EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of May 19, 2003, by and among (a) SmartServ Online, Inc., a
Delaware corporation (the "Company"), and (b) the purchasers of units consisting
of a $100,000 convertible debenture and a warrant to purchase 200,000 shares of
the Company's common stock, par value $.01 per share (the "Common Stock"),
listed on Schedule A hereto (individually, a "Purchaser" and collectively, the
"Purchasers") pursuant to the Securities Purchase Agreement of even date
herewith (the "Purchase Agreement") among the Company and the Purchasers.
R E C I T A L S
WHEREAS, in order to induce the Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide the Purchasers with the
registration rights set forth in this Agreement; and
WHEREAS, the execution and delivery of this Agreement are express
conditions to the closing under the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Purchase Agreement. As used in this
Agreement, the following capitalized terms shall have the following meanings:
"Affiliate" means a person that directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, the Holder and shall include an individual's spouse, parents, siblings or
issue or entity created primarily for the benefit of any such person.
"Affiliated Group" has the meaning given to it in Section 1504 of the
Internal Revenue Code of 1986, as amended, and in addition includes any
analogous combined, consolidated, or unitary group, as defined under any
applicable state, local, or foreign income Tax law.
"Agreement" means this Registration Rights Agreement, as it hereinafter
may be amended from time to time.
"Debenture" or "Debentures" shall have the meaning set forth in Section
1.1 of the Purchase Agreement.
"Closing Date" shall have the meaning set forth in Section 1.3 of the
Purchase Agreement.
"Common Stock" shall have the meaning set forth in the Preamble hereof.
"Company" shall have the meaning set forth in the Preamble hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as from time
to time amended.
"Holder" means a Purchaser or a Permitted Transferee of a Purchaser.
"Indemnified Company Party" means the Company, its directors, officers
and Affiliates.
"Indemnified Holder Party" means the Holder of Registrable Securities
and any officer, director, member, manager, partner, trustee, beneficiary or
Affiliate of the Holder.
"Losses" means any losses, damages, liabilities or expenses (including
reasonable attorneys' fees and disbursements).
"Misstatement" means an untrue statement of a material fact or an
omission to state a material fact required to be stated in a Registration
Statement or Prospectus or necessary to make the statements in a Registration
Statement, Prospectus or preliminary prospectus not misleading.
"Permitted Transferee" means (i) an Affiliate or member of an
Affiliated Group of the transferor or (ii) with the consent of the Company,
which shall not be unreasonably withheld, delayed, or conditioned, any party
that is an "accredited investor" (as such term is defined in Rule 501 under the
Securities Act).
"Person" means a natural person, partnership, corporation, limited
liability company, business trust, association, joint venture or other entity or
a government or agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Registration
Statement, as supplemented by any and all prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated
by reference in such prospectus.
"Purchase Agreement" shall have the meaning set forth in the Preamble
hereof.
"Purchaser" shall have the meaning set forth in the Preamble hereof.
"Registrable Securities" means (a) any Common Stock hereafter acquired
or purchasable on (i) conversion of a Debenture by the Holder (if such stock is
not already registered with the SEC) or (ii) exercise of a Warrant by a Holder
(if such stock is not already registered with the SEC), and (b) any securities
issued or issuable with respect to the Common Stock referred to in clause (a)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
reorganization. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities
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when (i) a Registration Statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such Registration Statement, (ii) such
securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act or are eligible for sale under Rule 144(k)
(or any successor provision) without being subject to any volume limitation and
the Company has removed any restrictive legend with respect thereto, (iii) such
securities shall have been otherwise transferred to a person who is not a
Permitted Transferee, or (iv) such securities shall have ceased to be
outstanding.
"Registration Expenses" means the out-of-pocket expenses of a
Registration Statement, including:
(1) all registration and filing fees (including, without
limitation, fees with respect to filings required to be made
with the National Association of Securities Dealers, Inc.);
(2) fees and expenses of compliance with securities or blue sky
laws (including, without limitation, state filing fees and
fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable
Securities and determinations of their eligibility for
investment under the laws of such jurisdictions as the
managing underwriters, if any, may designate);
(3) printing, messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company;
(5) fees and disbursements of all independent certified public
accountants of the Company incurred in connection with such
Registration Statement;
(6) premiums and other costs of securities acts liability
insurance if the Company so desires; and
(7) fees and expenses of any other Persons retained by the
Company.
"Registration Statement" means any registration statement under the
Securities Act on an appropriate form (to the extent such form shall be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof and shall include all
financial statements required by the SEC to be filed therewith) which covers
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included in such registration statement, amendments (including
post-effective amendments) and supplements to such registration statement, and
all exhibits to and all material incorporated by reference in such registration
statement.
"Securities Act" means the Securities Act of 1933, as from time to time
amended.
"SEC" means the Securities and Exchange Commission.
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"Units" means the security comprising Warrants and Debentures sold
pursuant to the Purchase Agreement.
"Warrant" or "Warrants" shall have the meaning set forth in Section 1.1
of the Purchase Agreement.
