EXHIBIT 4.05
ANNEX D
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("AGREEMENT") is entered into as of
February 16, 2001 by and between HYBRID NETWORKS, INC., a Delaware corporation
with offices at 0000 Xxxxxxxxx Xxxxx Xxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (the
"COMPANY"), and each of the entities listed under "Purchasers" on the signature
page hereto (each a "PURCHASER" and collectively the "Purchasers"), each with
offices at the address listed beside such Purchaser's name on Schedule I to the
Purchase Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement dated
as of the date hereof by and between the Company and the Purchasers (the
"PURCHASE AGREEMENT"), the Company has agreed to sell and issue to the
Purchasers, and the Purchasers have agreed to purchase from the Company, (i) an
aggregate of up to $7.5 million in principal amount of the Company's 6%
Convertible Debentures ("DEBENTURES"), which are convertible into shares
("UNDERLYING SHARES") of the Company's Common Stock, $0.001 par value ("COMMON
STOCK"), (ii) 5-year warrants to purchase an aggregate of up to 833,333 shares
("PURCHASE SHARES") of Common Stock at an initial exercise price of $9.00 per
share (the "PURCHASE WARRANTS"), and (iii) adjustment warrants to purchase a
number of shares (together with the Purchase Shares, "WARRANT SHARES") of Common
Stock calculated pursuant to a formula set forth therein (together with the
Purchase Warrants, the "WARRANTS"), all as more fully specified and subject to
the terms and conditions set forth in the Purchase Agreement;
WHEREAS, pursuant to the terms of, and in partial consideration for the
Purchasers' agreement to enter into, the Purchase Agreement, the Company has
agreed to provide the Purchasers with certain registration rights with respect
to the Underlying Shares and Warrant Shares, as well as certain other rights and
remedies as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement and/or
the Warrants. As used in this Agreement, the following terms shall have the
following respective meanings:
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"COMMISSION" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"EFFECTIVENESS DEADLINE" has the meaning specified in Section 2(a)
herein.
"FAIR MARKET VALUE" shall have the meaning ascribed to such term in the
Warrants.
"HOLDER" and "HOLDERS" shall mean the Purchaser or the Purchasers,
respectively, and any transferee of Registrable Securities, Debentures and/or
Warrants which have not been sold to the public to whom the registration rights
conferred by this Agreement have been transferred in compliance with this
Agreement.
"INTERFERING EVENTS" shall have the meaning set forth in Section 2(b).
"MONTHLY DELAY PAYMENT" shall have the meaning specified in Section
2(b)(i)(B).
"PREMIUM REDEMPTION PRICE" shall mean the following:
(a) as to the Debentures, the greater of (x) 120% of the
Principal Amount (as defined in the Debentures) of all such Debentures being
sold to the Company, or (y) 105% of the Principal Amount of the Debentures being
sold to the Company multiplied by the highest Common Stock closing price on the
Principal Market (or other Approved Market) between and including date of the
event triggering the right of redemption and the trading day immediately prior
to the actual redemption of such Debentures and divided by the then applicable
Conversion Price (as defined in the Debentures), in each case payable in cash;
(b) as to the Underlying Shares and Warrant Shares, the
greater of (x) 105% of the dollar amount which is the product of (i) the number
of shares to be redeemed, multiplied by (ii) the highest Common Stock closing
price on the Principal Market (or other Approved Market) between and including
the date of the event triggering the right of redemption and the trading day
immediately prior to the actual redemption of such shares, or (y) 120% of the
Principal Amount of the Debentures which were converted into the Underlying
Shares being redeemed or 120% of the aggregate exercise price for the Warrant
Shares being redeemed, as the case may be, in each case payable in cash; and
(c) as to the Warrants, 105% of the dollar amount which is the
product of (i) the number of Warrant Shares issuable to the Holder upon exercise
thereof (assuming full exercise without regard to any beneficial ownership
limitations set forth therein and assuming the Adjustment Date under the
Adjustment Warrant occurs at such time if it has not already occurred)
multiplied by (ii) the difference between (A) the highest Common Stock closing
price on the Principal Market (or other Approved Market) between and including
date of the event triggering the right of redemption and the trading day
immediately prior to the actual redemption of such shares, less (B) the exercise
price under such Warrants, in each case payable in cash.
