Exhibit 99.2
PAYMENT AND REGISTRATION RIGHTS AGREEMENT
PAYMENT AND REGISTRATION RIGHTS AGREEMENT dated as of February 2, 2001
(this "AGREEMENT"), by and between BIZ INTERACTIVE ZONE, INC., a Delaware
corporation ("BIZ"), and WAVE SYSTEMS CORP., a Delaware corporation ("WAVE").
The parties hereby agree as follows:
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings specified below:
"BUSINESS DAY" shall mean any day other than a day which is a Saturday
or Sunday or any other day on which commercial banks in New York, New York or
California are authorized or required to remain closed.
"CLOSING" shall have the meaning set forth in the Stock Purchase
Agreement.
"CLOSING DATE" shall have the meaning set forth in the Stock Purchase
Agreement.
"COMMON STOCK" shall mean the Class A Common Stock, par value $.01 per
share, of Wave.
"CONTROL" (including, with its correlative meanings, "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934.
"GOVERNMENTAL AUTHORITY" shall mean any court, administrative agency or
commission or other governmental agency or instrumentality, domestic or foreign,
or any arbitrator, of competent jurisdiction.
"GROUP" shall mean a "Group" within the meaning of Section 13(d)(3) of
the Exchange Act.
"OPERATIVE AGREEMENTS" shall have the meaning set forth in the Stock
Purchase Agreement.
"PERSON" shall mean any individual, firm, corporation, partnership,
Group, trust, joint venture, Governmental Authority or other entity, and shall
include any successor (by merger or otherwise) of such entity.
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"REGISTRATION SHARES" shall mean (i) all Payment Shares issued to BIZ
and (ii) all securities issued or issuable to BIZ in respect thereof by way of
stock dividend, stock split or reclassification or in connection with a
combination of shares, recapitalization, merger or, consolidation or other
reorganization or otherwise.
"REGISTRATION STATEMENT" shall mean, as applicable, a Payment Share
Registration Statement or a registration statement filed with the SEC in
connection with a Piggyback Registration.
"REGISTRATION TERMINATION DATE" means, with respect to any Registration
Statement, the earlier of (i) the date when all of the Registration Shares
registered thereunder shall have been sold or (ii) the second anniversary of the
Closing Date; PROVIDED HOWEVER, that in the event that the right of BIZ to use
such Registration Statement (and the prospectus relating thereto) is delayed or
suspended pursuant to Section 5.07 or 5.09, Wave shall be required to extend the
Registration Termination Date beyond the second anniversary of the Closing Date
by the same number of days as such delay or Suspension Period.
"SEC" shall mean the Securities and Exchange Commission or any
successor commission or agency having similar powers.
"SECURITIES ACT" shall mean the Securities Act of 1933.
"STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement,
dated as of the date hereof, between Wave and BIZ.
"TRANSACTIONS" shall mean the transactions contemplated by the Stock
Purchase Agreement, Stockholder's Agreement, this Agreement and the Operative
Agreements.
"TRANSFER" shall mean to sell, transfer or assign.
SECTION 1.02. ADDITIONAL DEFINITIONS.
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DEFINED TERM SECTION DEFINED IN
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Payment Share Registration Statement 5.01(a)
Payment Shares 2.01
Piggyback Registration 5.02(a)
Registered Sale 4.01
Sale 4.01
SEC Documents 3.01(e)
Securities 3.01(c)
Specified Reports 3.02(e)
Specified Report Exhibits 3.02(e)
Suspension Period 5.09
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SECTION 1.03. TERMS GENERALLY. The definitions in Sections 1.01 and
1.02 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may
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require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. The headings of the Articles and Sections
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. Unless the
context shall otherwise require, any reference to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any successor
provision). Any reference in this Agreement to a "day" or a number of "days"
(without the explicit qualification of "BUSINESS") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
ARTICLE II.