2. REGISTRATION.
At any time before the third anniversary of the date of this Agreement,
whenever the Company proposes to file a registration statement pursuant to the
Securities Act with the SEC, other than a registration relating to the offering
or issuance of shares in connection with (i) employee compensation or benefit
plans or (ii) one or more acquisition transactions under a Registration
Statement on Form S-4 or Form S-1 under the Securities Act (or a successor to
Form S-4 or Form S-1), the Company shall give each Holder of Registrable
Securities written notice (the "Company Notice") of the Company's intention to
file a registration statement at least fifteen days prior to the date the
Company proposes to file such registration statement. The Company shall include
in such registration statement the Registrable Securities unless either (i) the
Registrable Securities are included in a Registration Statement that is
effective under the Securities Act, or (ii) a Holder gives the Company notice
not to include such Holder's Registrable Securities in the registration
statement within ten days of such Holder's receipt of the Company Notice.
Each Holder agrees that within five business days of receiving a
written request from the Company for information required by the SEC to be in a
Registration Statement in order for such Registration Statement to be declared
effective (the "Required Information"), such Holder shall provide the Required
Information to the Company. If a Holder does not provide the Required
Information to the Company within five business days of receiving a request from
the Company for the Required Information, the Company shall not be required to
register the Holder's Registrable Securities on such Registration Statement. The
Holder's right to have such Holder's Registrable Securities registered pursuant
to a subsequent registration statement shall not be abridged by such Holder's
failure to provide the Required Information on a previous registration
statement.
3. REGISTRATION PROCEDURES.
In connection with the Company's registration obligations under Section
2, the Company will effect the registration for resale of the Registrable
Securities in accordance with the intended plan of distribution thereof. The
Company shall provide to each Holder such information and documents as the
Company provides to the other selling stockholders under the Registration
Statement.
4. REGISTRATION EXPENSES.
The Company shall bear all Registration Expenses incurred in connection
with any Registration Statement. The Company also will pay its internal expenses
(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 any
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listing of the securities to be registered on a securities exchange or the
National Association of Securities Dealers, Inc., and the fees and expenses of
any Person, including special experts, retained by the Company.
5. INDEMNIFICATION.
(a) Company Indemnification.
The Company shall indemnify and hold harmless each Indemnified Holder
Party against any Losses to which such Indemnified Holder Party may become
subject under the Securities Act or any other applicable law, insofar as such
Losses (or actions in respect thereof) arise out of or are based upon (i) any
alleged untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which securities were registered
under the Securities Act, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereto, or (ii) any alleged
omission to state therein a material fact required to be stated or necessary to
make the statements therein not misleading, except insofar as such Losses are
directly and primarily caused by any such actual untrue statement or omission so
made in conformity with information furnished in writing to the Company by such
Indemnified Holder Party seeking indemnification expressly for use therein, or
(iii) any violation by the Company of any federal or state rule or regulation
applicable to the Company and relating to action required of or inaction by the
Company in connection with any such registration.; provided, however, that the
Company shall not be liable to an Indemnified Holder Party for any untrue
statement included in any Prospectus, which statement has been corrected in
writing by the Company in an amended or supplemented Prospectus filed with the
SEC before the sale from which such Loss occurred.
(b) Holders' Indemnification.
In connection with any Registration Statement in which the Holders of
Registrable Securities are participating, each Holder so participating will
indemnify and hold harmless each Indemnified Company Party against any Losses to
which the Company or any Indemnified Company Party may become subject, insofar
as such Losses (or actions in respect thereof) arise out of or are based
directly and primarily upon information in writing furnished to the Company by
such Holder of Registrable Securities expressly for use in (and such information
is contained in) any registration statement under which securities were
registered under the Securities Act at the request of the Holders of Registrable
Securities, any preliminary prospectus or final prospectus contained therein or
any amendment or supplement thereto. Notwithstanding the provisions of this
paragraph (b) or paragraph (d) below, no Holder of Registrable Securities shall
be required to indemnify any Person pursuant to this Section 5 or to contribute
pursuant to paragraph (d) below in an amount in excess of the amount of the
aggregate net proceeds received by such Holder of Registrable Securities in
connection with any such Registration Statement under the Securities Act.
(c) Procedure.
Promptly after receipt by any indemnified party of a notice of a claim
or the beginning of any action in respect of which indemnity is to be sought
against an indemnifying
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party pursuant to this Section 5, such indemnified party shall notify the
indemnifying party in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified party and the indemnifying party
shall have been notified thereof, the indemnifying party shall be entitled to
participate therein, and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to such indemnified party of the
indemnifying party's election to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate in the reasonable judgment of the
indemnified party for the same counsel to represent both the indemnified party
and such indemnifying party or any affiliate or associate thereof, the
indemnified party shall be entitled to retain its own counsel at the expense of
such indemnifying party.
(d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an indemnified party (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 any 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, 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 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 by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
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.
