March 28, 2000
IDT Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Net2Phone, Inc.
Gentlemen:
This letter agreement (this "Agreement") will confirm our understandings
relating to the proposed purchase (the "Purchase") from IDT Corporation ("I
Corp.") of 14,900,000 shares of Class A common stock, par value $.01 per share
(the "Class A Stock") of Net2Phone, Inc. (the "Company") and certain related
matters as set forth herein.
1. Purchase Price. The purchase price for the 14,900,000 shares of Class A
Stock will be $75 per share in cash, or an aggregate of $1,117,500,000,
payable at the Closing.
2. Structure. Subject to the terms and conditions set forth herein, AT&T
Corporation ("A Corp.") shall effect the Purchase through a newly formed
business entity ("Holdco"). A Corp. agrees, that it will retain, either
directly or indirectly through its controlled affiliates and Liberty
Media Group, a majority of the ownership and voting interests in Holdco,
for a period of three years from the Closing. In the event that the
stockholders of the Company do not approve the Amendments (as defined
below), A Corp. shall have the right to sell or transfer all or any
portion of the ownership interests in Holdco at any time; provided that
if A Corp. ceases to own a majority of the ownership and voting
interests in Holdco, A Corp. shall cause Holdco to grant a proxy until
August 1, 2003 to I Corp. to vote any Common Shares owned by Holdco or
acquired by Holdco prior to August 1, 2003. Any sale or transfer by A
Corp. of its interest in Holdco shall not relieve A Corp. of its
obligations to cause the Purchase to occur and to cause Holdco to abide
by the terms of this Agreement, subject to the terms and conditions
described herein. Until August 1, 2003, and provided that I Corp. owns
not less than one million Common Shares (as
IDT Corporation
March 28, 2000
Page 2
defined in Article Fourth of the Company's certificate of incorporation
("Common Shares")), Holdco shall not without I Corp.'s consent sell or
transfer all or any portion of its shares of Class A Stock or Common
Stock purchased pursuant to this Agreement.
3. Timing. The Closing shall occur upon the satisfaction or waiver of the
conditions described herein, provided that in no event shall the Closing
occur prior to August 1, 2000. The Closing will be conditioned upon (1)
the Board of Directors of the Company, no later than March 31, 2000,
adopting the Amendments (as defined below), declaring the advisability
of the Amendments and calling a special meeting of the Company's
stockholders for the consideration of the Amendments, (2) the receipt of
all required regulatory approvals, (3) the expiration of the waiting
period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act, (4) the
absence of an injunction making illegal or otherwise prohibiting the
consummation of any of the transactions contemplated in this Agreement,
(5) the absence of any pending litigation or regulatory proceeding in
either case initiated by a governmental authority against the Company or
with respect to the transactions contemplated by this Agreement, (6) the
absence of any material adverse change in the business or operations of
the Company resulting from the actions or inactions of the management of
the Company, excluding actions or decisions not to act taken in good
faith and with the appropriate degree of care, and excluding changes in
general economic conditions, general changes in the industry in which
the Company is engaged and general changes in technology, (7) the
accuracy in all material respects of the representations and warranties
contained herein, (8) the performance of all agreements to be performed
hereunder prior to the Closing, (9) the accuracy in all material
respects of the reports filed by the Company with the Securities and
Exchange Commission, as of their respective dates, and (10) the absence
of any infringement by the Company of any intellectual property rights
of any third party that has or reasonably could be expected to have a
material adverse effect on the business of the Company.
4. Sale of Additional Shares by the Company. It shall also be a condition
of A Corp's obligation to consummate the Purchase that the Company shall
have issued to Holdco four million shares of Class A Stock (the "Primary
Issuance") for a price of $75 per share (it being understood that the
Primary Issuance shall not be consummated unless the Purchase is
consummated immediately thereafter). The Board of Directors of the
Company, no later than March 31, 2000, shall duly adopt a resolution
setting forth amendments (the "Amendments") to the Company's certificate
of incorporation (i) increasing the number of authorized shares of Class
A Stock by four million and (ii) expanding the Board of Directors of the
Company by three seats, and resolving to nominate designees named by A
Corp. to such additional three seats, and shall by such date also
declare the advisability of the Amendments and call a special meeting of
its stockholders for the consideration of the Amendments. The Board of
Directors of the Company, subject to its fiduciary obligations, shall
take such actions as are necessary and appropriate to cause the adoption
of the Amendments, including causing an information or proxy statement
containing the recommendation of the Board of Directors in favor of the
Amendments to be distributed to stockholders as promptly as practicable.
The only additional corporate action required for the Primary Issuance
is the approval of the Amendments by the affirmative vote of the holders
of at least 66-2/3% of the outstanding Common Shares and the filing of
the Amendments. By
IDT Corporation
March 28, 2000
Page 3
resolution, the Board of Directors of the Company will confirm that the
restrictions contained in Section 203 of the Delaware General
Corporation Law shall not apply to any business combination between the
Company and A Corp. or Holdco. A result of the Primary Issuance will be
to cause Holdco to become a Holder within the meaning of Article Fourth,
Section 3(e)(2) of the Company's certificate of incorporation
("Holder"), with the effect that the shares of Class A Stock to be sold
to Holdco by I Corp. will not be converted by their terms into shares of
Common Stock upon the consummation of the Purchase. In addition, it is a
condition of A Corp.'s obligation to consummate the Purchase that the
Board of Directors of the Company, no later than March 31, 2000, shall
have granted to Holdco demand and "piggyback" registration rights with
respect to the shares of capital stock of the Company hereafter acquired
by it hereunder, substantially as provided in the form of the
Registration Rights Agreement attached hereto as Exhibit A which
registration rights will be exercisable upon the lapse of the
restriction on Holdco's right to dispose of shares contained in Section
2.