PAYMENTS AND ISSUANCE OF SHARES
SECTION 2.01. PAYMENTS AND ISSUANCE OF SHARES. In reliance upon the
representations, warranties and agreements of BIZ set forth in this Agreement
and the other Operative Agreements, and upon the terms and conditions set forth
in this Agreement and the other Operative Agreements, in full consideration for
sale and issuance to Wave of the Purchased Shares (as defined in the Stock
Purchase Agreement), at the Closing, Wave shall (i) issue to BIZ 2,000,000
shares of Common Stock (the "PAYMENT SHARES") and (ii) deliver to BIZ a
certificate representing the Payment Shares issued in the name of BIZ.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF WAVE. Wave hereby
represents and warrants to BIZ on and as of the Closing Date as follows:
(a) ORGANIZATION. Wave is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect upon
Wave. Wave has full power and authority to own or lease and to operate and use
its properties and to carry on its business as now conducted by it.
(b) AUTHORIZATION. All corporate action on the part of Wave,
its officers, directors and stockholders, necessary for the authorization,
execution, delivery and performance (including issuance of the Payment Shares)
of this Agreement and the other Operative Agreements and the consummation of the
transactions contemplated herein and therein has been taken. Each of this
Agreement and the other Operative Agreements have been duly executed and
delivered by Wave and constitute the legal, valid and binding obligation of
Wave,
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enforceable against Wave in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. Wave has all
requisite corporate power to enter into this Agreement and the other Operative
Agreements and to carry out and perform its obligations under this Agreement and
the other Operative Agreements.
(c) CAPITALIZATION. The authorized capital stock of Wave
consists of (i) 75,000,000 shares of Class A common stock, par value $0.01 per
share, (ii) 13,000,000 shares of Class B common stock, par value $0.01 per
share, and (iii) 2,000,000 shares of preferred stock, shares of each of which
class of the capital stock of Wave have been issued and are outstanding as set
forth in Schedule 3.01(c) hereto. The terms, preferences and privileges of the
outstanding shares of Class A Common Stock, Class B Common Stock and Preferred
Stock are set forth in Wave's Certificate of Incorporation or, in the case of
Preferred Stock of any series, in the applicable Certificate of Designations for
such series. Except as set forth in Schedule 3.01(c) hereto, there are no
existing options, warrants, calls, preemptive (or similar) rights, subscriptions
or other rights, agreements, arrangements or commitments of any character
obligating Wave to issue, transfer or sell, or cause to be issued, transferred
or sold, any shares of the capital stock of Wave or other equity interests in
Wave or any securities convertible into or exchangeable for such shares of
capital stock or other equity interests (collectively, "Securities"), and there
are no outstanding contractual obligations of Wave to repurchase, redeem or
otherwise acquire any shares of its capital stock or other equity interests.
Schedule 3.01(c) sets forth the number of shares of Class A common stock Wave
has reserved for issuance upon exercise of rights under or conversion of
outstanding Securities. Schedule 3.01(c) sets forth the number of stock options
outstanding under Wave's stock incentive plans, and the number of shares
reserved for issuance under such plans that are not subject to outstanding
options. Except as set forth on Schedule 3.01(c) no holder of any capital stock
or Securities of Wave has any outstanding registration rights.
(d) VALID ISSUANCE OF THE PAYMENT SHARES. The Payment Shares to
be issued to BIZ hereunder, upon issuance pursuant to the terms hereof, will be
duly authorized and validly issued, fully paid, nonassessable and free of any
liens or encumbrances (other than liens or encumbrances created by BIZ) and,
assuming the accuracy of the representations and warranties made by BIZ to Wave,
will be issued and sold by Wave to BIZ in compliance with applicable state and
federal securities laws.
(e) SEC DOCUMENTS. Wave has timely filed and made available to
BIZ (or has provided access to BIZ via XXXXX or other publicly available
resource) all forms, reports and documents required to be filed by Wave since
December 31, 1999 (all such documents, collectively, the "SEC Documents"). As of
their respective filing dates (and if amended or superseded by a filing prior to
the Closing, then on the date of such filing), the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as applicable, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, as of their
respective filing dates.
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(f) NO CONFLICT. The execution and delivery of this Agreement
and the other Operative Agreements by Wave and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of any provision of the Certificate of Incorporation or By-laws of
Wave. The execution and delivery of this Agreement and the other Operative
Agreements by Wave and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to a
loss of a material benefit or give rise to an event which results in the
creation of any lien, charge or encumbrance upon any of Wave's properties or
assets under any agreement or instrument, permit, franchise, license, judgment,
order, statute, law, ordinance, rule or regulation, applicable to Wave or its
respective properties or assets, except where any such event could not
reasonably be expected to have a material adverse effect on the Transactions
contemplated by this Agreement and the other Operative Agreements.
