EXHIBIT 10.27
$15,002,183
Cybernet Internet Services International, Inc.
13.0% Convertible Senior Subordinated Discount Notes due 2009
Registration Rights Agreement
-----------------------------
Dated as of August 26, 1999
Between
Cybernet Internet Services International, Inc.
and
Xxxxxx Xxxxxxx & Co. International Limited
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
as of August 26, 1999, between Cybernet Internet Services International, Inc.
(the "Company") and Xxxxxx Xxxxxxx & Co. International Limited (the "Initial
Purchaser"), who has agreed to purchase an additional $15,002,183 initial
accreted value of the Company's 13.0% Convertible Senior Subordinated Discount
Notes due 2009 (the "Notes") pursuant to the Purchase Agreement dated as of
August 23, 1999 between the Company and the Initial Purchaser (the "Purchase
Agreement"). This Agreement is being executed pursuant to Section 6(j) of the
Purchase Agreement. The Notes are convertible into shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), under the terms
and conditions set forth in an Indenture, dated as of August 26, 1999, between
the Company and The Bank of New York, as trustee (the "Indenture").
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following capitalized terms
shall have the following meanings:
Broker-Dealer. Any broker or dealer registered under the Exchange
Act.
Business Day. A day other than a Saturday or Sunday or other day on
which commercial banking institutions are authorized or required by law to
close in New York City or Munich.
Closing Date. The date of this Agreement.
Commission. The United States Securities and Exchange Commission.
Common Stock. As defined in the preamble hereto.
Company. As defined in the preamble hereto.
Conversion Ratio. As defined in the Indenture.
Conversion Shelf Registration Statement. As defined in Section 2(b).
Conversion Shares. The shares of Common Stock issuable upon
conversion of Notes at the rate and in the manner described in the
Indenture.
Damages Payment Date. Each February 15 and August 15 after a Resale
Registration Default, until the cure of such Resale Registration Default.
Effectiveness Target Date. As defined in Section 3 hereof.
Exchange Act. The United States Securities Exchange Act of 1934, as
amended.
First Conversion Date. As defined in Section 2(b) hereof.
Holder. A Person who owns, beneficially or otherwise, Notes or
Conversion Shares.
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Indemnified Holder. As defined in Section 6(a) hereof.
Indenture. As defined in the preamble hereto.
Initial Purchaser. As defined in the preamble hereto.
Liquidated Damages. As defined in Section 3 hereof.
Majority Holders. The holders of a majority of the aggregate
principal amount of Notes or a majority of the Conversion Shares, as
applicable; provided, that for purposes of Section 10(c), any Notes or
Conversion Shares held by the Company or any of its affiliates (as such
term is defined in Rule 405 under the Securities Act) (other than the
Initial Purchaser or subsequent Holders of Notes or Conversion Shares if
such subsequent Holders are deemed to be affiliates of the Company solely
by reason of their holding Notes or Conversion Shares) shall not be counted
in determining whether any consent was given.
NASD. National Association of Securities Dealers, Inc.
Notes. As defined in the preamble hereto.
Person. An individual, trustee, partnership, corporation, limited
liability company, unincorporated organization, trust, joint venture, firm
or other legal entity or a government or agency or political subdivision
thereof.
Prospectus. The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Purchase Agreement. As defined in the preamble hereto.
Record Holder. Each Person who is a Holder of Transfer Restricted
Securities on February 1 and August 1 immediately preceding each Damages
Payment Date.
Registrable Shares. Each Conversion Share until the registration of
such Conversion Share under the Securities Act (pursuant to the Conversion
Shelf Registration Statement or otherwise).
Registration Statement. The Conversion Shelf Registration Statement
and the Resale Shelf Registration Statement including, in each case, all
amendments and supplements to such registration statement, the Prospectus
included therein, all exhibits thereto and all material incorporated by
reference therein.
Resale Registration. A shelf registration under the Securities Act
effected pursuant to the Resale Shelf Registration Statement or, in the
case of a resale of Conversion Shares, pursuant to the Conversion Shelf
Registration Statement.