5. Efforts by I Corp in Support of the Primary Issuance and the Amendments.
I Corp. agrees that it will vote all of the shares of capital stock of
the Company held by it in favor of the Amendments and will use its best
efforts to cause the Primary Issuance to be consummated in the manner
contemplated herein. I Corp. may terminate this Agreement within five
business days of such date if, by March 31, 2000, the Board of Directors
of the Company has not adopted a resolution amending Section 6(g) of the
Company's Amended and Restated 1999 Stock Option and Incentive Plan (the
"Plan"), and any other sections of the Plan necessary to ensure that no
rights of I Corp. employees under the Plan will be terminated or
affected in any way as a result of the transactions contemplated by this
Agreement. A Corp. may terminate this Agreement within 5 business days
of such date if I Corp. breaches its obligations contained in the first
sentence of this paragraph or if the Board of Directors of the Company
fails to take the actions contemplated herein by March 31, 2000 or
thereafter withdraws or modifies in a manner adverse to A Corp. its
recommendation in favor of the Amendments.
6. Failure to Obtain Shareholder Approval of Amendments. If the approval of
the shareholders of the Company for the Amendments is not obtained by
August 1, 2000, but upon the satisfaction or waiver of the other
conditions to Closing on or prior to September 30, 2000, Holdco shall
promptly loan to I Corp. $1,117,500,000, which loan (the "Loan") shall
accrue interest at a per annum rate of 7%, compounded quarterly; it
being agreed that if such conditions have not been satisfied or waived
on or prior to September 30, 2000, then this Agreement shall terminate.
The Loan shall initially be for a term of five years, but shall be
renewed automatically for up to an aggregate of three one year periods
unless not less than six months prior to the then scheduled maturity of
the Loan Holdco or I Corp. provides notice that it has elected not to
extend the maturity of the Loan. Thereafter, at such time as Holdco
becomes a Holder, I Corp. shall promptly deliver to Holdco 14,900,000
shares of Class A Stock, whereupon the Loan (including interest accrued
thereon) will be discharged. Upon the maturity of the Loan, I Corp. will
promptly deliver to Holdco 14,900,000 shares of Class A Stock (which
upon delivery to Holdco will become an equal number of shares of common
stock, par value $.01 per share (the "Common Stock")), whereupon the
Loan will be discharged. From the date hereof and until the earlier of
the Closing or this Agreement terminates, or, if the Loan (including any
interest
IDT Corporation
March 28, 2000
Page 4
accrued thereon) is made, until the Loan is no longer outstanding, I
Corp. will not dispose, encumber or enter into any agreement to dispose
or encumber the 14,900,000 shares of Class A Stock or otherwise take any
action that would make it unable to fulfill its obligation to deliver
such shares upon the maturity of the Loan. The agreement governing the
Loan shall provide that Holdco's sole recourse for non-payment of the
Loan (including any interest thereon) will be the 14,900,000 shares of
Class A Stock or Common Stock, as applicable.
7. Right of First Refusal. The shares of Class A Stock currently owned by I
Corp. which are not subject to the Purchase (the "Remaining Shares")
shall be subject to a right of first refusal in favor of Holdco from the
date hereof until August 1, 2003 (the "Right of First Refusal Period").
I Corp. shall not transfer any of the Remaining Shares during the Right
of First Refusal Period unless it shall have provided Holdco with notice
in writing stating (1) that it has received a firm offer to purchase
such shares, (2) the fair market value of the consideration proposed to
be paid to I Corp. in such transfer (or, in the case of a registered
public offering, the fact that the consideration will be the fair market
value of the shares at the time the registration statement becomes
effective), as well as the other terms thereof and (3) in the case of a
proposed buyer who is also a Holder, the identity of the proposed buyer.
In the event that the aggregate purchase price of the Remaining Shares
proposed to be sold by I Corp. to a third party purchaser equals or
exceeds $100,000,000, Holdco shall have 21 days from the date of such
written notice (the "Notice Period") to advise I Corp. whether it wishes
to exercise the Right of First Refusal. If Holdco advises I Corp. in
writing that it wishes to exercise the Right of First Refusal, thereupon
I Corp. and Holdco will be deemed to have agreed to the sale to Holdco
of such shares upon financial terms and conditions no less favorable to
I Corp. than those set forth in the notice, the closing thereon to occur
as promptly as practicable following the receipt of all necessary
regulatory approvals; provided, however, that if all necessary
regulatory approvals are not obtained within 90 days from the date of
the notice, the provisions in this Section 7 shall automatically
terminate. If Holdco notifies I Corp. in writing that it does not wish
to purchase such shares, or such 21 day period elapses without any
written notification by Holdco, then I Corp. shall be free to dispose of
such shares upon terms and conditions no more favorable to a third party
than those set forth in the notice for a period of 60 days; provided,
however, that if I Corp. identified a Holder as the proposed buyer in
its notice to Holdco, such shares shall only be sold to such Holder. If
the aggregate purchase price of the Remaining Shares proposed to be sold
by I Corp. to a third party purchaser is less than $100,000,000, the
Notice Period (as defined above) shall be 7 days from the date of
written notice. Notwithstanding the foregoing, provided that stockholder
approval of the Amendments has been obtained and the Closing has
occurred, individual sales of not more than 100,000 shares of Class A
Stock by I Corp., up to an aggregate of 2,000,000 shares of Class A
Stock during the Right of First Refusal Period, shall not be subject to
the provisions of this Section 7.
