EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
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AGREEMENT between FiberNet Telecom Group, Inc., a Delaware corporation (the
"Company"), and xxxxxxx.xxxxxx.xxx xxxxxx.xxx, a New Jersey limited liability
company (the "Shareholder").
W I T N E S S E T H:
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WHEREAS, the Company, through its wholly owned subsidiary, Local Fiber, LLC
("Local Fiber"), has purchased substantially all of the assets of the
Shareholder pursuant to an Asset Purchase Agreement, dated as of December 31,
2003, between the Company, Local Fiber and the Shareholder (the "Purchase
Agreement"); and
WHEREAS, in connection with the Purchase Agreement, the Company intends to
register and the Shareholder desires that the Company register the Shares and
the Additional Shares, and any other shares of the Company's Common Stock issued
in respect of the Shares or the Additional Shares by way of stock split, stock
dividend or other distribution, recapitalization or otherwise, held or to be
held by Shareholder or permitted transferees of the Shareholder in such
registration (the "Registrable Securities").
NOW THEREFORE, in consideration of the premises and the mutual terms and
provisions hereof, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, capitalized terms not
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otherwise defined herein shall have the meanings set forth in the Purchase
Agreement and the following terms shall have the following respective meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute enacted hereafter, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
(b) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Act.
(c) "Common Stock" shall mean the common stock, par value $0.001 per
share, of the Company.
(d) "Exchange Act" shall mean the Securities Exchange of 1934, as
amended, or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
(e) "Holder" shall mean the Shareholder and any member of the
Shareholder who is the beneficial owner of any of the Shares or the Additional
Shares.
(f) "Registrable Securities" shall have the meaning set forth in the
second WHEREAS clause hereof
(g) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of such
registration statement by the Commission.
2. Registration.
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(a) With respect to the Registrable Securities issued pursuant to Section 3.2(b)
of the Purchase Agreement, within thirty (30) days of the date hereof (the
"Filing Date"), the Company shall use its commercially reasonable efforts to
prepare and file with the Commission a "resale" registration statement covering
all such Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415 under the Act. Such registration statement shall be on
Form S-3 (except if the Company is not then eligible to register for resale such
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith). The Company shall also use
its commercially reasonable efforts to have such registration statement declared
effective within 60 days from the Filing Date. In the event any shares of
Company Common tock are issued in respect of the Shares by way of stock split,
dividend or other distribution, recapitalization or otherwise, the Company shall
promptly amend the registration to include such newly issued shares to the
extent such amendment is necessary to include such issued shares in such
registration statement.
(b) With respect to the Registrable Securities issued pursuant to Section
3.3(d) or Section 3.3(e) of the Purchase Agreement, if any, within thirty (30)
days of the date of issuance of such Registrable Securities (the "Second Filing
Date"), the Company shall use its commercially reasonable efforts to prepare and
file with the Commission a "resale" registration statement covering all such
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415 under the Act. Such registration statement shall be on Form S-3
(except if the Company is not then eligible to register for resale such
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith). The Company shall also use
its commercially reasonable efforts to have the registration statement declared
effective within 60 days from the Second Filing Date. In the event any shares
of Company Common tock are issued in respect of the Additional Shares by way of
stock split, dividend or other distribution, recapitalization or otherwise, the
Company shall promptly amend the registration to include such newly issued
shares to the extent such amendment is necessary to include such issued shares
in such registration statement.
(c) Shareholder acknowledges and understands that: (i) the Company shall
register only the Registrable Securities in fulfillment of its obligations to
register the Registrable Securities pursuant to the Purchase Agreement; and (ii)
the Company shall be under no additional obligation to register any other
securities of the Company held by any Holder, including, without limitation,
options or other rights of the Shareholder to acquire securities of the Company.
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3. Furnishing of Information. Each Holder shall furnish to the Company
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such information regarding the Holder, its officers, directors, shareholders,
members, family members, and affiliates, as applicable, the Shares, the
Additional Shares and the intended method of disposition of the Registrable
Securities as the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company pursuant to this
Agreement.
