EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of ____________,
2000, executed and delivered by Net/Tech International, Inc., a Delaware
corporation (the "Company") which has its principal place of business at Xxx
Xxxx Xxxxx xxxxxx, Xxxxx 00,Xxx Xxxx, Xxx Xxxxxx 00000, in favor of the Holders
(as defined below) whose names appear on Exhibit A annexed hereto.
RECITALS
WHEREAS, simultaneously with the execution and delivery of this Agreement,
the Company, pursuant to terms and conditions set forth in the Confidential
Private Offering Memorandum of the Company, dated May 2, 2000, including the
exhibits thereto and any and all supplements thereof and amendments thereto, and
all documents incorporated by reference therein (collectively, the "Memorandum")
is offering (the "Offering") up to 3,000,000 shares ("Shares") of Common Stock
(the "Common Stock") through First Montauk Securities Corp., as placement agent;
WHEREAS, pursuant to the Offering, the Shares are being offered on a "best
efforts all or none" basis as to 2,000,000 shares and on a "best efforts" basis
as to the remaining 1,000,000 Shares;
WHEREAS, the terms and conditions of the Offering provide for the execution
and delivery of this Agreement by the Company and grant to all subscribers in
the Offering the rights contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Company, the Company hereby
agrees as follows:
1. PIGGYBACK REGISTRATION.
(a) If at any time the Company proposes to prepare and file with the Securities
and Exchange Commission (the "SEC") one or more registration statements or
amendments, including post-effective amendments, or supplements thereto covering
any equity or debt securities of the Company, or any such securities of the
Company held by its stockholders, other than in connection with a merger or
acquisition or pursuant to a registration statement on Form S-4 or Form S-8 or
any successor form (for purposes of this Section 1, collectively, a "Piggyback
Registration Statement"), the Company will give written notice of its intention
to do so by registered or certified mail ("Notice"), at least thirty (30)
business days prior to the filing of each such Piggyback Registration Statement,
to each Person (as defined below) who holds Shares (such Shares are referred to
herein as the "Registrable Shares") and each of the successors, assigns and
transferees of each of such Persons (individually, a "Holder" and collectively,
"Holders"). "Person" as used herein shall mean any individual, sole
proprietorship, partnership, corporation, association, joint venture, trust,
unincorporated entity or other entity, or the government of any country or
sovereign state, or of any state, province, municipality or other political
subdivision thereof. Upon the written request of a Holder or Holders, made
within twenty (20) days after receipt of the Notice, that the Company include
any or all of the Registrable Shares held by such Holder or Holders ("Piggyback
Securities") in the proposed Piggyback Registration Statement (each such Holder,
a "Requesting Holder"), the Company shall use its best efforts to cause such
Piggyback Registration Statement to be declared effective under the Securities
Act of 1933, as amended (the "Act"), by the SEC, so as to permit the public sale
by the Requesting Holders of their Piggyback Securities pursuant thereto, at the
Company's sole cost and expense and at no cost or expense to the Requesting
Holder (other than any underwriting or other commissions, discounts or fees of
any counsel or advisor to the Holder which shall be payable by the Holder, as
further provided in Section 4(d) hereof) (the "Piggyback Registration").
(b) If securities are proposed to be offered for sale pursuant to such Piggyback
Registration Statement by other security holders of the Company and the total
number of the Securities to be offered by the Requesting Holders and such other
selling security holders is required to be reduced pursuant to a request from
the underwriter or managing underwriter (which request shall be made in
writing), the aggregate
number of Piggyback Securities to be offered by the Requesting Holders pursuant
to such Piggyback Registration Statement shall equal the number which bears the
same ratio to the maximum number of securities that the underwriter or managing
underwriter believes may be included for all the selling security holders
(including the Requesting Holders) as the original number of Piggyback
Securities proposed to be sold by the Requesting Holders bears to the total
original number of securities proposed to be offered by the Requesting Holders
and the other selling securityholders.
(c) Notwithstanding the preceding provisions of this Section, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 1 (irrespective of whether any written request for inclusion of
Piggyback Securities shall have already been made) to elect not to file any
proposed Piggyback Registration Statement contemplated pursuant to this Section
1, or to withdraw the same after the filing but prior to the effective date
thereof.
2. AUTOMATIC REGISTRATION.
(a) In the event that the Company has not registered all of the Registrable
Securities pursuant to Section 1 hererof within 180 days of the final closing of
the Offering then the Company shall use its best efforts to file a registration
statement with the SEC, at the sole expense of the Company, and such other
documents, including a prospectus, as may be necessary (in the opinion of
counsel for the Company), in order to comply with the provisions of the Act, so
as to permit the public sale of the Registrable Shares by the Holders. The
registration statement required to be filed pursuant to this Section 2 shall be
filed within 15 days of expiration of such 180 day period, and the Company shall
use its best efforts to obtain effectiveness of the registration statement so
filed as soon as possible.