(g) CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, and filings required on the part of Wave to be
obtained or made prior to the Closing in connection with the execution, delivery
or performance of this Agreement and the other Operative Agreements, and the
consummation of the transactions contemplated herein and therein have been
obtained or made prior to the Closing.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the last filing
date of the SEC Documents, no event has occurred that has had a material adverse
effect on the assets, properties, business or condition (financial or otherwise)
of Wave and its subsidiaries taken as a whole, excluding for this purpose the
execution or announcement of the transactions contemplated by this Agreement and
the other Operative Agreements and any adverse effect, if any, resulting
therefrom.
(i) REGISTRATION RIGHTS. Other than as provided in this
Agreement and as set forth in Schedule 3.01(c), Wave is presently not under any
obligation to file any registration statement under the Securities Act relating
to any securities of Wave or to have any securities of Wave included in any
registration statement filed or to be filed with the SEC.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF BIZ. BIZ hereby
represents and warrants to Wave on and as of the Closing Date as follows:
(a) ACQUISITION SOLELY FOR THE PURPOSE OF INVESTMENT. BIZ is
acquiring the Payment Shares being acquired by it hereunder for investment, for
its own account, and not for resale or with a view to distribution thereof in
violation of the Securities Act or any other applicable securities law.
(b) INVESTOR STATUS, ETC. BIZ certifies and represents to Wave
that (i) its financial condition is such that it is able to bear the risk of
holding any and all of the Payment Shares acquired by it for an indefinite
period of time and the risk of loss of its entire investment and (ii) it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of purchasing and holding the Payment
Shares.
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(c) PAYMENT SHARES NOT REGISTERED. BIZ understands that because
the Payment Shares are issued by Wave in a transaction exempt from the
registration requirements of the Securities Act, the Payment Shares have not
been registered under the Securities Act, and that the Payment Shares must
continue to be held by BIZ unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration. BIZ understands
that the exemptions from registration afforded by Rule 144 (the provisions of
which are known to it) promulgated under the Securities Act depend on the
satisfaction of various conditions, and that, if applicable, Rule 144 may afford
the basis for sales only in limited amounts.
(d) CONSENTS. All consents, approvals, orders, authorizations,
registrations qualifications and filings required on the part of BIZ to be
obtained or made prior to the Closing in connection with the execution, delivery
or performance of this Agreement and the other Operative Agreements and the
consummation of the Transactions contemplated herein or therein have been
obtained or made prior to the Closing.
(e) CERTAIN ACKNOWLEDGEMENTS. Wave has, within a reasonable
time prior to the Closing Date, (i) furnished to BIZ all of the reports listed
on Schedule 3.01(e) hereto (the "Specified Reports"), (ii) provided BIZ with
copies of all such Specified Report Exhibits (as defined below) as BIZ has
requested, (iii) made available to BIZ all other SEC Documents, (iv) provided
BIZ with the opportunity to ask questions and receive answers concerning the
Payment Shares and the terms and conditions of this Agreement and the other
Operative Agreements, and (v) provided BIZ the opportunity to request and
receive any additional information that is necessary to verify the accuracy of
the Specified Reports. BIZ has reviewed and understands the SEC Documents,
including the "Risk Factors" set forth therein, and acknowledges that Wave has
made no representations or warranties to BIZ to induce BIZ to enter into the
Transactions, except for those set forth herein (or, in the case of the SEC
Documents, incorporated herein by reference) and in the other Operative
Agreements. BIZ acknowledges that investments in the Common Stock are risky,
that the market price of the Common Stock is volatile and subject to a variety
of factors, many of which are outside Wave's control, and that no assurances can
be or are given by Wave or any of its officers or directors as to the market
price at which BIZ may be able to sell the Payment Shares. "Specified Report
Exhibits" means all exhibits required to be filed with the SEC as part of the
Specified Reports.
ARTICLE IV.