8. Conversion of Remaining Shares. I Corp. shall convert such number of the
Remaining Shares as requested by Holdco into shares of Common Stock
promptly upon the payment in cash to I Corp. of an amount equal to 10%
of the average daily closing price per share of Common Stock for the
20-trading day period ending on the day prior to the date of such notice
of conversion in
IDT Corporation
March 28, 2000
Page 5
respect of each of the Remaining Shares requested to be converted, if so
requested by Holdco, during the period ending August 1, 2003.
9. Voting Agreement. Until August 1, 2003 or such earlier time as I Corp.
ceases to own two million or more Common Shares or until A Corp. ceases
to own a majority of the ownership and voting interests in Holdco,
Holdco and I Corp. will vote all of the Common Shares beneficially owned
by each of them in favor of mutually acceptable nominees to the Board of
Directors of the Company. In the event that Holdco and I Corp. are
unable to agree on acceptable nominees, Holdco and I Corp. will be
counted as present for purposes of determining a quorum at the
shareholders meeting but will abstain from voting on such nominees as to
which Holdco and I Corp. are unable to agree.
10. Company Headquarters. The parties agree that they will support the move
to and continued presence for no less than 10 years of the headquarters
of the Company at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in Newark, New Jersey, unless
otherwise mutually agreed.
11. Joint Venture and Licensing. A Corp. and Holdco will support the
formation of a joint venture between the Company and I Corp. for the
development and sale of Internet telephony network equipment using the
Company's VOIP technology. No later than March 31, 2000, the Board of
Directors of the Company will agree that (i) the Company will grant to A
Corp. a license for all of the Company's present and future technology
for use in the present and future businesses of A Corp. and its
affiliates and (ii) the Company will grant to I Corp. a license for all
of the Company's present and future technology for use in the present
and future businesses of I Corp. and its affiliates; it being agreed
that should any term, condition or pricing of a license be given prior
to or after the date of this agreement by the Company to any other
person (including, in the case of A Corp., I Corp., and in the case of I
Corp., A Corp.) which is more favorable to the licensee than that given
to A Corp. or I Corp., as the case may be, such term, condition or
pricing shall be applicable to A Corp.'s license or I Corp.'s license,
as the case may be, at such party's option. Any contract or transaction
between A Corp. and the Company, or between I Corp. and the Company
involving the potential payment to or from the Company of more than
$500,000, shall be subject to the approval of a majority of the
disinterested directors of the Company; provided that the requirement
for such approval shall cease to apply at such time as A Corp. or I
Corp., as the case may be, becomes the beneficial owner of more than 85%
or less than 15% of the voting power of the Company; and provided
further that the requirement of disinterested director approval shall
not be required with respect to the granting of a license by the Company
to A Corp. or I Corp. which does not contain terms, conditions and
pricing that are more favorable to the licensee than those contained in
a license granted to any other person.
11(a). A Corp/I Corp. Arrangements. A Corp. and I Corp. agree that they will
enter into the following series of commercial and outsourcing
arrangements as soon as practicable following the date of this
Agreement, with the intent to use reasonable best efforts to have these
agreements in place by Closing. The agreements referred to in this
Section 11 each shall be for a term of three years, unless the parties
agree otherwise.
IDT Corporation
March 28, 2000
Page 6
o A Corp. and I Corp. will enter into an agreement, which will
provide for each party to be classified by the other party as a
"Preferred Supplier" where mutually beneficial and not
inconsistent with other commitments of the parties existing on the
date of this Agreement, with respect to all services and products
offered by the parties.
o I Corp. and A Corp. will enter into an agreement pursuant to which
A Corp will supply 66% of the domestic service needs, including
long distance, data, IP, and local service, which I Corp.
purchases from third parties; provided that such agreement shall
not require the substitution of A Corp. for any supplier to I
Corp. under an agreement existing on the date of this Agreement,
unless such existing commitment can be assigned or transferred to
A Corp. without causing an adverse effect to I Corp.'s business
(including relations with customers and suppliers), financial
position or results of operations. A Corp. will manage such
existing supply commitments with the intent of providing
integrated support to I Corp., and transitioning to A Corp the
services covered by such existing supply commitments as soon as it
is reasonably practicable to do so in a manner that benefits I
Corp. and does not have any adverse effect on I Corp's. business,
financial condition or results of operations. A Corp shall provide
the domestic services it provides on a most favored customer
basis, taking into account the types and volumes of services
furnished. I Corp.'s commitment to enter into this agreement will
be contingent upon I Corp. experiencing cost savings in each
category of services provided (as defined below) as compared with
the cost to I Corp. of obtaining comparable services of comparable
quality from third parties. For the purpose of calculating the
cost savings, the parties will measure savings within three (3)
separate buckets or categories: (1) domestic voice services; (2)
data and IP services; and (3) fiber, colocation, and network
management services. The pricing terms for such services shall be
adjusted as commercially required to maintain competitiveness to
ensure that the principles set forth above in this paragraph
continue to be observed throughout the term of the agreement.
