Exhibit 10.10
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 10, 1997, among PSINet Inc., a New York corporation
(the "Company"), Xxxxxx Brothers Inc., a Delaware corporation ("Xxxxxx"), SBC
Warburg Dillon Read Inc., a Delaware corporation ("SBC"), KA Investments, LDC, a
corporation organized and existing under the laws of the British Virgin Islands
("KA Investments"), and Xxxxx Xxxxxxx Strategic Growth Fund, L.P., a New York
limited partnership ("Xxxxx Xxxxxxx Strategic Growth Fund"). Each of Xxxxxx,
SBC, KA Investments and Xxxxx Xxxxxxx Strategic Growth Fund is a "Purchaser" and
collectively they are referred to herein as the "Purchasers."
WHEREAS, this Agreement is made pursuant to the Convertible Preferred
Stock Purchase Agreement, dated as of the date hereof among the Company and the
Purchasers (the "Purchase Agreement").
WHEREAS, the Company has previously granted or agreed to grant
registration rights to certain other holders of the Company's securities
pursuant to the Other Registration Rights Agreements.
WHEREAS, it is the intention of the parties to this Agreement that the
registration rights granted hereunder shall rank ratably with the registration
rights under the Other Registration Rights Agreements.
WHEREAS, certain defined terms are set forth in Section 1 hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the mutual
covenants contained herein and for other good and available consideration, the
receipt and adequacy of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used but not otherwise defined herein and defined in
the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Advice" shall have meaning set forth in Section 3(n).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; and the terms of "affiliated,"
"controlling" and "controlled" have meanings correlative to the foregoing.
"Amended and Restated Registration Rights Agreement" shall mean the
Amended and Restated Registration Rights Agreement dated as of January 17, 1995
among the Company and the other parties thereto.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which The Nasdaq National Market is closed.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, $.01 par value, of the Company.
"Demand Date" means the date on which the Demand Notice is delivered
to the Company.
"Demand Notice" means the notice given to the Company by the Holders
of Registrable Securities holding at least the Required Demand Percentage
demanding that the Company register their Registrable Securities under the
Securities Act in accordance with the terms of this Agreement, provided,
however, that a Demand Notice may not be given prior to December 31, 1997.
"Effectiveness Date" means, with respect to the Registration Statement
to be filed with respect to the Preferred Stock, the date which (subject to the
last paragraph of Section 3) is the earlier of (i) the fifth day after the
Company is advised by the Commission that the Commission has no additional
comments to the Registration Statement and (ii) the fifth day after the Company
receives a no review notice from the Commission, or, if such date in (i) or (ii)
above is not a Business Day, the next Business Day following such date.
"Effectiveness Period" shall have the meaning set forth in Section
2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the date (subject to the last paragraph of Section
3) which is the 75th day after the Demand Date, or, if such date is not a
Business Day, the next Business Day following such 75th day.
"Holder" or "Holders" means any record holder of Preferred Stock or of
Common Stock issued upon conversion of Preferred Stock who is a party to this
Agreement or is otherwise entitled to the benefits of this Agreement. When this
Agreement specifies a percentage or proportion of the Registrable Securities
required to take some action, each
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Holder of Preferred Stock, as such, shall be deemed to be a Holder of the number
of shares of Common Stock into which such Preferred Stock is convertible.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"IXC" means IXC Internet Services, Inc.
"IXC Agreement" means the IRU and Stock Purchase Agreement, dated as
of July 22, 1997 between the Company and IXC.
"IXC Registration Rights Agreement" means the Registration Rights
Agreement proposed to be entered into between the Company and IXC in
substantially the form of Exhibit N to the IXC Agreement, for so long as the
same may be in effect.
"Losses" shall have the meaning set forth in Section 5(a).
"Other Registration Rights Agreements" shall mean the Amended and
Restated Registration Rights Agreement, the Registration Rights Agreement dated
February 8, 1995 between the Company and the parties thereto, the Registration
Rights Agreement dated June 16, 1995 between the Company and the parties
thereto, the Registration Rights Agreement dated July 11, 1995 between the
Company and the parties thereto, the Registration Rights Agreement dated
September 19, 1996 between the Company and the parties thereto, the IXC
Registration Rights Agreement and the agreements granting registration rights
contained in the Warrants listed on Schedule 2.1(s) of the Schedules to the
Purchase Agreement, as each of the same may be amended from time to time, for so
long as the same may be in effect.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Preferred Stock" means the Company's Series B 8% Convertible
Preferred Stock, $.01 par value per share, issued pursuant to the Purchase
Agreement.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
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Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Registrable Securities" at any time means (i) the shares of Common
Stock issued before that time pursuant to conversion of Preferred Stock,
provided such shares are held by a Holder, and (ii) the shares of Common Stock
that are issuable at that time upon conversion of Preferred Stock by a Holder
thereof (regardless of whether a conversion notice has been given) or are
issuable upon conversion of Preferred Stock to be issued in payment of dividends
declared in shares of Preferred Stock but not theretofore paid.
