REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, by and between Powerlinx, Inc., a
Nevada corporation (the "Company"), and the person whose name appears on the
signature page attached hereto (individually a "Holder" and collectively, with
the holders of other Units (the "Holders") issued in the private placement
offering by the Company.
WHEREAS, pursuant to a subscription agreement (the "Subscription
Agreement"), in connection with the proposed private placement (the "Private
Placement") of the Company's units ("Units") consisting of (i) 8 shares of
Series A Convertible Preferred Stock ("Preferred Shares") (ii) 2 shares of the
Company's common stock, $0.01 par value per share (the "Common Shares"); and
(iii) 3 common stock purchase warrants ("Warrants");
WHEREAS, pursuant to the terms of and in order to induce the Holders to
enter into a certain subscription agreement dated the date hereof between the
Company and the Holders (the "Subscription Agreement") to purchase the Units,
the Company and the Holders have agreed to enter into this Agreement; and
WHEREAS, it is intended by the Company and the Holders that this Agreement
shall become effective immediately upon the acquisition by the Holders of the
Units;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Company hereby agrees as follows:
1. Registration. The Company shall file a registration statement with the
Securities and Exchange Commission which seeks to register the shares of common
stock issuable upon conversion of the Preferred Shares contained in the Units
and the shares of common stock issuable upon exercise of the Warrants contained
in the Units (together referred to as the "Registerable Securities") under the
Securities Act of 1933 (the "1933 Act"), no later than 30 days after the first
closing date of the Private Placement.
2. Cooperation with Company. Holders will cooperate with the Company in all
respects in connection with this Agreement, including, timely supplying all
information reasonably requested by the Company and executing and returning all
documents reasonably requested in connection with the registration and sale of
the Registerable Securities.
3. Registration Procedures. If and whenever the Company is required by any
of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registerable Securities under the 1933 Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible:
a. prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement and shall use its best efforts
to cause such registration statement to become effective and remain
effective until all the Registerable Securities are sold or
become capable of being publicly sold without registration under the
1933 Act.
b. prepare and file with the Commission 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 1933 Act with
respect to the sale or other disposition of all securities covered by
such registration statement whenever the Holder or Holders of such
securities shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration
statement pursuant to Rule 415 of the Commission);
c. furnish to each Holder such numbers of copies of a summary prospectus
or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as such Holder
may reasonably request in order to facilitate the public sale or other
disposition of the securities owned by such Holder;
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 each Holder shall reasonably request,
and do any and all other acts and things which may be necessary or
advisable to enable such Holder to consummate the public sale or other
disposition in such jurisdiction of the securities owned by such
Holder, except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
e. use its best efforts to list such securities on any securities
exchange on which any securities of the Company is then listed, if the
listing of such securities is then permitted under the rules of such
exchange;
f. enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and
customary form, with the managing underwriter or underwriters of such
underwritten offering;
g. notify each Holder of Registerable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered
under the 1933 Act, of the happening of any event of which it has
knowledge 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; and
h. furnish, at the request of any Holder on the date such Registerable
Securities are delivered to the underwriters for sale pursuant to such
registration or, if such Registerable Securities are not being sold
through underwriters, on the date the registration
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statement with respect to such Registerable Securities becomes
effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such
request, covering such legal matters with respect to the registration
in respect of which such opinion is being given as the Holder of such
Registerable Securities may reasonably request and are customarily
included in such an opinion and (ii) letters, dated, respectively, (1)
the effective date of the registration statement and (2) the date such
Registerable Securities are delivered to the underwriters, if any, for
sale pursuant to such registration from a firm of independent
certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder
making such request, covering such financial, statistical and
accounting matters with respect to the registration in respect of
which such letters are being given as the Holder of such Registerable
Securities may reasonably request and are customarily included in such
letters.
4. Expenses. All expenses incurred in any registration of the Holders'
Registerable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company, expenses of any audits to which the Company shall agree
or which shall be necessary to comply with governmental requirements in
connection with any such registration, all registration and filing fees for the
Holders' Registerable Securities under federal and State securities laws, and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to Section 3(h)(i); provided, however, the Company shall not be liable
for (a) any discounts or commissions to any underwriter; (b) any stock transfer
taxes incurred with respect to Registerable Securities sold in the Offering or
(c) the fees and expenses of counsel for any Holder, provided that the Company
will pay the costs and expenses of Company counsel when the Company's counsel is
representing any or all selling security holders.
5. Indemnification. In the event any Registerable Securities are included
in a registration statement pursuant to this Agreement:
a. Company Indemnity. Without limitation of any other indemnity provided
to any Holder, either in connection with the Offering or otherwise, to
the extent permitted by law, the Company shall indemnify and hold
harmless each Holder, the affiliates, officers, directors and partners
of each Holder, any underwriter (as defined in the ▇▇▇▇ ▇▇▇) for such
Holder, and each person, if any, who controls such Holder or
underwriter (within the meaning of the 1933 Act or the Securities
Exchange Act of 1934 (the "Exchange Act")), against any losses,
claims, damages or liabilities (joint or several) to which they may
become subject under the 1933 Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation"): (i) any alleged untrue statement of a material fact
contained in such registration statement including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein, (iii) any violation or alleged violation by the
Company of the 1933 Act, the Exchange Act, or (iv) any
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state securities law or any rule or regulation promulgated under the
1933 Act, the Exchange Act or any state securities law, and the
Company shall reimburse each such Holder, affiliate, officer or
director or partner, underwriter or controlling person for any legal
or other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable to any Holder in any
such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a violation which occurs
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Holder or any other officer, director or controlling person thereof.