4. Suspension of Disposition of Shares. The Holder agrees that, upon
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receipt of any notice from the Company, of (a) the happening of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, (b) any requests by the Commission for
amendments or supplements to the registration statement or the prospectus or for
additional information, (c) the issuance of any stop order suspending the
effectiveness of the registration statement, (d) the information in the
registration statement no longer being sufficient to permit continued sales
under the registration statement, or (e) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction, the Holder will forthwith
discontinue disposition of the Registrable Securities until the Company notifies
the Holder in writing that sales of Registrable Securities may continue. If so
directed by the Company, such Holder will deliver to the Company (at the expense
of the Company) all copies, other than permanent file copies then in the
Holder's possession, of the prospectus covering such Registrable Securities at
the time of receipt of such notice.
5. Expenses of Registration. All reasonable expenses, other than
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underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 2, including,
without limitation, all registration, listing and qualification fees, printers
and accounting fees and the fees and disbursements of counsel for the Company
and one counsel for the Holders shall be borne by the Company; provided,
however, that in no event shall the Company be responsible for more than $7,500
in fees and disbursements of such counsel in any registration hereunder. The
Shareholder shall bear the fees and disbursements of its own counsel, if any, in
excess of those referred to in the immediately preceding sentence, which fees of
such counsel shall not exceed $7,500.
6. Limitation of the Company's Obligations. The Company shall not be
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obligated under this Agreement to register or include in any registration
Registrable Securities that any Holder has requested to be registered if the
Company shall furnish such Holder with a written opinion of counsel reasonably
acceptable to the Holder that all Registrable Securities that such Holder holds
may be publicly offered, sold and distributed without registration under the Act
pursuant to Rule 144 promulgated by the Commission under the Act without
restriction as to the amount of securities that can be sold or the timing of any
such sale.
7. Indemnification.
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(a) Except in the case of a sale by a Holder in violation of
Section 4 hereof, the Company agrees to indemnify and hold harmless each Holder,
its directors, its members, its officers and each person, if any, who controls
any Holder within the meaning of Section 15 of the
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Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement of a material fact contained in the registration statement filed by
the Company pursuant to Section 2, including any final prospectus contained
therein (or any amendment thereto), or caused by 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, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Holder furnished in writing to the Company by such
Holder expressly for use therein.
(b) Each Holder agrees to indemnify and hold harmless the Company,
its directors, its officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement of a material fact contained in the
registration statement filed pursuant to Section 2, including any final
prospectus contained therein (or any amendment thereto), or caused by 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, but
only with respect to losses, claims, damages, liabilities and judgments caused
by an untrue statement or omission or alleged untrue statement or omission based
on information relating to such Holder furnished in writing by or on behalf of
such Holder expressly for use in the registration statement filed pursuant to
Section 2, including any final prospectus contained therein (or any amendment
thereto).
(c) In case any action shall be commenced involving any person
entitled to indemnification pursuant to Section 7(a) or 7(b) (the "Indemnified
Party"), the Indemnified Party shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all reasonable fees and expenses of such counsel, as incurred. Any
Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the Indemnifying Party, (ii) the Indemnifying Party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
Indemnified Party or (iii) the named parties to any such action (including any
impleaded parties) include both the Indemnified Party and the Indemnifying
Party, and the Indemnified Party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of the Indemnified Party). In any such case, the Indemnifying Party
shall not, in connection with any one action or separate but
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substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all Indemnified Parties. The Indemnifying Party shall
indemnify and hold harmless the Indemnified Party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action effected with its written consent. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the Indemnified Party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the Indemnified Party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the Indemnified
Party from all liability on claims that are or could have been the subject
matter of such action, (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of the Indemnified
Party and (iii) involves only the payment of money by the Indemnified Party.