"REGISTRABLE SECURITIES" shall mean: (i) the Underlying Shares and the
Warrant Shares (without regard to any limitations on beneficial ownership
contained therein) or other securities issued or issuable to each Holder or its
permitted transferee or designee (a) upon conversion of the Debentures and/or
upon exercise of the Warrants, or (b) upon any distribution with respect to, any
exchange for or any replacement of such Debentures or Warrants or (c) upon any
conversion, exercise or exchange of any securities issued in connection with any
such distribution, exchange or replacement; (ii) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar event with
respect to the foregoing; and (iii) any other security issued as a dividend or
other distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses.
2
The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "blue sky"
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents (to the extent that the aggregate of such fees
and expenses does not exceed the difference between $35,000 and the aggregate
fees and disbursements paid to KKWC under Section 3.4 of the Purchase
Agreement), and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"REGISTRATION STATEMENT" shall have the meaning set forth in Section
2(a) herein.
"REGISTRATION PERIOD" shall have the meaning specified in Section 5
herein.
"REGULATION D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"SECURITIES" means the Registrable Securities, the Debentures and the
Warrants.
"SECURITIES ACT" or "ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
"TRADING DAY" shall mean (x) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (y) if the Common Stock is not listed on
either of such stock exchanges but sale prices of the Common Stock are reported
on an automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.
2. REGISTRATION REQUIREMENTS. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including without
limitation the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable "blue sky" or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the resale of all the Registrable
Securities in the manner (including manner of sale) reasonably requested by the
Holder and in all U.S. jurisdictions. Such best efforts by the Company shall
include the following:
3
(a) The Company shall, as expeditiously as reasonably possible
after the Closing Date:
(i) But in any event within 30 days thereafter,
prepare and file a registration statement with the Commission
on Form S-3, as applicable, under the Securities Act (or in
the event that the Company is ineligible to use either such
form, such other form as the Company is eligible to use under
the Securities Act) covering the resale by the Purchasers of
the Registrable Securities (such registration statement,
including any amendments or supplements thereto and
prospectuses contained therein, is referred to herein as the
"REGISTRATION STATEMENT"), which Registration Statement, to
the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), shall state that
such Registration Statement also covers such number of
additional shares of Common Stock as may become issuable to
prevent dilution resulting from stock splits, stock dividends
or similar events. Subject to compliance with the rules of the
SEC, the number of shares of Common Stock initially included
in such Registration Statement shall be no less than 200% of
the aggregate number of shares of Common Stock issuable upon
full conversion of the Debentures (without regard to any
beneficial ownership limitations set forth therein), plus 100%
of the number of shares of Common Stock estimated in good
faith to be issuable upon exercise of the Warrants in full
(without regard to any beneficial ownership limitations set
forth therein) as of the most recent filing date. Thereafter,
the Company shall use its best efforts to cause such
Registration Statement to be declared effective as soon as
reasonably practicable, and in any event not later than 120
calendar days following the Closing Date (the "EFFECTIVENESS
DEADLINE"). The Company shall provide Holders and their legal
counsel reasonable opportunity to review any such Registration
Statement or amendment or supplement thereto prior to filing.
Without limiting the foregoing, the Company will promptly
respond to all SEC comments, inquiries and requests, and shall
request acceleration of effectiveness at the earliest possible
date. If the Company is not initially eligible to use Form
S-3, it will, at the request of a majority-in-interest of the
holders of Registrable Securities, amend its Form S-1 to a
Form S-3 at such time that it becomes eligible to do so. The
Company shall notify the Holders in writing (A) within one day
following each of the SEC's clearance to request acceleration
of effectiveness of the Registration Statement and the
Company's request for such acceleration of effectiveness and
(B) immediately upon the SEC's declaration of such
effectiveness.