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Resale Registration Default. As defined in Section 3(a) hereof.
Resale Shelf Registration Statement. As defined in Section 2(a)
hereof.
Resale Shelf Filing Deadline. As defined in Section 2 hereof.
Securities Act. The Securities Act of 1933, as amended.
TIA. The United States Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities. Each Note and the Common Stock
issuable upon conversion thereof until the earliest of (a) the date on
which such Note (and the Common Stock issuable upon conversion thereof) has
been effectively registered under the Securities Act and disposed of in
accordance with the Resale Shelf Registration Statement, (b) the date on
which such Note (and the Common Stock issuable upon conversion thereof) is
distributed to the public pursuant to Rule 144 under the Securities Act (or
any similar provision then in effect) or is saleable pursuant to Rule
144(k) under the Securities Act (or any similar provision then in effect)
or (c) the date on which such Note (and the Common Stock issuable upon
conversion thereof) ceases to be outstanding.
Underwritten Registration or Underwritten Offering. A registration in
which securities of the Company are sold to an underwriter for reoffering
to the public.
2. Shelf Registration.
(a) The Company shall: (i) as soon as practicable, but not later
than 90 days after the date hereof (the "Resale Shelf Filing Deadline"), cause
to be filed a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Resale Shelf Registration Statement"), which Resale Shelf
Registration Statement shall provide for resales of all Transfer Restricted
Securities held by Holders that have provided the information required pursuant
to Section 2(c) hereof; (ii) use its best efforts to cause such Resale Shelf
Registration Statement to be declared effective by the Commission on or before
150 days after the date hereof; and (iii) use its best efforts to keep such
Resale Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 4(b) hereof to the extent
necessary to ensure that it is available for resales by the Holders of Transfer
Restricted Securities entitled to the benefit of this Agreement, and to ensure
that it conforms with the requirements of this Agreement, the Securities Act and
the policies, rules and regulations of the Commission as announced from time to
time, until, subject to the provisions of Section 4(b)(i) hereof, such time as
no Notes remain Transfer Restricted Securities.
(b) The Company shall: (i) cause to be filed a registration statement
(the "Conversion Shelf Registration Statement") covering the issuance of the
Conversion Shares upon conversion of the Notes prior to the one year anniversary
of the Closing Date, (ii) use its best efforts to cause such Conversion Shelf
Registration Statement to become effective by the date that is one year after
the Closing Date (the "First Conversion Date") and (iii)
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use its best efforts to keep such Conversion Shelf Registration Statement
continuously effective until the earlier of (A) such time as all Notes have been
converted into Conversion Shares or redeemed and (B) August 15, 2009; provided,
that if the Company determines that, notwithstanding its best efforts, the
Commission will not declare such Conversion Shelf Registration Statement
effective, the Company shall (i) file a registration statement (also, a
"Conversion Shelf Registration Statement") with respect to the resale of
Conversion Shares before the one year anniversary of the Closing Date, (ii) use
its best efforts to cause such registration statement to become effective by the
First Conversion Date and (iii) use its best efforts to keep such registration
statement continuously effective until the earlier of (A) the date on which all
Notes can be resold by holders thereof without restrictions and without
registration under the Securities Act and (B) such time as all Conversion Shares
covered by such registration statement have been resold pursuant thereto. The
Company further agrees to supplement and amend the Conversion Shelf Registration
Statement, as required by the applicable provisions of Section 4(b) hereof.