o The parties intend to purchase international services from one
another, with the understanding that the substantive commitments
concerning such services are as set forth in Section 11(b).
o I Corp. will obtain a domestic fiber ring from A Corp. (a Dark
Fiber, Lit Fiber or OC-X service, as agreed upon by the parties).
The price shall be the lowest rate that A. Corp has offered for a
comparable arrangement; provided, however, that I Corp. will be
under no obligation to acquire such ring unless A Corp. provides
the fiber ring at a price equal to or lower than that at which I
Corp. could obtain the same capabilities from another source. A
Corp. agrees to engineer the ring based on I Corp.'s forecast of
demand for use of the capacity on the ring and agrees to price the
capacity it provides based on the capacity required to meet such
IDT Corporation
March 28, 2000
Page 7
forecasts of demand, whether or not it engineers the network for
greater capacity. The parties will agree on a plan to update such
forecasts from time to time as necessary to reflect I Corp.'s
forecasted needs. I Corp. agrees that it will terminate the
traffic which it services on this ring, provided that I Corp.
shall be permitted first to terminate traffic on capacity which I
Corp. has or has contractually committed to on the date of this
agreement or under agreements to terminate traffic that are in
effect on the date of this Agreement.
o I Corp. and A Corp. will enter into an Outsourcing Agreement
pursuant to which I Corp. will outsource network management to A
Corp. at mutually agreed upon prices and terms. In addition, the
parties intend to enter into an agreement covering each party's
use of the other party's web hosting facilities.
o A Corp. will initially sublease from I Corp. 40,000 square feet
(with options to eventually rent an additional 160,000 square
feet, contingent on the availability of space) at I Corp.'s
facility at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. The initial base
rent shall be the lower of (1) between $25 to $29 per square foot
(the rate excludes utility and construction costs), or (2) market
rates for comparable space. Rent shall be CPI adjusted on an
annual basis, consistent with I Corp.'s underlying lease. A Corp.
agrees to locate a network operation center and/or a switch or
switches at the subleased premises.
o A Corp. and I Corp. will support good faith negotiations to reach
an agreement to colocate at each other's facilities.
11(b). Concert/I Corp. Arrangements. A Corp. will use its reasonable
best efforts to cause Concert to enter into the following series of
commercial arrangements with I Corp.
o Concert and I Corp. will enter into an agreement, which will
provide for each party to be classified by the other party as a
"Preferred Supplier" where mutually beneficial and not
inconsistent with other commitments of the parties existing on the
date of this Agreement, with respect to all services and products
offered by the parties.
o For a period of three (3) years from the date hereof, I Corp. and
Concert will work together to purchase from each other an annual
aggregate amount of services, including international termination,
international bandwidth, least cost routing infrastructure
buildouts, international toll free services, offshore UK wholesale
delivery, co-location opportunities, switching development and
management, etc., provided however that any commitment by a party
under this paragraph will be contingent on such party having
excess demand that it cannot meet itself through its network or
through PTT correspondent arrangements, and upon it being
economically attractive to such party to outsource this demand to
the other party.
The parties agree to provide such services at Concert and I Corp's
respective preferred leading edge cost structures with
consideration to quality, volumes, availability of capacity and
other key market and economic conditions. Concert and I Corp. will
provide each other with six (6) month traffic projections
identifying each party's price and volume requirements.
o Concert and I Corp. will support good faith negotiations to work
together to partner in building or jointly purchasing
international fiber networks or in swapping capacity on each
other's networks.
o Concert and I Corp. will support good faith negotiations to reach
an agreement to colocate at each other's facilities and to use
each other's switching facilities to route traffic in mutually
beneficial ways, including, but not limited to, I Corp.'s
utilization of Concert's European and Asian switches for I Corp's
opportunistic traffic.
12. Tag-along Provisions. If, during the 18 month period after the date
hereof, Holdco buys shares of Class A Stock from other current Holders,
Holdco will so notify I Corp. in writing, such notice to contain
information regarding number of shares, price and other material terms
of the transaction and I Corp. then will have the option, exercisable
within 30 days of its having received such written notice of such
purchase, of causing Holdco to purchase up to five million shares of
Class A Stock (or if A Corp. has exercised its conversion rights under
paragraph 8, then Common Stock) from it on the same terms and conditions
as Holdco purchased shares from such other holder of Class A Stock;
provided, that the provisions of this paragraph will not apply to
arrangements entered into by Holdco or A Corp. solely in connection with
obtaining shareholder approval of the Amendments.
13. Definitive Documentation. The parties agree to negotiate in good faith
and enter into mutually acceptable definitive documentation with respect
to the transactions contemplated herein and on the terms and conditions
set forth herein.