(ii) Prepare and file with the SEC such amendments
and supplements to such Registration Statement and the
prospectus used in connection with such Registration
Statement, or prepare and file such additional registration
statements, as may be necessary to comply with the provisions
of the Act with respect to the disposition of all securities
covered by such Registration Statement in accordance with the
intended methods of disposition by the seller thereof as set
forth in the Registration Statement (and the disposition of
all Registrable Securities as necessary to comply with this
Agreement) and notify the Holders of the filing and
4
effectiveness of such Registration Statement and any
amendments or supplements.
(iii) After the registration, furnish to each Holder
such numbers of copies of a current prospectus conforming with
the requirements of the Act, copies of the Registration
Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other
documents as such Holder may reasonably require in order to
facilitate the disposition of Registrable Securities owned by
such Holder.
(iv) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such
other securities or "blue sky" laws of all U.S. jurisdictions
(except in any such jurisdiction where the registration and
qualification of the securities covered by such Registration
Statement is exempt under the laws and regulations of such
jurisdiction); 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 states or jurisdictions.
(v) Notify each Holder immediately of the happening
of any event (but not the substance or details of any such
event unless specifically requested by a Holder who agrees in
writing to maintain the confidentiality of such information)
as a result of which the prospectus (including any supplements
thereto or thereof and any information incorporated or deemed
to be incorporated by reference therein) included in such
Registration Statement, as then in effect, includes an untrue
statement of 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, and, pursuant to Section 2(f)
(and subject to the grace periods in Section 2(b)(iii)), use
its best efforts to promptly update and/or correct such
prospectus.
(vi) Notify each Holder immediately of the issuance
by the Commission or any state securities commission or agency
of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use its best efforts to
prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest
possible time.
(vii) Permit a single firm of counsel, designated as
Holders' counsel by the Holders of a majority of the
Registrable Securities included in the Registration Statement,
to review the Registration Statement and all amendments and
supplements thereto within a reasonable period of time prior
to each filing, and shall not file any document in a form to
which such counsel reasonably objects.
(viii) Use its best efforts to list the Registrable
Securities covered by such Registration Statement with all
securities exchange(s) and/or markets on which the Common
Stock is then listed and/or quoted and prepare and file any
5
required filings with the National Association of Securities
Dealers, Inc. or any exchange or market where the Common Stock
is then traded.
(ix) If applicable, cooperate with the Holders to
avail themselves of the prospectus delivery mechanism set
forth in Rule 153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that
may arise that the Purchasers consider will interfere with the full enjoyment of
their rights under the Purchase Agreement and this Agreement (the "INTERFERING
EVENTS"), and (II) certain remedies applicable in each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Purchasers if an Interfering Event
occurs and provide that the Purchasers may require that the Company redeem
outstanding Securities at a specified price if certain Interfering Events are
not timely cured.
Paragraph (v) provides, INTER ALIA, that if payments required as the
remedy in the case of certain of the Interfering Events are not paid when due,
the Company may be required by the Purchasers to redeem outstanding Securities
at a specified price.
The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) DELAY IN EFFECTIVENESS OF REGISTRATION
STATEMENT.
(A) In the event that the Registration
Statement has not been declared effective by the Effectiveness
Deadline, then the Company shall pay to each Holder a Monthly
Delay Payment (as defined below) on the day after the
Effectiveness Deadline. In addition, the Company shall pay the
Holder a Monthly Delay Payment for each 30 day period (or
portion thereof) thereafter during which the Registration
Statement has not been declared effective, which Monthly Delay
Payments shall not in the aggregate exceed the maximum
percentage permitted by law.