(c) No Holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in any Resale Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the Company
in writing, within 10 Business Days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with
such Resale Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein and in any application to be filed with or under state
securities laws. No Holder of Transfer Restricted Securities shall be entitled
to Liquidated Damages pursuant to Section 3 hereof unless and until such Holder
shall have provided all such reasonably requested information. Each Holder as to
which any Resale Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
3. Liquidated Damages; Conversion Ratio Adjustment.
(a) If the Resale Shelf Registration Statement required by this
Agreement (i) is not filed with the Commission on or before the date specified
for such filing in Section 2(a)(i) hereof, (ii) has not been declared effective
by the Commission on or before the date specified for such effectiveness in
Section 2(a)(ii) hereof (the "Effectiveness Target Date"), or (iii) subject to
the provisions of Section 4(b)(i) below, is filed and declared effective but,
during the period specified in Section 2(a)(ii) hereof, shall thereafter cease
to be effective or fail to be usable for its intended purpose without being
succeeded within 15 Business Days by a post-effective amendment to such
Registration Statement that cures such failure and that is itself immediately
declared effective (each such event referred to in foregoing clauses (i) through
(iii), a "Resale Registration Default"), the Company hereby agrees to pay
liquidated damages ("Liquidated Damages") to each Holder of Notes with respect
to any period during which a Resale Registration Default shall have occurred and
be continuing, in an amount equal to (i) for the first 90-day period during
which there exists a Resale Registration Default, one half of one percent (50
basis points) per annum per $1,000 principal amount of Notes held by such
Holder; and (ii) for each subsequent 90-day period, an additional one half of
one percent (50 basis points) per annum per $1,000 principal amount of Notes
held by such Holder; provided, however, that Liquidated Damages may
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not at any time exceed one and one half percent (150 basis points) per annum per
$1,000 principal amount of Notes.
(b) All accrued Liquidated Damages shall be paid to Record Holders by
the Company on each Damages Payment Date by wire transfer of immediately
available funds or by federal funds check. Following the cure of all
Registration Defaults relating to any particular Note, the accrual of Liquidated
Damages with respect to such Note shall cease.
(c) If a Conversion Shelf Registration Statement required by this
Agreement covering all Conversion Shares is not declared effective on or prior
to the First Conversion Date, the denominator of the Conversion Ratio will be
decreased by 2.04%.
4. Registration Procedures.
(a) In connection with each of the Resale Shelf Registration
Statement and the Conversion Shelf Registration Statement, the Company shall
comply with all applicable provisions of Section 4(b) below and shall use its
best efforts to effect such registration in accordance with the intended method
or methods of distribution of the Transfer Restricted Securities or Registrable
Shares, as the case may be, and the Company will as expeditiously as possible
prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Securities Act.
(b) In connection with each Registration Statement and any Prospectus
required by this Agreement to permit the sale or resale of Transfer Restricted
Securities or the issuance of Conversion Shares, the Company shall:
(i) Use its best efforts to keep such Registration Statement
continuously effective; upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) to not be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an appropriate
amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of either
clause (A) or (B), use its reasonable best efforts to cause such amendment
to be declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purposes as soon as
practicable thereafter. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in its reasonable judgment that there
is a valid business purpose for the Company to suspend the effectiveness of
either Registration Statement, and the Company gives notice of such
determination to Holders, the Company may allow such Registration Statement
to fail to be effective and usable for two consecutive 30-day periods
(except for the 30 consecutive-day period prior to August 15, 2009) in any
365-day period; provided, that in no event shall the Company be required to
disclose the business purpose for such suspension of effectiveness if the
Company determines in good faith that such business purpose must remain
confidential.
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(ii) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statements as may be
necessary to keep the applicable Registration Statement effective for the
periods set forth in Section 2(a)(iii) and 2(b)(iii) hereof, as the case
may be; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Securities Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Securities Act in a timely manner; and comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution set forth in such Registration Statement or supplement to the
Prospectus.
(iii) Advise the underwriter(s), if any, and Holders of Transfer
Restricted Securities and Registrable Shares promptly (but in any event
within two Business Days) and, if requested by such Persons, to confirm
such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement under the Securities Act or of the suspension
by any state securities commission of the qualification of the Transfer
Restricted Securities or the Registrable Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in a Registration
Statement, a Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in any Registration Statement or any
Prospectus in order to make the statements therein not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of a Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities or Registrable Shares under state securities or Blue
Sky laws, the Company shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(iv) Furnish to each of the Holders of Transfer Restricted
Securities or Registrable Shares, as the case may be, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such Registration
Statement or Prospectus (including, upon request in writing, all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review of such Holders
and any underwriter(s), for a period of at least three Business Days, and
the Company will not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to
which a
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Holder of Transfer Restricted Securities or Registrable Shares covered by
such Registration Statement or any underwriter(s) shall reasonably object
within three Business Days after the receipt thereof. A Holder of Transfer
Restricted Securities or Registrable Shares or any underwriter shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains a material misstatement or omission.