14. Binding Intent. It is the intent of the parties hereto that the
agreements contained herein be legally binding on and enforceable
against them upon, and only upon, the Board of Directors of the Company
taking the actions identified herein as required to be taken no later
than March 31, 2000. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to
contracts executed in and to be fully performed in such State, without
giving effect to its conflicts of law, rules or principles. Each party
hereto (a) consents to submit itself to the personal jurisdiction of any
federal court located in the State of New York or any New York state
court in the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or
state court sitting in the State of New York. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity
IDT Corporation
March 28, 2000
Page 9
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
If the foregoing conforms to your understanding, please so signify by signing in
the space provided below. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Very truly yours,
AT&T CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------
Accepted and Agreed:
IDT CORPORATION.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
ANNEX A
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of o, by and
between N Inc., a Delaware corporation (the "Company"), and Holdco, a o
corporation (the "Investor").
WHEREAS, the Company will issue and sell to the Investors o shares of
Class A Common Stock of the Company, par value $0.01 per share (the "Class A
Stock"), pursuant to the Subscription Agreement, dated as of o, 2000, between
the Company and the Investor (the "Subscription Agreement");
WHEREAS, I Corp., a Delaware corporation ("I Corp.") has agreed to sell
to the Investor 14,900,000 shares of Class A Stock, pursuant to the Purchase
Agreement, dated as of o, 2000, between I Corp. and the Investor (the "Purchase
Agreement");
WHEREAS, the Company has agreed to grant the registration rights set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. For the purposes of this Agreement:
(a) The term "Affiliate" means, with respect to any person or entity,
any other person or entity directly or indirectly controlling, controlled by or
under common control with the first such person or entity.
(b) The term "current market value" means the average closing sale
price per share of Common Stock, par value $0.01 per share, of the Company
("Common Stock"), on the NASDAQ National Market over the 10 trading days prior
to the date of determination.
(c) The term "Holder" means a holder of Registrable Securities.
(d) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities
Act of 1933, as amended (the "Act"), and the declaration or ordering of
effectiveness of such registration statement.
(e) The term "Registrable Securities" means the shares of Class A
Common Stock issued to the Investor pursuant to the Subscription Agreement and
the shares of Class A Stock purchased by the Investor pursuant to the Purchase
Agreement (collectively, the "Securities") as the same may exist, from time to
time; provided, however, that such Securities shall cease to be Registrable
Securities when and to the extent that (i) such Securities have been sold
pursuant to an effective registration statement under the Act, (ii) such
Securities have become eligible for resale pursuant to Rule 144(k) of the Act
(or any similar provision then in force) or another provision of Rule 144 of the
Act pursuant to which all of such Securities are immediately eligible for resale
or (iii) such Securities have ceased to be outstanding.
Section 2. Registration Rights.
2.1. (a) Registration Upon Demand.
(i) For a period of [three years] after August 1, 2003, one or more
Holders that in the aggregate beneficially own at least 50% of the Registrable
Securities may make a demand that the Company effect the registration of all or
part of such Holders' Registrable Securities (a "Demand Registration"). Upon
receipt of a valid request for a Demand Registration, the Company shall
promptly, and in any event no later than 15 days after such receipt, notify all
other Holders of the making of such demand and shall use its best efforts to
register under the Act as expeditiously as may be practicable the Registrable
Securities that Holders have requested the Company to register in accordance
with this Section 2.1. Notwithstanding the foregoing, the Company shall not be
required to effect any registration if the Registrable Securities that the
Company shall have been requested to register shall, in the aggregate, have a
current market value of less than $5,000,000. The Holders shall have the right
to one Demand Registration pursuant to this Section 2.1(a)(i). Notwithstanding
Section 2.1(a)(ii), if any registration demand is made by Holders beneficially
owning 50% or more of the Registrable Securities, and no Demand Registration has
been made prior to such time, then such registration demand shall be treated for
purposes of this Agreement as a Demand Registration, regardless of the
registration form used (including Form S-3).
(ii) Notwithstanding Section 2.1(a)(i) hereof, and in addition to the
rights granted under Section 2.1(a)(i) hereof, at any time after the Company
becomes eligible to register its securities on Form S-3 (or any successor form),
one or more holders that in the aggregate beneficially own at least 20% of the
Registrable Securities may make a demand
2
that the Company effect the registration of all or part of such Holders'
Registrable Securities (an "S-3 Demand Registration"). Upon receipt of a valid
request for an S-3 Demand Registration, the Company shall promptly, and in any
event no later than 15 days after such receipt, notify all other Holders of the
making of such demand and shall use its best efforts to register under the Act
as expeditiously as may be practicable the Registrable Securities which Holders
have requested the Company to register in accordance with this Section 2.1.
Notwithstanding the foregoing, the Company shall not be required to effect any
registration if the Registrable Securities that the Company shall have been
requested to register shall, in the aggregate, have a current market value of
less than $1,000,000. The Holders shall have the right to two S-3 Demand
Registrations pursuant to this Section 2.1(a)(ii).