OTHER COVENANTS
SECTION 4.01. RESTRICTIONS ON TRANSFER OF THE PAYMENT SHARES. BIZ shall
not offer, sell, assign, transfer, endorse, pledge, mortgage, hypothecate or
otherwise convey or dispose of (a "SALE") any of the Payment Shares acquired by
it, or any interest therein, unless (i) any such Sale shall be (A) pursuant to
and in conformity with an effective registration statement under the Securities
Act (a "REGISTERED SALE"), (B) pursuant to and in conformity with Rule 144 under
the Securities Act or (C) a private transfer undertaken as part of a derivatives
financing strategy with an accredited investment banking firm and (ii) in the
case of a Sale under Rule 144 as
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described in clause (i)(B) above or a private transfer described in clause
(i)(C) above, if requested by Wave, BIZ shall have obtained and delivered to
Wave a written legal opinion of counsel (reasonably satisfactory to Wave as to
such counsel and as to the substance of such opinion) to the effect that any
such proposed Sale by BIZ or other transaction does not violate the registration
provisions of the Securities Act and any applicable state securities or blue sky
laws.
SECTION 4.02. EFFECT OF VIOLATION OF TRANSFER RESTRICTIONS; PREVENTIVE
MEASURES. Any Sale of any Payment Shares, or of any interest therein, in
violation of this Article IV shall be null and void. Wave may make a notation on
its records or give instructions to any of its transfer agents in order to
implement the restrictions on transfer set forth in this Article IV. Wave shall
not incur any liability for any delay in recognizing any transfer of any
Purchased Shares if Wave reasonably believes that any such transfer may have
been or would be in violation of the provisions of the Securities Act,
applicable blue sky laws or this Article IV.
SECTION 4.03. LEGENDS. (a) Each certificate evidencing any of the
Payment Shares shall be endorsed with the legend set forth below, and BIZ
covenants that, except to the extent such restrictions are waived by Wave, it
shall not transfer the Payment Shares represented by any such certificate
without complying with the restrictions on transfer described in this Agreement
and the legends endorsed on such certificate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, ENDORSED, PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE
CONVEYED OR DISPOSED OF, UNLESS SUCH SHARES ARE (1) SO REGISTERED OR
(2) AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND, IF REQUESTED
BY WAVE SYSTEMS CORP. (THE "COMPANY"), A WRITTEN LEGAL OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IS PROVIDED BY THE
TRANSFEROR. IF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE NOT
TRANSFERRED PURSUANT TO AND IN CONFORMITY WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR IN
ACCORDANCE WITH RULE 144 OF THE SECURITIES ACT OF 1933, SUCH SHARES ARE
ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN ARTICLE
IV OF A PAYMENT AND REGISTRATION RIGHTS AGREEMENT DATED AS OF FEBRUARY
2, 2001, AND NO TRANSFER OF SUCH SHARES SHALL BE VALID OR EFFECTIVE IF
IT IS NOT EFFECTED IN COMPLIANCE WITH ALL OF SUCH RESTRICTIONS ON
TRANSFER. A COPY OF SUCH PAYMENT AND REGISTRATION RIGHTS AGREEMENT MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF SUCH SHARES TO THE SECRETARY OF THE COMPANY.
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(b) Each certificate evidencing any of the Payment Shares shall
be endorsed with any legend required under any applicable state securities or
blue sky laws.
ARTICLE V.
REGISTRATION RIGHTS
SECTION 5.01. REGISTRATION. (a) Within the time periods set forth below
in this Section 5.01(a), Wave shall prepare and file with the SEC a registration
statement, or registration statements, on Form S-3 (or Form S-1 if registration
on Form S-3 is not available to Wave at such time) for the purposes of
registering under the Securities Act the Registration Shares for resale by, and
for the account of, BIZ as selling stockholder thereunder (the "PAYMENT SHARE
REGISTRATION STATEMENT(S)"). The Registration Shares shall, at the option of
Wave, be registered by means of separate registration statements, or by means of
amendments and supplements to an initial shelf registration statement, in
accordance with the following schedule:
(i) On or before the 120th day following the Closing Date, Wave
shall prepare and file, a Payment Share Registration Statement, for the
registration of 667,000 of the Registration Shares;
(ii) On or before the 240th day following the Closing Date,
Wave shall prepare and file a Payment Share Registration Statement, or shall
prepare and file amendments and supplements to the initial Payment Share
Registration Statemen,t for the registration of an additional 667,000 of the
Registration Shares; and
(iii) On or before the first anniversary after the Closing
Date, Wave shall prepare and file a Payment Share Registration Statement, or
shall prepare and file amendments and supplements to any previously filed
Payment Share Registration Statement, for the registration of the remaining
666,000 Registration Shares.