(B) As used in this Agreement, a "MONTHLY
DELAY PAYMENT" shall be a cash payment equal to 2% of the
aggregate Purchase Price paid by a Holder, payable on the date
on which the specified condition in this Section 2(b) has not
been fulfilled or the specified deficiency has not been
remedied, and 2% of the aggregate Purchase Price paid by a
Holder, payable for each 30-day period thereafter (or portion
thereof) that the specified condition in this Section 2(b) has
not been fulfilled or the specified deficiency has not been
remedied. Payment of the Monthly Delay Payments, and any
Premium Redemption Price payment due pursuant to the other
provisions of this Section 2(b), shall be due and payable from
the Company to such Holder within 5 business days of demand
therefor. Without limiting the foregoing, if payment in
immediately available funds of the
6
Premium Redemption Price is not made within such 5 business
day period, the Holder may revoke and withdraw in whole or in
part its election to cause the Company to make such mandatory
purchase at any time prior to its receipt of such cash,
without prejudice to its ability to elect to receive that
particular or other Premium Redemption Price payments in the
future.
(ii) NO LISTING; PREMIUM PRICE REDEMPTION FOR
DELISTING OF CLASS OF SHARES.
(A) In the event that the Company fails,
refuses or is unable to cause the Registrable Securities
covered by the Registration Statement to be listed and/or
quoted, as the case may be, with the Approved Market and each
other securities exchange and market on which the Common Stock
is then traded at all times during the Registration Period,
then the Company shall make to each Holder a Monthly Delay
Payment for each 30 day period (or portion thereof) during the
Registration Period from and after such failure, refusal or
inability to so list the Registrable Securities until the
Registrable Securities are so listed and/or quoted.
(B) In the event that shares of Common Stock
of the Company are delisted from or not quoted on, or trading
in the Common Stock is otherwise suspended on, an Approved
Market at any time following the Closing Date and remains so
delisted, not quoted or suspended for 5 consecutive Trading
Days, then at the option of each Holder and to the extent such
Holder so elects, the Company shall on 2 business days notice
either (1) make to such Holder a Monthly Delay Payment for
each 30 day period (or portion thereof) that the shares are
delisted, not quoted or suspended or (2) redeem the Securities
held by such Holder, in whole or in part, at a redemption
price equal to the Premium Redemption Price; PROVIDED,
however, that such Holder may revoke such request at any time
prior to receipt of such Monthly Delay Payments or Premium
Redemption Price, as the case may be.
(iii) BLACKOUT PERIODS. In the event any Holder is
unable to sell Registrable Securities under the Registration
Statement for more than (A) 15 consecutive Trading Days or (B)
an aggregate of 30 Trading Days in any 12 month period
("SUSPENSION GRACE PERIOD"), including without limitation by
reason of the Company's failure to deliver unlegended shares,
any suspension or stop order with respect to the Registration
Statement or the fact that an event has occurred as a result
of which the prospectus (including any supplements thereto)
included in such Registration Statement then in effect
includes an untrue statement of 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, or the number of
shares of Common Stock covered by the Registration Statement
is insufficient at such time to make such sales (any of the
foregoing, a "BLACKOUT"), then the Company shall make to each
Holder a Monthly Delay Payment for each 30 day period (or
portion thereof) from and after the expiration of the
Suspension Grace Period. In lieu of receiving the
7
Monthly Delay Payment as provided above, a Holder shall have
the right but not the obligation to elect to have the Company
redeem its Securities at a price equal to the Premium
Redemption Price. In the event that any Holder is unable to
sell Registrable Securities under the Registration Statement
after the Effective Date solely due to the obligation of the
Company to file any post-effective amendment or prospectus
supplement thereto as a result of any change in the plan of
distribution of the Common Stock covered thereby requested by
the selling stockholders or of the identity of the selling
stockholders thereunder, then such period shall not be counted
against the number of days constituting a Blackout provided
that the Company acts in good faith to effect any such
amendment or supplement as soon as reasonably possible.