(b) Effective Registration Statement. A registration requested pursuant
to Section 2.1(a) hereof shall not be deemed to have been effected (i) if a
registration statement with respect thereto has not been declared effective by
the Securities and Exchange Commission ("SEC"), (ii) if after it has become
effective, such registration is materially interfered with by any stop order,
injunction or similar order or requirement of the SEC or other governmental
agency or court for any reason not attributable to any of the Holders and has
not thereafter become effective, or (iii) the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of a Holder.
2.2. "Piggy-Back" Registration.
(a) If the Company proposes to register any securities under the Act in
connection with any offering of its securities (other than a registration
statement on Form S-8 or Form S-4, or their successors, or any other form for a
similar limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation), whether or not for its own account, the Company shall furnish
promptly, and in any event not less than 15 days in advance, written notice to
the Holders of its intention to effect such registration and the intended method
of distribution in connection therewith. Upon the written request of a Holder
made to the Company within 15 days after the receipt of such notice by the
Company, the Company shall include in such registration the requested number of
the Holder's Registrable Securities (a "Piggy-Back Registration"). If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, the Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements
3
as may be filed by the Company with respect to offerings of its Common Stock and
any other securities, all upon the terms and conditions set forth herein.
(b) Nothing in this Section 2.2 shall create any liability on the part
of the Company or any other person to the Holders if the Company, for any
reason, decides not to file a registration statement proposed to be filed
pursuant to Section 2.2(a) or to withdraw such registration statement subsequent
to its filing (except for the Company's obligation to pay the expenses in
connection therewith as provided in Section 2.6), regardless of any action
whatsoever that a Holder may have taken, whether as a result of the issuance by
the Company of any notice under Section 2.2(a) or otherwise.
2.3. Blackout Periods for Holders. If the board of directors of the
Company determines in good faith that the registration and distribution of
Registrable Securities (or the use of a registration statement or related
prospectus) would be materially detrimental to the Company or its shareholders
and therefore the board of directors determines that it is in the Company's best
interest to defer the filing, and promptly gives the Holders written notice of
such determination in the form of a certificate signed by an executive officer
of the Company following their request to register any Registrable Securities
pursuant to Section 2.1, the Company shall be entitled to postpone the filing of
the registration statement otherwise required to be prepared and filed by the
Company pursuant to Section 2.1 hereof for a reasonable period of time, but not
to exceed 90 days (a "Demand Blackout Period") after the date of such request.
The Company shall promptly notify each holder of the expiration or earlier
termination of any Demand Blackout Period.
2.4. Obligations of the Company. Whenever the Company is required to
effect the registration of any Registrable Securities under this Section 2, the
Company shall, at its expense and as expeditiously as may be practicable:
(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 Holders
of a majority of the Registrable Securities registered thereunder, use
reasonable efforts to keep such registration statement effective for ninety (90)
days.
(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
applicable law with respect to the disposition of all of the Registrable
Securities covered by such registration statement.
4
(c) Furnish to the Holders of Registrable Securities registering such
securities such numbers of copies of a prospectus, including a preliminary
prospectus (in the event of an underwritten offering), in conformity with the
requirements of applicable law, and such other documents as each such Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it.
(d) Use best efforts to register and qualify the securities covered by
such registration statement under state blue sky laws in any U.S. jurisdictions
in which such registration and qualification is reasonably requested by any
Holder; 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 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 and substance as agreed to by the Company and the managing underwriter of
such offering.
(f) Promptly notify the Holders in writing:
(i) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has become
effective;
(ii) of any request by the SEC for amendments or supplements to the
registration statement or related prospectus or any written request by the SEC
for additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or prospectus or any amendment or
supplement thereto or the initiation of any proceedings by any person for that
purpose, and promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued; and
(iv) of the receipt by the Company of any written notification with
respect to the suspension of the qualification of any Registrable Securities for
sale in any jurisdiction or the initiation or overt threat of any proceeding for
such purpose.
(g) Notify the Holders in writing on a timely basis, at any time when a
prospectus relating to such Registrable Securities is required to be delivered
under
5
applicable law, 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 and at the request of
any such Holder promptly prepare and furnish to such Holder a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offerees of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(h) Furnish, at the request of any Holder participating in the
registration, on the date that such Registrable Securities are delivered to the
underwriters for sale, 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 as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as if customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders participating in the
registration, addressed to the underwriters, if any, and to the Holders
participating in the registration of Registrable Securities and (ii) a "Cold
Comfort" letter dated as of such date, from the independent certified public
accountants to the underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders participating
in the registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders participating in the
registration of Registrable Securities.
(i) Use best efforts to cause the transfer agent to remove restrictive
legends on certificates representing the securities covered by such registration
statement, as the Company determines to be appropriate, upon advice of counsel.
(j) Use best efforts to list such Registrable Securities on any
national securities exchange on which any shares of the Common Stock are listed.
(k) Prepare and file with the SEC, promptly upon the request of any
such Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders, is required under
the Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities by such Holders.
6
(l) Make available for inspection by any Holder of such Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information (together
with the Records, the "Information") reasonably requested by any such Inspector
in connection with such registration statement. Any of the Information that the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, shall not be disclosed by the Inspectors unless
(i) the release of such Information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (ii) such Information has been
made generally available to the public or (iii) as necessary to enforce a
Holder's rights under this Agreement. The Holder of Registrable Securities
agrees that it will, upon learning that disclosure of such Information is sought
in a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential and the Inspectors shall not
disclose such Information until such action is determined.