(b) Wave shall use all reasonable efforts to have the above
Registration Share Registration Statements declared effective as soon as
reasonably practicable.
(c) Notwithstanding any provision of paragraph (a) of this
Section 5.01, or any amendment or supplement thereto to the contrary, Wave may
extend the period to file a Payment Share Registration Statement, or any
supplement or amendment for not more than an additional 90 days after any of the
dates set forth in 5.01(a)(i) - (iii) (the "Extension Period") if (i) such delay
would relieve Wave of the obligation to include any interim financial statements
in any Registration Statement or (ii) Wave would be required to disclose in the
Registration Statement(s) any material nonpublic information and Wave concludes
that the disclosure of such information would be inadvisable at that time. The
Registration Statement(s) shall permit BIZ to offer and sell, on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act, any or all of
the Registration Shares for the periods set forth herein. Notwithstanding the
foregoing, Wave shall not be entitled to Suspension Periods and Extension
Periods totaling,
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when combined, more than 180 days in any consecutive twelve month period during
the term of this Agreement.
(d) Sales of the Registrable Shares pursuant to any Payment
Share Registration Statements shall not be underwritten.
SECTION 5.02. PIGGYBACK REGISTRATIONS.
(a) If Wave proposes to register any Common Stock under the
Securities Act for sale for cash in an underwritten offering, Wave shall give
BIZ notice of such proposed registration (a "PIGGYBACK REGISTRATION") at least
30 days prior to the filing of the registration statement. At the written
request of BIZ delivered to Wave within 10 days after the receipt of the notice
from Wave, which request shall state the number of Registration Shares that BIZ
wishes to sell under the registration statement proposed to be filed by Wave,
Wave will use reasonable efforts to include in such underwritten registration
the Registration Shares requested to be included by BIZ (subject to Section
5.02(b) below).
(b) If the managing underwriters of a Piggyback Registration
advise Wave in writing that in their opinion the number of securities requested
to be included in the registration exceeds the number which can be sold in the
offering, then Wave shall be required to include in the offering only that
number of such securities, including Registrable Shares, which the underwriters
determine in their sole discretion will not materially and adversely affect such
offering, and the shares to be included, if any, shall be apportioned pro rata
among all other holders of Wave's securities who have the right to participate
in such offering according to the total amount of securities requested to be
included therein by such holders.
(c) All necessary amendments to any Payment Share Registration
Statement will be made to reduce the number of shares to be sold by BIZ
thereunder, in the event that shares are sold by BIZ in a Piggyback
Registration.
SECTION 5.03. INDEMNIFICATION BY WAVE. In the event of any registration
of any Registration Shares of BIZ under the Securities Act, Wave shall, and
hereby does, indemnify and hold harmless BIZ, its directors and officers, each
other Person who participates as an underwriter in the offering or sale of such
Registration Shares and each other Person, if any, who controls such party or
any such underwriter within the meaning of Section 15 of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to which
such party or any such director or officer or underwriter or controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which the Registration Shares were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and Wave shall reimburse
such party and each such director, officer, underwriter and controlling Person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or
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defending any such loss, claim, liability, action or proceeding; provided,
however, that Wave shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information about
such party furnished to Wave through an instrument duly executed by such party
specifically stating it is for use in the preparation thereof. Such indemnity
shall remain in full force and affect regardless of any investigation made by or
on behalf of such party or any such director, officer, controlling Person or
underwriter and shall survive any transfer of the Registration Shares.
SECTION 5.04. INDEMNIFICATION BY BIZ. Wave may require, as a condition
to including any Registration Shares of BIZ in any registration statement filed
pursuant to Section 5.01 or 5.02, that Wave shall have received an undertaking
satisfactory to it from BIZ to indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 5.03) Wave, each director of
Wave, each officer of Wave signing such Registration Statement, each Person who
participates as an underwriter in the offering or sale of such Registration
Shares and each other Person, if any, who controls Wave or any such underwriter
within the meaning of Section 15 of the Securities Act with respect to any
untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
about BIZ furnished to Wave through an instrument duly executed by BIZ
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; provided, however, that the liabilities of BIZ
hereunder shall be limited to an amount equal the net proceeds to BIZ and its
permitted assignees from the Registration Shares sold in connection with any
such registration statement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or an behalf of Wave or any such
director, officer or controlling Person and shall survive the Transfer by BIZ of
the Registration Shares being registered.