"Registration Statement" means the registration statements
contemplated by Section 2(a) (and any additional Registration Statements
contemplated in the definition of Registrable Securities), including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated
by reference in such registration statement.
"Required Demand Percentage" means 51% of the number of Registrable
Securities outstanding on the date of the Demand Notice.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any one firm of special counsel to the
Holders.
"Underwritten Offering" means an offering in which Registrable
Securities are sold to one or more underwriters for resale to the public
pursuant to an effective registration statement, provided that the managing
underwriter executes and delivers to the Company a confidentiality agreement in
form and substance reasonably satisfactory to the Company.
2. Demand Shelf Registration
(a) On or prior to the Filing Date, the Company shall prepare and
file with the Commission a "Shelf" Registration Statement covering all
Registrable Securities for an
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offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 (or if the Company is not then
eligible to register the Registrable Securities for resale on Form S-3, such
registration shall be on another appropriate form in accordance herewith, which
form shall be reasonably acceptable to the Holders). Subject to the last
paragraph in Section 3 of this Agreement, the Company shall use its reasonable
best efforts to cause the Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but in any
event no later than the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until the date which
is three years after the Original Issue Date or such earlier date when all
Registrable Securities covered by such Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144 as determined by
counsel to the Company (which may be counsel employed by the Company) (the
"Effectiveness Period"). If an additional Registration Statement is required to
be filed because the actual number of shares of Common Stock into which the
Preferred Stock is convertible exceeds the number of shares of Common Stock
initially registered in respect of the Preferred Stock, the Company shall have
30 Business Days to file such additional Registration Statement. Once a
Registration Statement filed pursuant to this Section 2(a) is declared effective
by the Commission, the holders of the Preferred Stock shall not have the right
to make any additional demands for registration under this Section 2(a), other
than demands to register additional shares of Common Stock in the circumstances
set forth in the preceding sentence.
(b) If the Holders of a majority of the Registrable Securities so
elect, the offering of Registrable Securities pursuant to the Registration
Statement may be effected in the form of an Underwritten Offering, certain costs
and expenses of which will be paid in accordance with Section 4(b) hereof. The
Company will not be required to effect more than one Underwritten Offering under
this Agreement and shall not be required to effect an Underwritten Offering
unless at the time of a written request of the Holders electing an Underwritten
Offering the average daily trading volume of the Common Stock on The Nasdaq
National Market (or any other market or quotation system on which the Company's
Common Stock is then quoted or listed) during the period of 60 days immediately
prior to such request shall be less than 50,000 shares. In such event, and if
the managing underwriters advise the Company and such Holders in writing that in
their opinion the amount of Registrable Securities proposed to be sold in such
Underwritten Offering exceeds the amount of Registrable Securities which can be
sold in such Underwritten Offering, there shall be included in such Underwritten
Offering the amount of such Registrable Securities which in the opinion of such
managing underwriters, including any securities to be sold in accordance with
the Other Registration Rights Agreements, can be sold, and such amount shall be
allocated pro rata among the Holders proposing to sell Registrable Securities in
such Underwritten Offering and the holders of the other securities required to
be included in such registration statement pursuant to the Other Registration
Rights Agreements.
(c) If any of the Registrable Securities are to be sold in an
Underwritten Offering, the managing underwriter that will administer the
offering (which managing underwriter shall be of national standing and
reputation) will be selected by the participating
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Holders upon consultation with the Company. No Holder may participate in any
Underwritten Offering hereunder unless such Person (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting agreements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
arrangements. No Holder may participate in any registration hereunder unless
such Holder executes and delivers an agreement not to divulge any proprietary or
confidential information of the Company or any of its subsidiaries which becomes
known to such Holder in connection with any such registration.