(m) Provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Securities.
(n) Use its best efforts to take all other steps necessary to effect
the registration of such Registrable Securities pursuant to the terms
contemplated hereby.
2.5. Furnish Information.
(a) It shall be a condition precedent to the obligation of the Company
to include any Registrable Securities of any Holder in a registration statement
pursuant to this Section 2 that the Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, any other
securities of the Company held by it, and the intended method of disposition of
such Registrable Securities as shall be required to effect the registration of
the Registrable Securities held by such Holder. Any such information shall be
provided to the Company within any reasonable time period requested by the
Company.
(b) Each Holder shall notify the Company, at any time when a prospectus
is required to be delivered under applicable law, of the happening of any event
as a result of which the prospectus included in the applicable registration
statement, as then in effect, in
7
each case only with respect to information provided by such Holder, 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 light of the circumstances then existing. Such Holder shall immediately upon
the happening of any such event cease using such prospectus. Any other Holders
shall cease using such prospectus immediately upon receipt of notice from the
Company to that effect. If so requested by the Company, each Holder shall
promptly return to the Company any copies of any prospectus in its possession
(other than one permanent file copy) that contains 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 light of the
circumstances then existing.
2.6. Expenses of Registration. The Company shall bear and pay all
reasonable expenses incurred in connection with any registration, filing or
qualification of Registrable Securities pursuant to Section 2.1 or Section 2.2
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, but excluding underwriting discounts and
commissions relating to the Registrable Securities. The Company also shall be
required to pay and bear the legal fees of one counsel for the Holders in an
amount not to exceed $25,000 in connection with any registration.
2.7. Underwriting Requirements. In connection with any underwritten
offering of a Holder's Registrable Securities, the Company shall not be required
under Section 2.4 to register any of such Registrable Securities in connection
with such underwritten offering unless the Holder accepts the underwriters
selected by the Company and then only in such quantity as the lead managing
underwriter determines, in its good faith discretion, will not jeopardize the
success of the offering by the Company. To the extent that the lead managing
underwriter will not permit the registration of all of the Registrable
Securities sought to be registered, in the case of a registration pursuant to
Section 2.1 or 2.2, the Registrable Securities to be included shall be
apportioned among the Holders on a pro rata basis (based on the number of
Securities proposed to be registered by each), first among the Holders of
Registrable Securities to be registered pursuant to Section 2.1, and thereafter
among the Holders of Registrable Securities to be registered pursuant to Section
2.2; provided, however, that the right of the underwriters to exclude
Registrable Securities from the registration and underwriting as described above
shall be restricted such that all shares that are not Registrable Securities and
all shares that are held by persons who are employees or directors of the
Company (or any subsidiary of the Company) shall first be excluded from such
registration and underwriting before any Registrable Securities are so excluded.
Notwithstanding the foregoing, the Holders' Registrable Securities shall in no
event be reduced to less than one-third of the total number of shares of Common
Stock to be registered in connection with a Piggyback Registration. Those
Registrable Securities and other securities that are
8
excluded from the underwriting by reason of the managing underwriter's marketing
limitation and all other Registrable Securities not originally requested to be
so included shall not be included in such registration and shall be withheld
from the market by the Holders thereof for a period, not to exceed 90 days,
which the managing underwriter reasonably determines necessary to effect the
underwritten public offering. No Holder of Registrable Securities shall be
entitled to participate in an underwritten offering unless such Holder enters
into, and performs its obligations under, one or more underwriting agreements
and any related agreements and documents (including an escrow agreement and/or a
power of attorney with respect to the disposition of the Registrable
Securities), in the form that such Holder shall agree to with the lead managing
underwriter of the transaction. If any Holder disapproves of the terms of any
underwriting, it may elect, prior to the execution of any underwriting
agreement, to withdraw therefrom by written notice to the Company and the lead
managing underwriter. Any Registrable Securities so withdrawn from an
underwriting by such Holder shall be withdrawn from such registration and shall
not be transferred in a public distribution prior to 180 days following the
effective date of the registration statement relating thereto.
2.8. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.9. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Act and the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and their respective directors, officers, partners, employees,
legal counsel and affiliates (each, an "Indemnified Person"), against any
losses, claims, damages, or liabilities joint or several) to which they may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (collectively, a
"Violation") (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any final prospectus
contained therein or any amendments or supplements thereto or (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 by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law in connection with the offering covered by any registration
statement; and the Company will pay to each Indemnified
9
Person any reasonable legal or other expenses incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided that the indemnity agreement contained in this Section 2.9(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 strict conformity with written information furnished by a
Holder expressly for use in connection with such registration or is caused by
any failure by the Holder to deliver a prospectus or preliminary prospectus (or
amendment or supplement thereto) as and when required under the Act after such
prospectus has been timely furnished by the Company.