(b) Once effective, the Company covenants and agrees to use its best efforts to
maintain the effectiveness of the Registration Statement until the earlier of
(i) 12 months following the date of effectiveness, or (ii) the date that the
Holders of the Registrable Shares receive an opinion of counsel to the Company
that all of the Registrable Shares may be freely traded (without limitation or
restriction as to quantity or timing and without registration under the Act)
pursuant to Rule 144 or otherwise, except that, the Company may suspend the use
of the Registration Statement for a period not to exceed 45 days in any 12-month
period for valid business reasons (not including avoidance of the Company's
obligations hereunder), including the acquisition or divestiture of assets,
public filings with the SEC, pending corporate developments and similar events.
3. REGISTRABLE SHARES. For purposes of this Agreement, the term "Registrable
Shares" shall also include any securities issued or issuable with respect to the
Shares by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. For purposes hereof, the term "Registrable Shares"
shall include all Shares sold by the Company in the Offering. Anything herein
contained to the contrary notwithstanding, the term "Registrable Shares" as used
in this Agreement shall not include, Shares after they have been sold by a
Holder pursuant to an effective Registration Statement under the Act or Shares
which may be sold without volume limitation pursuant to Rule 144k.
4. ADDITIONAL COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 2 above, the Company shall
file the Registration Statement as expeditiously as possible, but in no event
later than ten (10) business days following expiration of the 180 day period
referenced in Section 2, and use its best efforts to have such Registration
Statement declared effective at the earliest possible time.
(b) In connection with any registration of Registrable Shares pursuant to
Sections 1 or 2 above, the Company shall furnish each Holder of Registrable
Shares included in a Registration Statement with such reasonable number of
copies of such Registration Statement, related preliminary prospectus and
prospectus meeting the requirements of the Act, and other documents necessary or
incidental to the registration and
public offering of such Registrable Shares, as shall be reasonably requested by
the Holder to permit the Holder to make a public distribution of such
Registrable Shares.
(c) If any stop order shall be issued by the SEC in connection with any
Registration Statement filed pursuant to Sections 1 or 2 above, the Company will
use its best efforts to obtain the removal of such order. Any stop order
declared by the SEC, or any registration statement prepared and filed pursuant
hereto due to a material misstatement or omission on behalf of the Company,
shall be without penalty to any of the registration rights granted hereunder.
(d) The Company shall pay all costs, fees, and expenses in connection with all
Registration Statements filed pursuant to Sections 1 and 2 above, including,
without limitation, the Company's legal and accounting fees, printing expenses,
and blue sky fees and expenses; provided, however, that the Holders shall be
solely responsible for the fees of any counsel retained by the Holders in
connection with such registration and any transfer taxes or underwriting
discounts, commissions or fees applicable to the Registrable Shares sold by the
Holders pursuant thereto.
(e) The Company will use its best efforts to qualify, at its sole expense, any
Registrable Shares included in a Registration Statement for sale in such states
as the Holders of such securities shall reasonably request, provided that no
such qualification will be required in any jurisdiction where, solely as a
result thereof, the Company would be subject to general service of process or to
taxation or qualification as a foreign corporation doing business in such
jurisdiction.
5. INDEMNIFICATION.
(a) In the event of any registration of any the Registrable Shares under the
Act, the Company shall indemnify and hold harmless each Holder, the affiliates
of each such Holder, the directors, partners, officers, employees and agents of
each such Holder and any person who controls any such Holder within the meaning
of the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or State statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) caused by, arising out of or based on any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement under which such securities were registered under the
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon 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, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder
specifically for inclusion therein, (ii) the Company will not be liable to any
indemnified party under this indemnity agreement with respect to any
Registration Statement or Prospectus to the extent that any such loss, claim,
damage or liability of such indemnified party results from the use of the
Prospectus during a period when the use of the Prospectus has been suspended in
accordance with Section 4(c) hereof, provided that the Holders received prior
notice of such suspension, which notice shall be deemed to have been received by
such Holders within 48 hours after the giving thereof; and (iii) the Company
shall not be liable to any indemnified party with respect to any preliminary
Prospectus to the extent that any such loss, claim, damage or liability of such
indemnified party results from the fact that such indemnified party sold
Registrable Securities to a person as to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the Prospectus or of
the Prospectus as then amended or supplemented in any case where such delivery
is required by the Act, if the loss, claim, damage or liability of such
indemnified party results from an untrue statement or omission of a material
fact contained in the preliminary Prospectus which was corrected in the
Prospectus or in the Prospectus as then amended or supplemented. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have. The Company also agrees to indemnify and provide contribution
to each person who may be deemed to be an underwriter (for purposes of the Act)
with respect to the Registrable Shares ("Underwriter" or "Underwriters"), their
officers and directors, and each person who controls each such Underwriter, on
substantially the same basis as that of the indemnification of and contribution
to the Holders provided in this Section 5.