3. Registration Procedures
In connection with the Company's registration obligations hereunder,
the Company shall:
(a) Prepare and file with the Commission a Registration Statement in
accordance with Section 2(a). Not less than seven (7) Business Days (or such
longer period as may be reasonably practicable) prior to the intended filing
date of the Registration Statement or any related Prospectus or any amendment or
supplement thereto (excluding any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall (i) furnish to the
Holders, their Special Counsel and any managing underwriters copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of such
Holders, their Special Counsel and such managing underwriters, and (ii) cause
its officers and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities, their Special Counsel, or any managing underwriters,
shall reasonably object in writing within four (4) Business Days of their
receipt thereof, in which case the Company shall revise the Registration
Statement and Prospectus substantially in accordance with the reasonable
comments of the Holders of a majority of the Registrable Securities, their
Special Counsel, or any managing underwriters until such person or entity
approves the Registration Statement and Prospectus for filing. If the Company
is unable to file the Registration Statement with the Commission by the Filing
Date solely because of the additional time necessary to address such comments,
then the Filing Date shall be extended by the amount of time reasonably
necessary for the Company to make the necessary revisions to the Registration
Statement and Prospectus in order to receive filing approval from such person or
entity.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
Registrable Securities for the
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Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; (iii) respond as promptly as
practicable to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and promptly provide the Holders
true and complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and (iv) comply with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold, their
Special Counsel and any managing underwriters as promptly as practicable (and,
in the case of (i)(A) below, not less than three (3) days prior to such filing)
and (if requested by any such Person) confirm such notice in writing no later
than two (2) Business Days following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) when the Commission notifies the Company whether
there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event that makes any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit 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; provided, however, that the Company need not provide the
Holders with the details of any such event if the last paragraph of this Section
3 shall be applicable to such event.
(d) Use its reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as reasonably practicable.
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(e) If requested by any managing underwriter or the Holders of a
majority in interest of the Registrable Securities to be sold in connection with
an Underwritten Offering, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information
concerning the manner of distribution of Registrable Securities as such managing
underwriters and such Holders reasonably agree should be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
required to take any action pursuant to this Section 3(e) that would, in the
opinion of counsel for the Company, violate applicable law or be materially
detrimental to the business prospects of the Company.
(f) Furnish to each Holder, their Special Counsel and any managing
underwriters, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission.
(g) Promptly deliver to each Holder, their Special Counsel, and any
underwriters, without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders and any underwriters in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the selling
Holders, any underwriters and their Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the Holders and any managing underwriters to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to a Registration Statement, which
certificates shall be free, to the extent
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permitted by applicable law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as any such managing underwriters or Holders may request at least two Business
Days prior to any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), except as contemplated by the last paragraph of this Section 3, as
promptly as reasonably practicable, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain 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,
in light of the circumstances under which they were made, not misleading.
(k) Use its reasonable best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on The Nasdaq
National Market and any other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which similar securities issued by
the Company are then listed as and when required pursuant to the Purchase
Agreement.
(l) Enter into such agreements (including an underwriting agreement
in form, scope and substance as is customary in Underwritten Offerings) and
take all such other actions in connection therewith (including those
reasonably requested by any managing underwriters and the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities, and whether or not
an underwriting agreement is entered into, (i) make such representations and
warranties to such Holders and such underwriters as are customarily made by
issuers to underwriters in underwritten public offerings, and confirm the
same if and when reasonably requested; (ii) in the case of an Underwritten
Offering obtain and deliver copies thereof to the managing underwriters, if
any, of opinions of counsel to the Company and updates thereof addressed to
each such managing underwriter, in form, scope and substance reasonably
satisfactory to any such managing underwriters and Special Counsel to the
selling Holders covering the matters customarily covered in opinions
requested in Underwritten Offerings and such other matters as may be
reasonably requested by such Special Counsel and underwriters; (iii)
immediately prior to the effectiveness of the Registration Statement, and, in
the case of an Underwritten Offering, at the time of delivery of any
Registrable Securities sold pursuant thereto, obtain and deliver copies to
the Holders and the managing underwriters, if any, of "cold comfort" letters
and updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed to each
selling Holder and each of the underwriters, if any, in form and substance as
are customary in connection with Underwritten Offerings; (iv) if an
underwriting agreement is
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entered into, the same shall contain indemnification provisions and
procedures no less favorable to the selling Holders and the underwriters, if
any, than those set forth in Section 6 (or such other provisions and
procedures acceptable to the Company, the managing underwriters, if any, and
holders of a majority of Registrable Securities participating in such
Underwritten Offering); and (v) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the Registrable
Securities being sold, their Special Counsel and any managing underwriters to
evidence the continued validity of the representations and warranties made
pursuant to clause 3(l)(i) above and to evidence compliance with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(m) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any disposition
of Registrable Securities, and any attorney or accountant retained by such
selling Holders or underwriters, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
officers, directors, agents and employees of the Company and its subsidiaries to
supply all information in each case reasonably requested by any such Holder,
representative, underwriter, attorney or accountant in connection with the
Registration Statement; provided, however, that such records, documents,
properties and information requested to be inspected or supplied are of the kind
necessary to be inspected or obtained by the selling Holders in connection with
the disposition of the Registrable Securities; provided, further, that any
information that is determined in good faith by the Company in writing to be of
a confidential nature at the time of delivery of such information shall be kept
confidential by such Persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (ii) disclosure of such information, in the
opinion of counsel to such Person, is required by law; (iii) such information
becomes generally available to the public other than as a result of a disclosure
or failure to safeguard by such Person; or (iv) such information becomes
available to such Person from a source other than the Company and such source is
not known by such Person, after due inquiry, to be bound by a confidentiality
agreement with the Company.