(b) To the extent permitted by law, each Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, and each person, if any, who controls the Company
within the meaning of the Act or the 1934 Act (each, an "Indemnified Person"),
against any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing persons may become subject, 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 is caused by (x) any untrue statement or alleged untrue statement
contained in, or by any omission or alleged omission from, information furnished
in writing to the Company by the Holder specifically and expressly for use in
any such registration statement or prospectus but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written information
furnished by such Holder specifically for use in the preparation thereof or (y)
any failure by the Holder to deliver a prospectus or preliminary prospectus (or
amendment or supplement thereto) as and when required under the Securities Act
after such prospectus has been timely filed by the Company. Such Holder will pay
any reasonable legal or other expenses incurred by any Indemnified Person
pursuant to this Section 2.9(b) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that the indemnity
agreement contained in this Section 2.9(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, further, that in no event shall any
indemnity under this Section 2.9(b) exceed the net proceeds from the offering
received by such Holder upon its sale of Registrable Securities included in the
registration statement.
10
(c) Promptly after receipt by an Indemnified Person under this Section
2.9 of notice of the commencement of any action (including any governmental
action),such Indemnified Person will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof, and the
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 indemnifying parties; provided that an Indemnified Person
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such Indemnified Person by the counsel retained by the
indemnifying party would be inappropriate (in the opinion of the Indemnified
Person) due to actual or potential differing interests between such Indemnified
Person 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, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the Indemnified Person under this Section 2.9, 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 Person otherwise than under this
Section 2.9; provided, that in no event shall any indemnity under this Section
2.9(b) exceed the net proceeds from the offering received by such Holder upon
its sale of Registrable Securities included in the registration statement.
(d) If the indemnification provided for in this Section 2.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such Indemnified Person thereunder,
agrees to contribute to the amount paid or payable by such Indemnified Person
as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the Indemnified Person on the other in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Indemnified Person shall be determined by a court
of law 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 Person and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. No person found guilty of
fraudulent misrepresentation (within the meaning of the Section 11(f) of
11
the Act) shall be entitled to contribution hereunder from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this Section
2.9 shall survive the completion of any offering of Registrable Securities under
a registration statement pursuant to this Section 2.
2.10. Assignment of Registration Rights. Subject to the provisions of
the Purchase Agreement and the Subscription Agreement, the rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a permitted transferee or assignee of Registrable
Securities which (a) is a subsidiary, parent, general partner, limited partner,
retired partner, affiliate, beneficial owner, member or retired member of a
Holder, or (b) is a Holder's family member or trust for the benefit of an
individual Holder; provided, however, (i) the transferor shall, within ten (10)
days after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.
2.11. Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written consent of
Holders owning in the aggregate sixty-six and two-thirds percent (66-2/3%) of
the Registrable Securities then outstanding, enter into any agreement with any
holder or prospective holder of any securities of the Company that would grant
such holder registration rights senior to those granted to the Holders
hereunder.
2.12. Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC that permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Act, at all times after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the 1934 Act; and
(c) So long as a Holder owns any Registrable Securities, furnish such
Holder forthwith upon request: a written statement by the Company as to its
compliance with the
12
reporting requirements of said Rule 144 of the Act, and of the 1934 Act (at any
time after it has become subject to such reporting requirements); a copy of the
most recent annual or quarterly report of the Company; and such other reports
and documents as a Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing it to sell any such securities without
registration.
Section 3. Miscellaneous.
3.1. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto, except that the Company may not assign
any of its obligations hereunder without the consent of Holders owning in the
aggregate 66-2/3% of the outstanding Registrable Securities. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Nothing contained herein shall be construed as permitting any
transfer of any securities of the Company in violation of any applicable law or
agreement.
3.2. 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
the conflict of laws provisions thereof. The Investor and the Company hereby
submit to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby. Each of the Investor
and the Company irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
3.3. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
3.4. Captions and Headings. The captions and headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5. Notices. Unless otherwise provided, any notice or other
communication required or permitted to be given or effected under this Agreement
shall be in writing and shall be deemed effective upon (i) personal or facsimile
delivery to the party to be
13
notified, (ii) one business day after deposit with an internationally recognized
courier service, delivery fees prepaid, or (iii) three business days after
deposit with the U.S. mail, return-receipt requested, postage prepaid, and in
each case, addressed to the party to be notified at the following respective
addresses, or at such other addresses as may be designated by written notice;
provided that any notice of change of address shall be deemed effective only
upon receipt.
If to the Company:
N Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Fax:
with a copy to:
o
o
o
Attn: o
Fax: o
If to the Investor:
o
o
o
Attn: o
Fax: o
with a copy to:
o
o
o
Attn: o
Fax: o
14
3.6. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained written consent of Holders
owning in the aggregate 66-2/3% of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or departure;
provided, however, that no amendment, modification, supplement, waiver or
consent to the departure with respect to the provisions of Section 2 hereof
shall be effective as against any person unless consented to in writing by such
person.
3.7. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.8. Entire Agreement. This Agreement (including the Schedule attached
hereto) contains the entire understanding of the parties hereto with respect to
the subject matter contained herein, and supersedes and cancels all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto with respect to the matters contemplated hereby, other than
those set forth herein or made hereunder.
3.9. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 3.9 HAS BEEN FULLY DISCUSSED
BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY
EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH
PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT
15
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL (WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
16
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
N INC.
By:-------------------------------
Name:
Title:
HOLDCO
By:-------------------------------
Name:
Title:
17