(iv) REDEMPTION FOR EXERCISE DEFICIENCY. In the event
that the Company does not have a sufficient number of shares
of Common Stock available to satisfy the Company's obligations
to any Holder upon conversion of a Debenture or receipt of a
notice of exercise of a Warrant from a Purchaser, or the
Company is otherwise unable or unwilling for any reason to
issue unlegended Common Stock as required by (and within the
time frames required by), and in accordance with the
provisions of, the Debentures, Warrants, this Agreement or the
Purchase Agreement (each, an "EXERCISE DEFICIENCY"), then at
any time 5 days after the commencement of the running of the
first 30 day period following an Exercise Deficiency, at the
request of any Holder, the Company promptly shall purchase
from such Holder, on the terms set forth in Section 2(b)(i)(B)
above, the Debentures that are unconvertible, the Warrants
that are unexercisable and/or the shares of Common Stock
required to be issued that have not been issued, in each case
as a result of the Exercise Deficiency, at their Premium
Redemption Price.
(v) PREMIUM REDEMPTION PRICE FOR DEFAULTS.
(A) The Company acknowledges that any
failure, refusal or inability by the Company to perform the
obligations described in the foregoing paragraphs (i) through
(iv) will cause the Holders to suffer damages in an amount
that will be difficult to ascertain, including without
limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in
holding the Registrable Securities. Accordingly, the parties
agree, after consulting with counsel, that it is appropriate
to include in this Agreement the foregoing provisions for
Monthly Delay Payments and mandatory redemptions in order to
compensate the Holders for such damages. The parties
acknowledge and agree that the Monthly Delay Payments and
mandatory redemptions set forth above represent the parties'
good faith effort to quantify such damages and, as such, agree
that the form and amount of such payments and mandatory
redemptions are reasonable and will not constitute a penalty.
(B) In the event that the Company fails to
make any Monthly Delay Payment within 10 calendar days of
demand therefor, each Holder shall have the right to sell to
the Company any or all of its Securities at the Premium
Redemption Price on the terms set forth in Section 2(b)(i)(B)
above.
8
(vi) CUMULATIVE REMEDIES. Each Monthly Delay Payment
triggered by an Interfering Event provided for in the
foregoing paragraphs (i) through (iv) shall be in addition to
each other Monthly Delay Payment triggered by another
Interfering Event; provided, however, that in no event shall
the Company be obligated to make to any Holder Monthly Delay
Payments in an aggregate amount greater than 3% of the
aggregate Purchase Price for any 30 day period (or portion
thereof). The Monthly Delay Payments and mandatory redemptions
provided for above are in addition to and not in lieu or
limitation of any other rights the Holders may have at law, in
equity or under the terms of the Transaction Documents
including without limitation the right to specific
performance. Each Holder shall be entitled to specific
performance of any and all obligations of the Company in
connection with the registration rights of the Holders
hereunder.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by investment bankers
reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering,
the Company shall:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered, if requested, to the
sellers of Registrable Securities and the underwriter or
underwriters, if any, opinions of independent counsel to the
Company, on and dated as of the effective day (or in the case
of an underwritten offering or deemed underwritten offering,
dated the date of delivery of any Registrable Securities sold
pursuant thereto) of the Registration Statement, and within 90
days following the end of each fiscal year thereafter, which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Holders and the underwriter(s),
if any, and their counsel and covering, without limitation,
such matters as the due authorization and issuance of the
securities being registered and compliance with securities
laws by the Company in connection with the authorization,
issuance and registration thereof and other matters that are
customarily given to underwriters in underwritten offerings,
addressed to the Holders and each underwriter, if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case
of an underwritten offering or deemed underwritten offering,
at the time of delivery of any Registrable Securities sold
pursuant thereto), and at the beginning of each fiscal year
following a year during
9
which the Company's independent certified public accountants
shall have reviewed any of the Company's books or records, a
"comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each
underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the
Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are
customarily covered by letters of the independent certified
public accountants delivered in connection with secondary
offerings; such accountants shall have undertaken in each such
letter to update the same during each such fiscal year in
which such books or records are being reviewed so that each
such letter shall remain current, correct and complete
throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the
Holders;
(iv) if an underwriting agreement is entered into,
the same shall include customary indemnification and
contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings;
(v) deliver such documents and certificates as may
be reasonably requested by the Holders of the Registrable
Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any; and
(vi) deliver to the Holders on the effective day (or
in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto)
of the Registration Statement, and at the beginning of each
fiscal quarter thereafter, a certificate in form and substance
as shall be reasonably satisfactory to the Holders, executed
by an executive officer of the Company and to the effect that
all the representations and warranties of the Company
contained in the Purchase Agreement are still true and correct
except as disclosed in such certificate; the Company shall, as
to each such certificate delivered at the beginning of each
fiscal quarter, update or cause to be updated each such
certificate during such quarter so that it shall remain
current, complete and correct throughout such quarter; and
such updates received by the Holders during such quarter, if
any, shall have been reasonably satisfactory to the Holders.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
10
(f) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved shares representing Registerable
Securities that are not covered by an existing Registration Statement within
twenty (20) business days of any shareholders meeting authorizing or reserving
same and shall use its best efforts to cause such Registration Statement to
become effective within ninety (90) days of such shareholders meeting. If the
Holders become entitled, pursuant to an event described in clause (iii) of the
definition of Registrable Securities, to receive any securities in respect of
Registrable Securities that were already included in a Registration Statement,
subsequent to the date such Registration Statement is declared effective, and
the Company is unable under the securities laws to add such securities to the
then effective Registration Statement, the Company shall promptly file, in
accordance with the procedures set forth herein, an additional Registration
Statement with respect to such newly Registrable Securities. The Company shall
use its best efforts to (i) cause any such additional Registration Statement,
when filed, to become effective under the Securities Act, and (ii) keep such
additional Registration Statement effective during the period described in
Section 5 below. All of the registration rights and remedies under this
Agreement shall apply to the registration of such newly reserved shares and such
new Registrable Securities, including without limitation the provisions
providing for Monthly Delay Payments contained herein.
3. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. REGISTRATION ON FORM S-3; OTHER FORMS. The Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.
5. REGISTRATION PERIOD. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective at all times during the period ("REGISTRATION
PERIOD") commencing on the earlier of the effective date of the Registration
Statement or the Effectiveness Deadline and continuing thereafter until the
later to occur of (a) the date on which sales are permitted of all Registrable
Securities without registration under Rule 144(k) (provided that the Company's
transfer agent has accepted an instruction from the Company to such effect and
assuming there is no cashless exercise of the Warrants) or (b) the earlier of
the date on which (i) there are no longer any Debentures and Warrants
outstanding or issuable and (ii) the fifth (5th) anniversary of the Closing
Date.
6. INDEMNIFICATION.
(a) THE COMPANY INDEMNITY. The Company will indemnify each
Holder, each of its officers, directors and partners, and each person
controlling each Holder, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any
11
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any state securities law or in either case, any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to a Holder to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such Holder or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity agreement contained in
this Section 6(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 will not be unreasonably withheld).
(b) HOLDER INDEMNITY. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s), against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company and such other
Holder(s) and their directors, officers and partners, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).
(c) PROCEDURE. Each party entitled to indemnification under
this Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any
12
claim as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim in any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Article except to the extent that the Indemnifying
Party is materially and adversely affected by such failure to provide notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
7. CONTRIBUTION. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying each of such Indemnified Parties, shall contribute to the amount
paid or payable by each such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Company on the one hand and any
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable
13
Securities or (ii) in the case of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed to the public were
offered to the public exceeds, in any such case, the amount of any damages that
such Holder or underwriter 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.