SECTION 5.05. NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 5.03 or 5.04, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give notice to the latter of the commencement of such action; provided, however,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under Section 5.03
or 5.04, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
or the indemnified party may have defenses not available to the indemnifying
party in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense
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thereof other than reasonable costs of investigation. No indemnifying party
shall be liable for any settlement of any action or proceeding effected without
its written consent. No indemnifying party shall, without the consent of the
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.
SECTION 5.06. INDEMNIFICATION PAYMENTS. The indemnification required by
this Article 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
SECTION 5.07. REGISTRATION COVENANTS OF WAVE. In the event that any
Registration Shares are to be registered pursuant to Section 5.01 or 5.02, Wave
covenants and agrees that it shall use reasonable efforts to effect the
registration and cooperate in the sale of the Registration Shares to be
registered and shall as expeditiously as possible:
(i) notify BIZ, promptly after Wave shall receive notice
thereof, of the time when the Registration Statement becomes effective or when
any amendment or supplement or any prospectus forming a part of the Registration
Statement has been filed;
(ii) notify BIZ promptly of any request by the SEC for the
amending or supplementing of the Registration Statement or prospectus or for
additional information;
(iii) (A) advise BIZ after Wave shall receive notice or
otherwise obtain knowledge of the issuance of any order by the SEC suspending
the effectiveness of the Registration Statement or any thereto or of the
initiation or threatening of any proceeding for that purpose and (B) promptly
use reasonable efforts to prevent the issuance of any stop order or to obtain
its withdrawal promptly if a stop order should be issued;
(iv) (A) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus forming a part
thereof as may be necessary to keep the Registration Statement effective until
the Registration Termination Date and (B) comply with the provisions of the
Securities Act with respect to the disposition of all Registration Shares
covered by the Registration Statement in accordance with the intended methods of
disposition by BIZ set forth in the Registration Statement;
(v) furnish to BIZ such number of copies of the Registration
Statement, each amendment and supplement thereto, the prospectus included in the
Registration Statement (including any preliminary prospectus) and such other
documents as BIZ may reasonably request in order to facilitate the disposition
of the Registration Shares owned by BIZ;
(vi) notify BIZ, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the Registration Statement would contain an 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 not misleading, and,
at the request of BIZ, prepare a supplement or amendment to the Registration
Statement so that the Registration Statement shall not, to Wave's knowledge,
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or
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necessary to make the statements therein not misleading, PROVIDED that upon such
notification by Wave, BIZ will not offer or sell Registration Shares until Wave
has notified BIZ that it has prepared a supplement or amendment to such
prospectus and delivered copies of such supplement or amendment to BIZ;
(vii) if the Registration Shares are securities of a class then
listed on a securities exchange or traded through a self-regulatory
organization, cause the Registration Shares to be so listed or traded;
(viii) provide a transfer agent and registrar, which may be a
single entity, for all the Registration Shares not later than the effective date
of the Registration Statement;
(ix) use its best efforts to cause the Registration Shares
covered by the Registration Statement to be registered with or approved by such
other Governmental Authorities as may be necessary to enable BIZ to consummate
the disposition of such Registration Shares;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and timely file all reports required
to be filed by it under the Exchange Act, and the rules and regulations adopted
by the SEC thereunder, all to the extent required to enable BIZ to sell its
Payment Shares pursuant to Rule 144 and the Registration Statement; and
(xi) in the event of an underwritten public offering that
involves the Registration Shares, enter into and perform its obligations under
an underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. BIZ, if participating in such underwriting, shall
also enter into and perform its obligations under such an agreement.