(b) As a condition to including any of the Registrable Shares in any
registration statement filed pursuant to this Agreement, the Holder of the
Registrable Shares, as a prospective seller of the Registrable Shares hereby
agrees to indemnify and hold harmless (in the same manner and to the same extent
as set forth in subdivision (a) of this Section 5) the Company, each director of
the Company, each officer, employee or agent of the Company and each Underwriter
of the Registrable Shares and each other person or entity, if any, which
controls the Company or such Underwriter within the meaning of the Act, with
respect to any statement or alleged statement in, or omission or alleged
omission from, such registration statement, any preliminary Prospectus,
Prospectus or summary Prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Holder for use in the preparation of
such registration statement, preliminary Prospectus, Prospectus, summary
Prospectus, amendment or supplement. Any such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by Holder. Anything in this Agreement contained
to the contrary notwithstanding the liability of each Holder for indemnification
or contribution hereunder shall be limited to the amount of proceeds received by
such Holder in the Offering giving rise to such liability.
(c) Promptly after receipt by an indemnified party of notice of the commencement
of any action or proceeding involving a claim referred to in the preceding
subdivisions of this Section 5, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action, provided that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 5, except to the extent that the indemnifying party is materially
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 in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that the indemnifying
party may wish, 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 thereof other than
reasonable costs of investigation. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnified party shall not settle or compromise any action for which it seeks
indemnification or contribution hereunder without the prior written consent of
the indemnifying party, which consent shall not be unreasonably withheld. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in Section 5(a) or 5(b) is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Registration Statement which
resulted in such losses.
(e) The provisions of this Section 5 shall remain in full force and effect
regardless of any investigation made by or on behalf of any Holder or the
Company or any other persons who are entitled to indemnification pursuant to the
provisions of this Section 5, and shall survive the sale by a Holder of
Registrable Shares pursuant to the Registration Statement.
6. AMENDMENTS. This Agreement may not be amended, modified or supplemented, and
waivers of or consents to departures from the provisions of this Agreement may
not be given, unless it would not have an adverse effect upon the rights of any
of the Holders and the Company has obtained the written consent of Holders then
holding a majority of the Registrable Shares.
7. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests and other communications (which shall include publication) to any
person provided for hereunder shall be in writing and shall be given by hand
delivery, registered or certified mail or by any courier providing overnight
delivery (i) if to the Company or the initial Holder, at the address set forth
in the Subscription Agreement and (ii) if to a subsequent Holder, to the address
set forth on the books and records of the Company. All such notices, requests or
communications shall not be effective until received.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement which
are for the benefit of Holder shall also be for the benefit of and enforceable
by any subsequent holder of the Registrable Shares. Holder agrees, by accepting
any portion of the Registrable Shares after the date hereof, to the provisions
of this Agreement.
9. GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE
WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
(b) Each of the Company and Holder hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the United States District
Court for the District of New Jersey (the "New Jersey Courts") for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in the New Jersey Courts and agrees not to plead or claim that such
litigation brought in any New York Jersey has been brought in an inconvenient
forum.
10. COUNTERPARTS. This Agreement may be executed by facsimile and may be signed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Agreement embodies the entire agreement of between
the Company relating to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
12. SEVERABILITY. If any provision of this Agreement, or the application of such
provisions to any person or circumstance, shall be held invalid, the remainder
of this Agreement, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
13. THIRD PARTY BENEFICIARIES. The Holders from time to time shall each be a
third party beneficiary of the agreements of the Company contained herein.
14. HEADINGS. The headings which are contained in this Agreement are for the
sole purpose of convenience of reference, and shall not limit or otherwise
affect the interpretation of any of the provisions hereof.
15. FURTHER ASSURANCES. The Company will from time to time after the date hereof
take any and all actions, and execute, acknowledge and deliver any and all
documents and instruments, at its cost and expense, as any Holder may from time
to time reasonably request in order to more fully perfect or protect the rights
intended to be granted to it hereunder.
16. INTERPRETATION. As used in this Agreement, unless the context otherwise
requires: words describing the singular number shall include the plural and vice
versa; words denoting any gender shall include all genders; words denoting
natural persons shall include corporations, partnerships and other entities, and
vice versa; and the words "hereof", "herein" and "hereunder", and words of
similar import, shall refer to this Agreement as a whole, and not to any
particular provision of this Agreement.
17. WAIVER. The failure of the Company or any Holder to at any time enforce any
of the provisions of this Agreement shall not be deemed or construed to be a
waiver of any such provision, nor to in any way affect the validity of this
Agreement or any provision hereof or the right of the Company or any Holder to
thereafter enforce each and every provision of this Agreement.
18. AGENT FOR HOLDERS. The Company and the Holders hereby agree that First
Montauk Securities Corp. may, at the election of the Holders evidenced by
written notice to the Company, serve as agent on behalf of the Holders in
connection with the receipt or delivery of any required notice hereunder.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Agreement as of the date first above written.
NET/TECH INTERNATIONAL, INC.
By:____________________________
Name:
Title:
HOLDERS
NAME ADDRESS SHARES