(n) Comply with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts Underwritten Offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date of
the Registration Statement, which statement shall cover said 12-month period, or
such shorter periods as is consistent with the requirements of Rule 158.
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The Company may require each selling Holder to furnish to the Company
such information, including information regarding the distribution of such
Registrable Securities, as is required by law to be disclosed in the
Registration Statement and the Company may exclude from such registration the
Registrable Securities of any such Holder who fails to furnish such information
within a reasonable time after receiving such request. The failure by the
Company to file the Registration Statement by the Filing Date, to cause it to
become effective by the Effectiveness Date or to maintain its effectiveness for
the Effectiveness Period, if due to the breach of a Holder's obligations under
this Section, shall not be deemed a breach of the Company's obligations under
this Agreement or the Purchase Agreement with respect to such Holder, however,
the Company's obligations to Holders that timely furnish such information shall
remain in full force and effect.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder agrees by its acquisition of such Registrable Securities
that (i) it will not sell any Registrable Securities under the Registration
Statement until it has received copies of the Prospectus as then amended or
supplemented as contemplated in Section 3(g) and notice from the Company that
such Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c) and (ii) it will comply with
the prospectus delivery requirements of the Securities Act as applicable to them
in connection with sales of Registrable Securities pursuant to the Registration
Statement.
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or
3(c)(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
If (a) there is material non-public information regarding the
Company which the Company's senior management or Board of Directors
reasonably determines not to be in the Company's best interest to disclose
and which the Company is not otherwise required to disclose, or (b) there is
a significant business opportunity or event (including but not limited to the
acquisition or disposition of assets or any merger, consolidation, tender
offer, joint venture, strategic alliance or other similar transaction)
available to the Company which the Company's senior management or Board of
Directors reasonably determines not to be in the
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Company's best interest to disclose, then the Company may postpone or suspend
filing or effectiveness of a registration statement, prospectus, prospectus
supplement or any report, form or statement incorporated by reference or to be
incorporated by reference into any of the foregoing, or any amendment to any of
the foregoing, and, upon delivery of written notice from the Company of any such
postponement or suspension, Holders shall cease and be prohibited from making
any offers or sales of Registrable Securities pursuant thereto.
4. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall, except as and to the extent
specified in Section 4(b), be borne by the Company whether or not pursuant to an
Underwritten Offering and whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the foregoing sentence shall include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses (A) with
respect to filings required to be made with The Nasdaq National Market and each
other securities exchange or market on which Registrable Securities are required
hereunder to be listed and (B) in compliance with state securities or Blue Sky
laws (including, without limitation, reasonable fees and disbursements of
counsel for the Holders in connection with Blue Sky qualifications of the
Registrable Securities or exemptions from such qualification and determination
of the eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or the Holders of a
majority of Registrable Securities may reasonably designate)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) reasonable messenger, telephone and delivery expenses, (iv)
reasonable fees and disbursements of counsel for the Company and one firm of
Special Counsel for the Holders, in the case of the Special Counsel, to a
maximum amount of $10,000 for the initial registration statement required to be
filed pursuant to this Agreement and $5,000 for any additional registration
statement filed pursuant to the penultimate sentence of Section 2(a), (v)
Securities Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
(b) If the Holders require an Underwritten Offering pursuant to the
terms hereof, the Company shall be responsible for all costs, fees and expenses
in connection
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therewith, except for the fees and disbursements of the Underwriters (including
any underwriting commissions and discounts) and their legal counsel and
accountants.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder for
use in the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto (including, without limitation, any
information incorporated therein pursuant to Section 3(e) hereof) and/or (ii)
such losses arise directly from the failure of a Holder to comply with the
prospectus delivery requirements applicable to it (provided that the Company has
timely prepared all necessary prospectus supplements or amendments and provided
them to the Holders or their representatives in accordance with the terms of
this Agreement and otherwise done all things required of it in this Agreement so
as not to adversely affect the ability of any Holder to timely comply with such
Holder's delivery requirements). The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from
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and against all Losses arising (i) (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) solely out of
or based solely upon any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information furnished in writing by such Holder to the Company
expressly for use therein or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder for
use in the Registration Statement, such Prospectus or such form of Prospectus,
and (ii) directly from the failure of a Holder to comply with the prospectus
delivery requirements applicable to it (provided that the Company has timely