▇. ▇▇▇▇▇▇ Indemnity. Each Holder shall indemnify and hold harmless the
Company, its affiliates, its counsel, officers, directors and
representatives, any underwriter (as defined in the ▇▇▇▇ ▇▇▇) and each
person, if any, who controls the Company or the underwriter (within
the meaning of the ▇▇▇▇ ▇▇▇) or liabilities (joint or several) to
which they may become subject under the 1933 Act, the Exchange Act or
any state securities law, and the Company shall reimburse each such
Holder, affiliate, officer or director or partner, underwriter or
controlling person for any legal or other expenses incurred by them in
connection with investigating or defending any loss, claim, damage,
liability or action insofar as such losses, claims, damages or
liabilities (or actions and respect thereof) arise out of or are based
upon any statements or information provided by such Holder to the
Company in connection with the offer or sale of Registerable
Securities.
c. Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Section 5 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if
a claim in respect thereof is to be made against any indemnifying
party under this Section 6 deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall
have the right to participate in and if the indemnifying party agrees
in writing that it will be responsible for any costs, expenses,
judgments, damages and losses incurred by the indemnified party with
respect to such claim, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if the indemnified
party reasonably believes that representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel
in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action shall relieve such indemnifying party of any liability to
the indemnified party under this Agreement only if and to the extent
that such failure is prejudicial to its ability to defend such action,
and 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 Agreement.
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d. Contribution. If the indemnification provided for in this Agreement is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage
or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party there under, shall contribute
to the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the indemnified party on the other hand in
connection with the statements or omissions which resulted in such
loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relevant fault of the
indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. Notwithstanding the foregoing, the amount any Holder shall
be obligated to contribute pursuant to the Agreement shall be limited
to an amount equal to the proceeds to such Holder of the Registerable
Securities sold pursuant to the registration statement which gives
rise to such obligation to contribute (less the aggregate amount of
any damages which the Holder has otherwise been required to pay in
respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising
from the sale of such Registerable Securities).
e. Survival of Indemnity. The indemnification provided by this Agreement
shall be a continuing right to indemnification and shall survive the
registration and sale of any Registerable Securities by any person
entitled to indemnification hereunder and the expiration or
termination of this Agreement.
6. Remedies.
a. Time is of Essence. The Company agrees that time is of the essence of
each of the covenants contained herein and that, in the event of a
dispute hereunder, this Agreement is to be interpreted and construed
in a manner that will enable the Holders to sell their Registerable
Securities as quickly as possible after such Holders have indicated to
the Company that they desire their Registerable Securities to be
registered. Any delay on the part of the Company not expressly
permitted under this Agreement, whether material or not, shall be
deemed a material breach of this Agreement.
b. Remedies Upon Default or Delay. The Company acknowledges the breach of
any part of this Agreement may cause irreparable harm to a Holder and
that monetary damages alone may be inadequate. The Company therefore
agrees that the Holder shall be entitled to injunctive relief or such
other applicable remedy as a court of competent jurisdiction may
provide. Nothing contained herein will be construed to limit a
Holder's right to any remedies at law, including recovery of damages
for breach of any part of this Agreement.
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7. Notices.
a. All communications under this Agreement shall be in writing and shall
be mailed by first class mail, postage prepaid, or telegraphed or
telexed with confirmation of receipt or delivered by hand or by
overnight delivery service,
b. If to the Company, at:
Powerlinx, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III,
Chairman & CEO
or at such other address as it may have furnished in writing to the
Holders of Registerable Securities at the time outstanding, or
c. if to any Holder of any Registerable Securities, to the address of
such Holder as it appears in the stock ledger of the Company.
d. Any notice so addressed, when mailed by registered or certified mail
shall be deemed to be given three days after so mailed, when
telegraphed or telexed shall be deemed to be given when transmitted,
or when delivered by hand or overnight shall be deemed to be given
when delivered.
8. Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of the Company and each of the Holders.
9. Amendment and Waiver. This Agreement may be amended, and the observance
of any term of this Agreement may be waived, but only with the written consent
of the Company and the Holders of securities representing a majority of the
Registerable Securities; provided, however, that no such amendment or waiver
shall take away any registration right of any Holder of Registerable Securities
or reduce the amount of reimbursable costs to any Holder of Registerable
Securities in connection with any registration hereunder without the consent of
such Holder; further provided, however, that without the consent of any other
Holder of Registerable Securities, any Holder may from time to time enter into
one or more agreements amending, modifying or waiving the provisions of this
Agreement if such action does not adversely affect the rights or interest of any
other Holder of Registerable Securities. No delay on the part of any party in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any party of any right, power or
remedy preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy.
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10. Counterparts. One or more counterparts of this Agreement may be signed
by the parties, each of which shall be an original but all of which together
shall constitute one and same instrument.
11. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York, without giving effect to
conflicts of law principles.
12. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
13. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day of ,2003.
POWERLINX, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III, Print Name of Holder
Chairman & CEO
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Signature of Holder
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