SECTION 5.08. EXPENSES. Wave shall pay, on behalf of BIZ, all the
expenses in connection with the registration of Registration Shares pursuant to
Sections 5.01 and 5.02 hereof, including all registration, filing and regulatory
review fees, all fees and expenses of complying with securities or blue sky
laws, all listing fees, all word processing, duplicating and printing expenses,
all messenger and delivery expenses, the fees and disbursements of counsel for
Wave and of its independent public accountants (including the expenses of
comfort letters required by or incident to such performance and compliance), and
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding any underwriting discounts and commissions
and transfer taxes, if any, on the Registration Shares. In any registration, BIZ
shall pay for its own underwriting discounts and commissions and transfer taxes,
and its own legal fees.
SECTION 5.09. DEFERRAL. Notwithstanding anything in this Agreement
to the contrary, if Wave shall furnish to BIZ a certificate signed by the
President or Chief Financial Officer of Wave stating that the Board of
Directors of Wave has made the good faith determination (i) that continued
use by BIZ of a Registration Statement for purposes of effecting offers or
sales of Registration Shares pursuant thereto would require, under the
Securities Act, premature disclosure in the Registration Statement (or the
prospectus relating thereto) of material, nonpublic information concerning
Wave, its business or prospects or any proposed material
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transaction involving Wave, (ii) that such premature disclosure would be
materially adverse to Wave, its business or prospects or any such proposed
material transaction significantly less likely and (iii) that it is therefore
advisable to suspend the use by BIZ of such Registration Statement (and the
prospectus relating thereto) for purposes of effecting offers or sales of
Registration Shares pursuant thereto, then the right of BIZ to use the
Registration Statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registration Shares pursuant thereto shall be
suspended for a period (the "Suspension Period") of not more than 90 days after
delivery by Wave of the certificate referred to above in this Section 5.09.
During the Suspension Period, BIZ shall not offer or sell any Registration
Shares pursuant to or in reliance upon the Registration Statement (or the
prospectus relating thereto). Notwithstanding the foregoing, Wave shall not be
entitled to Suspension Periods and Extension Periods totaling, when combined,
more than 180 days in any consecutive twelve-month period during the term of
this Agreement.
SECTION 5.10. ASSIGNMENT OF REGISTRATION RIGHTS. The registration
rights set forth in this Article V may be assigned by BIZ to any permitted
transferee or assignee; provided, however that (a) Wave is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and (b) such transferee or assignee agrees to be
bound by the terms of this Agreement (and executes an instrument in writing to
that effect).
ARTICLE VI.
MISCELLANEOUS
SECTION 6.01. NOTICES. Except as expressly provided herein, notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopier, as
follows:
(a) if to Wave:
Wave Systems Corp.
000 Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxx, XX 00000
Attn: Xxxxxx Xxxxxx
Chief Financial Officer
Facsimile No.: (000) 000-0000
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With a copy to:
Xxxxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
(b) if to BIZ:
BIZ Interactive Zone, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to :
Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxx Xxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
or to such other address or attention of such other person as any party shall
advise the other party in writing. All notices and other communications given to
a party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
SECTION 6.02. APPLICABLE LAW; WAIVER OF JURY TRIAL. THE VALIDITY,
CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, APPLICABLE TO
CONTRACTS EXECUTED IN AND PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REFERENCE TO ANY CHOICE OF LAW PRINCIPLES OF SUCH STATE. WITH RESPECT TO ANY
LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER OPERATIVE
AGREEMENTS OR ANY TRANSACTION, THE PARTIES EXPRESSLY WAIVE ANY RIGHT THEY MAY
HAVE TO A JURY TRIAL AND AGREE THAT ANY SUCH LEGAL PROCEEDING SHALL BE TRIED BY
A JUDGE WITHOUT A JURY.
SECTION 6.03. SEVERABILITY. If any provision of this Agreement shall be
hold to be illegal, invalid or unenforceable, that provision will be enforced to
the maximum extent permissible so as to effect the intent of the parties, and
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired
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thereby. If necessary to effect the intent of the parties, the parties will
negotiate in good faith to amend this Agreement to replace the unenforceable
language with enforceable language which as closely as possible reflects such
intent.
SECTION 6.04. AMENDMENTS. This Agreement may be modified or waived only
by a writing signed by the parties hereto.
SECTION 6.05. WAIVER. The waiver by any party of any instance of the
other party's noncompliance with any obligation or responsibility herein shall
not be deemed a waiver of other instances or of any party's remedies for such
noncompliance.
