parties hereto represents to the
---------
other that (i) it has the corporate power and authority to execute,
deliver and perform this Agreement, (ii) the execution, delivery and
performance of this Agreement by it have been duly authorized by all
necessary corporate action, (iii) it has duly and validly executed and
delivered this
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Agreement, and (iv) this Agreement is a legal, valid and binding
obligation, enforceable against it in accordance with its terms subject
to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equity principles.
9.4 Assignment. This Agreement shall be binding on and inure
----------
to the benefit of and be enforceable by the parties hereto and, with
respect to the Company, its respective successors and assigns, and any
Permitted Transferees.
9.5 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without
giving effect to any choice or conflict of law provisions thereof,
except, however, the General Corporation Law of the State of Delaware
shall apply to matters governed exclusively thereby.
9.6 Notices. All notices, requests, demands and other
-------
communications under this Agreement shall be in writing and shall be
deemed to have been duly given: (i) on the date of service if served
personally on the party to whom notice is to be given; (ii) on the day
of transmission if sent via facsimile transmission to the facsimile
number given below, and telephonic confirmation of receipt is obtained
promptly after completion of transmission; (iii) on the day after
delivery to Federal Express or similar overnight courier or the Express
Mail service maintained by the United States Postal Service; or (iv) on
the fifth day after mailing, if mailed to the party to whom notice is
to be given, by first class mail, registered or certified, postage
prepaid and properly addressed, to the party as follows:
If to IPC:
IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, President and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to any other Holder, the address indicated for such Holder in the
Company's stock transfer records with a copy, so long as IPC owns any
Shares, to:
IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, President and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company:
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IXnet, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its address for the purpose of this Section 9.7 by
giving the other party written notice of its new address in the manner
set forth above.
9.7 Severability. Any provision of this Agreement which 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.
Any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
9.8 Remedies. Each of IPC and the Company shall be entitled to
--------
enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorneys' fees and costs)
caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. Each of IPC and the Company
acknowledges and agrees that under certain circumstances the breach by
IPC or any of its affiliates or the Company or any of its affiliates of
a term or provision of this Agreement will materially and irreparably
harm the other party, that money damages will accordingly not be an
adequate remedy for such breach and that the non-defaulting party, in
its sole discretion and in addition to its rights under this Agreement
and any other remedies it may have at law or in equity, may apply to
any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive
relief in order to enforce or prevent any breach of the provisions of
this Agreement.
9.9 Waivers. The observance of any term of this Agreement may
-------
be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce such
term, but such waiver shall be effective only if it is in writing
signed by the Company and the Holders of a majority of the Shares.
Unless otherwise
-15-
expressly provided in this Agreement, no delay or omission on the part
of any party in exercising any right or privilege under this Agreement
shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any right or privilege under this Agreement operate as a
waiver of any other right or privilege under this Agreement nor shall
any single or partial exercise of any right or privilege preclude any
other or further exercise thereof or the exercise of any other right or
privilege under this Agreement. No failure by either party to take any
action or assert any right or privilege hereunder shall be deemed to be
a waiver of such right or privilege in the event of the continuation or
repetition of the circumstances giving rise to such right unless
expressly waived in writing by the party against whom the existence of
such waiver is asserted.
9.10 Amendment and Modification. Amendments of, or
--------------------------
modifications to, this Agreement may only be made if such amendments or
modifications, as the case may be, are approved by [a majority of] the
Company's independent directors and the Holders of at least a majority
of the Shares and are evidenced by a written agreement signed by the
Company and such Holders. [(subject to compliance with Section 144 of
the Delaware General Corporation Law)]
9.11 General Interpretative Principles. For purposes of this
---------------------------------
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Agreement include the
plural as well as the singular, and the use of any gender
herein shall be deemed to include the other gender;
(2) accounting terms not otherwise defined herein have
the meanings given to them in accordance with United States
generally accepted accounting principles consistently
applied;
(3) references herein to "articles," "sections,"
"subsections" and other subdivisions without reference to a
document are to designated articles, sections, subsections
and other subdivisions of this Agreement;
(4) a reference to a subsection without further
reference to a section is a reference to such subsection as
contained in the same section in which the reference
appears, and this rule shall also apply to paragraphs and
other subdivisions;
(5) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole
and not to any particular provision;
(6) the term "include" or "including" shall mean
without limitation by reason of enumeration;
-16-
(7) the headings in this Agreement are solely for
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement;
(8) any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context otherwise requires; and
(9) the Parties have participated jointly in the
negotiation and drafting of this Agreement, and, in the
event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring either Party by virtue
of the authorship of any of the provisions of this
Agreement.
9.12 Counterparts. 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 be executed by facsimile signature.
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
IPC INFORMATION SYSTEMS, INC.
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
IXNET, INC.
By:
------------------------------------
Name:
------------------------------------
Title:
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