8. SURVIVAL. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. INFORMATION BY HOLDERS. Each Holder shall reasonably promptly
furnish to the Company in writing such information regarding such Holder and the
distribution and/or sale proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement. The
intended method or methods of disposition and/or sale (Plan of Distribution) of
such securities as so provided by such Purchaser shall be included without
alteration in the Registration Statement covering the Registrable Securities and
shall not be changed without written consent of such Holder (which shall not be
unreasonably withheld), except that such Holder may not require an intended
method of disposition which violates applicable securities law or a description
of the method of disposition to which the SEC objects.
10. NASDAQ LIMIT ON STOCK ISSUANCES. Section 3.14 of the Purchase
Agreement shall govern limits imposed by NASDAQ rules on the issuance of Common
Stock.
11. REPLACEMENT CERTIFICATES. The certificate(s) representing the
Registrable Securities held by the Purchaser (or then Holder) may be exchanged
by the Purchaser (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Registrable Securities, as reasonably requested by the Purchaser (or such
Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
12. TRANSFER OR ASSIGNMENT. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchasers by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Registrable Securities, Debentures or Warrants that are or that
are convertible into or exercisable for, an aggregate of not less than 20,000
shares of Common Stock for transfers or assignments in part, and all other
rights granted to the Purchasers by the Company hereunder may be transferred or
assigned to any transferee or assignee of any Registrable Securities, Debentures
or Warrants; PROVIDED in each case that the Company must be given written notice
by the such Purchaser at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and
14
identifying the securities with respect to which such registration rights are
being transferred or assigned; and PROVIDED FURTHER that the transferee or
assignee of such rights agrees in writing to be bound by the provisions of this
Agreement.
13. MISCELLANEOUS.
(a) REMEDIES. The Company and the Purchasers acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
(b) JURISDICTION. THE COMPANY AND EACH OF THE PURCHASERS (I)
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT, THE STATE COURTS AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW YORK COUNTY, NEW YORK, OR SAN JOSE, CALIFORNIA FOR THE PURPOSES OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II)
HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND EACH OF
THE PURCHASERS CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS
PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
(c) NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
TO THE COMPANY:
Hybrid Networks, Inc.
0000 Xxxxxxxxx Xxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile:
Attention:
WITH A COPY TO:
Fenwick and West LLP
15
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxx Xxxxxxx, Esq.
TO THE PURCHASERS:
To each Purchaser at the address and/or fax
number set forth on Schedule I of the
Purchase Agreement
WITH COPIES TO:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Any party hereto may from time to time change its address for notices
by giving at least 10 days' written notice of such changed address to the other
parties hereto.
(d) INDEMNITY. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement.
(e) WAIVERS. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. The representations and warranties and
the agreements and covenants of the Company and each Purchaser contained herein
shall survive the Closing.
(f) EXECUTION. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(g) PUBLICITY. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of any Purchaser
without its express written approval, unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement. The Company agrees to deliver a copy of any public announcement
regarding the matters covered by this Agreement or any agreement or document
executed herewith to each Purchaser and any public announcement including the
name of a Purchaser to such Purchaser, prior to the publication of such
announcements.
16
(h) ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreement, the Warrants and the agreements and documents contemplated
hereby and thereby, contains the entire understanding and agreement of the
parties, and may not be modified or terminated except by a written agreement
signed by both parties.
(i) GOVERNING LAW. THIS AGREEMENT AND THE VALIDITY AND
PERFORMANCE OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
(j) SEVERABILITY. The parties acknowledge and agree that the
Purchasers are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Purchasers
hereunder are several and not joint, that no Purchaser shall have any
responsibility or liability for the representations, warrants, agreements, acts
or omissions of any other Purchaser, and that any rights granted to "Purchasers"
hereunder shall be enforceable by each Purchaser hereunder.
(k) JURY TRIAL. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY.
(l) TITLES. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
* * * SIGNATURE PAGE FOLLOWS * * *
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMPANY:
HYBRID NETWORKS, INC.,
By:
-----------------------------------------
Name:
Title:
PURCHASERS:
HALIFAX FUND, L.P.
By:
------------------------------------------
Name:
Title:
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
18