prepared all necessary prospectus supplements or amendments and provided them to
the Holders or their representatives in accordance with the terms of this
Agreement and otherwise done all things required of it in this Agreement so as
not to adversely affect the ability of any Holder to timely comply with such
Holder's delivery requirements). In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume in the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses reasonably incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel in writing that a conflict of interest is
likely to exist if the same counsel were to represent such Indemnified Party and
the Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to
-14-
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party); provided that
if more than one Indemnified Party is seeking indemnification with respect to
the same Proceeding, the Indemnifying Party shall not be required to pay for
more than one separate counsel for all such Indemnified Parties as a group. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld, delayed or
conditioned, effect any settlement of any pending Proceeding in respect of which
any Indemnified Party is a party.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within 20 Business
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a)
or 5(b) is unavailable to an Indemnified Party because of a failure or refusal
of a governmental authority to enforce such indemnification in accordance with
its terms (by reason of public policy or otherwise), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the
-15-
immediately preceding paragraph. Notwithstanding the provisions of this Section
5(d), no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount of proceeds actually received by such Holder. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may otherwise
have to the Indemnified Parties.
6. Miscellaneous
(a) Granting of Rights Agreements. The Company shall not grant any
registration rights in respect of any shares of capital stock of the Company or
other securities of the Company if such rights would be superior to the
registration rights granted to the Holders under this Agreement; provided,
however, that the Holders hereby consent and agree that (i) the Company may
grant in other agreements to other holders of securities of the Company
registration rights which rank ratably with the registration rights granted
hereunder to the Holders and (ii) the Company may make such grants in connection
with the IXC Transaction, to the extent that such registration rights rank
ratably with the registration rights granted hereunder to the Holders.
(b) Remedies. In the event of a breach by the Company or by a Holder
of any of its obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled,
to the extent permitted by applicable law, to specific performance of its rights
under this Agreement. The Company and each Holder agree that monetary damages
would not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.
(c) Piggy-Back Registrations. If at any time prior to the third
anniversary of the date of this Agreement when there is not an effective
Registration Statement the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder written notice of such
determination and, if within twenty (20) days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of the Registrable Securities such Holder
requests to be registered; provided, however, that the Company shall not be
required to
-16-
register any Registrable Securities pursuant to this paragraph that are eligible
for sale pursuant to Rule 144(k) of the Commission.
(d) 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 same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities; provided, however, that, for the purposes of this sentence,
Registrable Securities that are owned, directly or indirectly, by the Company or
a controlled Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
certain Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(e) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be delivered and deemed effective in accordance with the terms of
Section 5.3 of the Purchase Agreement. Notices shall be sent to the parties
hereto to there addresses for notice set forth in the Purchase Agreement except
that with respect to any other registered Holder who is not a party to this
Agreement, to the address of such Holder as it appears in the stock transfer
books of the Company, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement.
(g) Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by the Holder to any permitted assignee or transferee
of all or a portion of the Registrable Securities if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities
-17-
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement, and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holder (and to subsequent) permitted
successors and assigns.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of law.
(j) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(m) Shares Held by The Company and its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its controlled Affiliates shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(n) Prior and Other Registration Rights Agreements. Notwithstanding
any provision of this Agreement, it is the intention of the parties hereto that
the provisions of this
-18-
Agreement shall rank ratably with the registration rights granted or to be
granted under the Other Registration Rights Agreements, and, to the extent the
provisions of this Agreement conflict with or are inconsistent with any such
registration rights granted or to be granted pursuant to the Other Registration
Rights Agreements, such conflict or inconsistency shall be resolved in a manner
which affords the holders of registration rights under the Other Registration
Rights Agreements the ratable benefits of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
PSINET INC.
By: Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President & CEO
XXXXXX BROTHERS INC.
By: /s/Xxxx Xxxxx
--------------------------------
Name: Xxxx Xxxxx
Title: Managing Director
SBC WARBURG DILLON READ INC.
By: /s/Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: Director
By: /s/Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
KA INVESTMENTS, LDC
By: /s/Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Manager/Mutual Funds
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.
By: /s/Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Principle