(d) To the extent the indemnification provided for in this Section
7 is unavailable (other than in accordance with the terms hereof) to an
Indemnified Party or insufficient in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Indemnifying Party(ies) on the one
hand and the Indemnified Party(ies) on the other hand from the offering of the
Shares or Additional Shares, as the case may be, or (ii) if the allocation
provided by clause 7(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 7(d)(i) above but also the relative fault of the Indemnifying Party
or parties on the one hand and the Indemnified Party or parties on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations; provided, however, that in no event shall any Holder
be liable for any amounts in excess of the proceeds from the sale of such
Holder's Shares and Additional Shares hereunder. The relative fault of the
Company and the Holder shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holder, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses incurred by
such Indemnified Party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Agreements of the Holders. Each Holder agrees:
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(a) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
reasonable expenses incident to the performance of the Holder's obligations
under this Agreement, including: (i) any fees, disbursements and expenses of
Holder's counsel in connection with the registration and delivery of the
Registrable Securities under the Act as required by Section 5 of this Agreement,
(ii) all costs and expenses related to the transfer and delivery of the
Registrable Securities, including any transfer or other taxes payable thereon,
and (iii) all other costs and expenses incident to the performance of the
obligations of the Holder hereunder for which provision is not otherwise made in
this Agreement. The provisions of this Section shall not supersede or otherwise
affect any separate agreement that the Company and any Holder or Holders may
have for allocation of such expenses among themselves; and
(b) that such Holder will not offer to sell, contract to sell, or
otherwise sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") the Shares or any other securities of the
Company issued in respect of the Shares (by way of stock split, stock dividend
or other distribution, recapitalization or otherwise) (collectively,
"Securities") now owned or hereafter acquired directly or indirectly by such
person or with respect to which such person has or hereafter acquires the power
of Disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction, (ii)
as a distribution to members of such person, provided that the distributees
thereof agree in writing to be bound by the terms of this restriction, or (iii)
with the prior written consent of the Company. The foregoing restrictions shall
commence on the date hereof and end, subject to applicable federal and state
securities laws, on the earlier of (x) the 180th day following the date the
registration statement as required to be filed pursuant to Section 2(a) herein
is declared effective by the Commission (the "Lock-Up Period"), and (y)
September 30, 2004. The Holder agrees that the foregoing restriction precludes
the Holder from engaging in any hedging or other transaction that is designed to
or reasonably expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than such Holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities. The
Holder also agrees and consents to the entry of stop transfer instructions with
the Company's transfer agent and registrar against the transfer of Securities
held by such Holder except in compliance with the foregoing restrictions.
9. Amendments and Waivers. The provisions of this Agreement, including
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the provisions of this sentence, may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may be given, by
written consent of the Company and the Shareholder.
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10. Notices. All notices and other communications hereunder shall be in
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writing by (i) delivery by hand, (ii) facsimile transmission (provided that such
materials shall also be sent via recognized overnight courier on the date such
facsimile is sent), (iii) recognized overnight courier, or (iv) certified mail,
return receipt requested, postage prepaid:
(a) if to a Holder, at the most current address given by such Holder to
the Company in accordance with the provisions of this Section 10, which address
initially shall be the address given to the Company upon acquisition of the
Shares unless the Holder has notified the Company of a change of address; and
(b) if to the Company, initially at its address set forth below and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 10:
FiberNet Telecom Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
All notices and other communications hereunder shall be deemed to have been
(a) if by hand, at the time of the delivery thereof to the receiving party at
the address of such party set forth above, (b) if sent by facsimile
transmission, at the time receipt has been acknowledged by electronic
confirmation or otherwise, (c) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier service,
or (d) if sent by certified mail, on the fifth business day following the day
such mailing is made.
11. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
12. Headings. The headings in this Agreement are for convenience of
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reference only and shall not limit or otherwise affect the meaning hereof.
13. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New York.
14. Severability. In the event that any one or more of the provisions
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contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
15. Entire Agreement. This Agreement, in conjunction with the Purchase
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Agreement, is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein with respect to the registration
rights granted by the
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Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
registration of the Registrable Securities. Nothing in this Agreement shall
preclude the Company from entering into any other agreement having the same or
different terms with any holder of the Company's securities or any third party
with respect to registration rights or related matters.
16. Assignment. The rights of the Shareholder under this Agreement may
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be assigned by the Shareholder to any or all of the members of the Shareholder
upon any sale, distribution or other disposition of Shares or Additional Shares
to any such member, provided that in connection with such assignment such member
agrees in a writing reasonably acceptable to the Company to be bound by the
terms and conditions of this Agreement. Each such assignee shall be deemed to
be a Holder for purposes of this Agreement.
17. Parties Benefited. Except as set forth in Section 16 hereof,
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nothing in this Agreement, express or implied, is intended to confer upon any
third party any rights, remedies, obligations or liabilities.
IN WITNESS WHEREOF, the parties have executed this Agreement as of January
30, 2004.
FIBERNET TELECOM GROUP, INC.
BY: ______________________________
Name:
Title:
SHAREHOLDER:
__________________________
BY: ______________________________
Name:
Title:
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