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The indemnity and contribution agreements contained in this Section are
in addition to any liability that the indemnifying parties may have to the
indemnified parties.
6. EXCHANGE ACT REPORTING REQUIREMENTS.
The Company shall timely file such information, documents and reports
as the SEC may require or prescribe under the Exchange Act. In addition, the
Company shall timely file such other information, documents and reports as shall
hereafter be required by the SEC as a condition to the availability of Rule 144
under the Securities Act (or any successor provision). The Company agrees to
take no action to deregister its securities under the Exchange Act by filing of
SEC Form 15 or otherwise, nor will it engage in any other "going private"
transaction, in each case, until such time as all Registrable Securities have
been sold by the Holders; provided, however, that the Company may enter into an
arms-length going private transaction with a non-affiliated third party and,
upon consummation thereof, the Company may deregister its securities.
The Company shall, upon reasonable request, (i) furnish the Holders of
Registrable Securities with (a) a written statement by the Company that it has
complied with such reporting requirements, (b) a copy of the most recent annual
or quarterly report of the Company, and (c) such other reports and documents
filed by the Company with the SEC as the Holders may reasonably request in
availing themselves of an exemption for the sale of Registrable Securities
without registration under the Securities Act pursuant to Rule 144 thereunder
and (ii) make such additional filings with the SEC as will enable the Holders to
make sales of the Registrable Securities pursuant to Rule 144.
7. SUSPENSION OF SALES.
Upon receipt of written notice from the Company that a Registration
Statement or Prospectus contains a Misstatement, the selling Holders of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until the Holders have received copies of the supplemented or amended
Prospectus required by Section 3 hereof, or until the Holders are advised in
writing by the Company that the use of the Prospectus may be resumed, and, if so
directed by the Company, each Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in the
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. The Company shall use its
commercially reasonable best efforts to promptly (and in no event more than
thirty (30) days) update the Registration Statement so that the Misstatement is
corrected.
8. TRANSFER OF REGISTRATION RIGHTS.
Neither this Agreement nor any of the rights or obligations hereunder
may be assigned (excluding any assignment by operation of law) by the Company
without the prior written consent of the Holders, which consent will not be
unreasonably withheld. The Holders of Registrable Securities may assign their
rights and obligations hereunder to any Person to which the applicable
Registrable Securities are assigned, without the prior consent of the Company or
any other person, provided that such assignment may only be to a Permitted
Transferee who is not a direct competitor of the Company. Subject to the
foregoing, this
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Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns including any person to whom Registrable
Securities are transferred and any person with whom the Company may merge and no
other Person shall have any right, benefit or obligation hereunder. The Company
shall be given written notice by a Holder of Registrable Securities at the time
of any such transfer of such securities by such Holder stating the name and
address of the transferee, including a writing by such transferee to the effect
that such transferee agrees to be bound by the terms hereof and identifying the
securities with respect to which the rights hereunder are being transferred.
9. MISCELLANEOUS.
(a) Remedies.
The Holders of Registrable Securities, in addition to being entitled to
exercise all rights provided herein and granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement and reasonable attorneys' fees and expenses in connection with the
exercise of such rights. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements.
The Company shall not, on or after the date of this Agreement, enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
conflicts with the provisions hereof.
(c) 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 the prior written consent of the Holders. The foregoing
notwithstanding, a waiver or consent to departure from the provisions hereof
that relates exclusively to the rights of each Holder of Registrable Securities
whose shares are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect the rights of other Holders of Registrable
Securities may be given by the Holders of a majority of the shares of
Registrable Securities being sold pursuant to such Registration Statement.
(d) Notices. Any notice or demand which is required or provided to be
given under this Agreement shall be deemed to have been sufficiently given and
received for all purposes when delivered by hand or by telecopy that has been
confirmed as received by 5:00 P.M. on a business day, one (1) business day after
being sent by nationally recognized overnight courier or received by telecopy
after 5:00 P.M. on any day, or five (5) business days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, to the following addresses:
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If to the Company: SmartServ Online, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to: SmartServ Online, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
And:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
If to the Investors:
To their respective
addresses set forth on Schedule A.
(e) Counterparts.
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(f) Headings.
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law.
This Agreement shall be governed by and construed, interpreted
and the rights of the parties determined in accordance with the internal laws of
the State of Delaware, without regard to the conflict of law principles thereof,
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
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(h) Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) Facsimile Signature.
A facsimile signature on this Agreement shall be considered
the same as an original and a signature to this Agreement may be delivered by
facsimile.
(j) Entire Agreement.
This Agreement, the Purchase Agreement and the Ancillary
Documents (as defined in the Purchase Agreement) are intended by the parties as
the final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein with respect to the registration rights granted by the Company
with respect to the securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
SMARTSERV ONLINE, INC.
By:
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Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and Chief
Financial Officer
Purchasers:
If an Individual:
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Name:
If an entity:
Name of entity:
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By:
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Name:
Title:
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SCHEDULE A
Name and Address Number of Purchased Units Aggregate Purchase Price
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