SECTION 6.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (including by telecopier), all of which shall be considered
one and the same agreement, and shall become effective when one or more
counterparts shall have been signed by each party and delivered to each other
party.
SECTION 6.07. ENTIRE AGREEMENT. The provisions of this Agreement, and
the other Operative Agreements set forth the entire agreement and understanding
among the parties as to the subject matter hereof and supersede all prior
agreements, oral or written, and all other communications between the parties
relating to the subject matter hereof.
SECTION 6.08. ASSIGNMENT.
(a) Except as expressly set forth in this Agreement, no party
shall assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other parties, PROVIDED, that no such
consent shall be required for a transfer by operation of law in connection with
a merger or consolidation of such party (without prejudice to any other rights
the parties may have under any other Operative Agreement).
(b) Any attempted assignment of this Agreement in violation of
this Section shall be void and of no effect.
(c) This Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
permitted assigns.
SECTION 6.09. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any party herein and in the certificates
or other instruments prepared or delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
and shall survive the Closing, regardless of any investigation made by the other
parties hereto or on their behalf.
SECTION 6.10. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the
sole benefit of the parties and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any Person, other
than the parties and such assigns, any legal or equitable rights hereunder,
except that Sections 5.03 and 5.04 and are intended to be for the benefit of the
Persons named therein.
-4-
SECTION 6.11. EXPENSES. All costs and expenses incurred in connection
with the Operative Agreements and the Transactions shall be paid by the party
incurring such cost or expense, except as the parties shall otherwise agree in
writing. The provisions of this Section 6.11 shall remain operative and in full
force and effect regardless of the expiration of this Agreement or the
consummation of the Transactions.
SECTION 6.12. REMEDIES. In no event will any party be liable to another
party for incidental damages, lost profits, lost savings, or any other
consequential damages, even if such party has been advised of the possibility of
such damages, resulting from the breach of its obligations under any Operative
Agreement or from the use of any confidential or other information.
SECTION 6.13. PUBLICITY. No public release, announcement or other form
of publicity concerning the Transactions shall be issued by any party without
the prior consent of the other party, except as such release or announcement may
be required by law or the rules or regulations of any securities exchange, in
which case the party required to make the release or shall, to the extent
possible, allow the other party reasonable time to comment on such release or
announcement in advance of such issuance.
SECTION 6.14. CONSTRUCTION. This Agreement has been negotiated by the
parties and their respective counsel and will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against any party.
[The remainder of this page is intentionally left blank.]
-16-
IN WITNESS WHEREOF, the parties have duly executed this Payment and
Registration Rights Agreement as of the day and year first above written.
WAVE SYSTEMS CORP.
By:
--------------------------------------
Name:
Title:
BIZ INTERACTIVE ZONE, INC.
By:
---------------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer.
[SIGNATURE PAGE TO PAYMENT AND REGISTRATION RIGHTS AGREEMENT]
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SCHEDULE 3.01(C)
As of January 31, 2001, there are 47,134,489 shares of Wave Class A
Common Stock and 779,211 shares of Wave Class B Common Stock issued and
outstanding. There are no shares of Wave preferred stock issued and outstanding.
The following numbers of Wave options and warrants are outstanding:
Employee Stock Options 7,936,742
Directors' Stock Options 348,000
Warrants 85,320
---------
TOTAL 8,370,062
Wave has reserved 12,652,410 shares of Class A Common Stock for issuance under
its stock option plans of which 8,284,742 shares are subject to outstanding
options. Wave has reserved an additional 85,320 shares of Class A Common Stock
for issuance upon the exercise of warrants.
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SCHEDULE 3.02(e)
(1) 10-K Annual Report filed by Wave Systems Corp. on March 22, 2000
(2) 10-Q Quarterly Report filed by Wave Systems Corp. on May 15, 2000
(3) 14A Proxy Statement Filed by Wave Systems Corp. on May 24, 2000
(4) 10-Q Quarterly Report filed by Wave Systems Corp. on August 14,
2000
(5) 8-K filed by Wave Systems Corp. on September 15, 2000
(6) 10-Q Quarterly Report filed by Wave Systems Corp. on November 14,
2000
(7) 8-K/A filed by Wave Systems Corp. on November 14, 2000
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