(v) Promptly before the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus after
the initial filing of such Registration Statement, (A) provide copies of
such document to the Holders of Transfer Restricted Securities or
Registrable Shares, as the case may be, and to any underwriter, (B) make
the Company's representatives available for discussion of such document and
other customary due diligence matters, and (C) include such information in
such document before the filing thereof as such Holders or underwriter(s),
if any, reasonably may request.
(vi) In the case of a Resale Registration, make available at
reasonable times for inspection by the selling Holders, any underwriter
participating in any distribution pursuant to such Registration Statement,
and any attorney or accountant retained by such selling Holders or any of
the underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, managers and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement after the filing thereof and
before its effectiveness.
(vii) In the case of a Resale Registration, if requested by
any selling Holders or the underwriter(s), if any, promptly incorporate in
any Registration Statement or Prospectus, pursuant to a supplement or post-
effective amendment if necessary, such information as such selling Holders
and underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities or Registrable
Shares, information with respect to the principal amount of Transfer
Restricted Securities or the number of Registrable Shares being sold to
such underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities or Registrable
Shares to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(viii) In the case of a Resale Registration, furnish to each
selling Holder and each of the underwriter(s), if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including, if requested in
writing, all documents incorporated by reference therein and, if requested
in writing, all exhibits (including exhibits incorporated therein by
reference).
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(ix) In the case of a Resale Registration, deliver to each
selling Holder and each of the underwriter(s), if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may request;
the Company hereby consents to the use of the Prospectus and any amendment
or supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities or Registrable Shares, as the case may
be, covered by the Prospectus or any amendment or supplement thereto.
(x) In the case of a Resale Registration, whether or not an
underwriting agreement is entered into and whether or not the registration
is an Underwritten Registration, the Company shall: (A) upon request,
furnish to each selling Holder and each underwriter, if any, in such
substance and scope as they may reasonably request and as are customarily
made by issuers to underwriters in primary underwritten offerings, upon the
date of effectiveness of the Registration Statement: (1) a certificate,
dated the date of effectiveness of such Registration Statement, signed by
(y) the President and (z) the Chief Financial Officer of the Company
confirming, as of the date thereof, the matters set forth in Section 1 of
the Purchase Agreement and such other matters as such parties may
reasonably request; (2) an opinion, dated the date of effectiveness of
such Registration Statement, of counsel for the Company covering the
matters set forth in Sections 6(c) and 6(d) of the Purchase Agreement; and
(3) customary comfort letters, dated as of the date of effectiveness of
such Registration Statement from the Company's independent accountants, in
the customary form and covering matters of the type customarily covered in
comfort letters by underwriters in connection with primary underwritten
offerings; (B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of section 6 hereof with respect to all parties to be
indemnified pursuant to said section; and (C) deliver such other documents
and certificates as may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by
the selling Holders pursuant to this clause (x).
(xi) Cooperate with the Holders of Transfer Restricted
Securities or Registrable Shares, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities or the Registrable Shares, as the case
may be, under the securities or Blue Sky laws of such jurisdictions as the
selling Holders or underwriter(s), if any, may reasonably request and do
any and all other acts or things necessary or advisable to enable the
disposition or transfer in such jurisdictions of the Transfer Restricted
Securities or Registrable Shares covered by a Registration Statement;
provided, however, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process, in any
jurisdiction where it is not now so subject.
(xii) In the case of a Resale Registration, cooperate with the
selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and
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delivery of certificates representing Transfer Restricted Securities or
Registrable Shares, as the case may be, to be sold; and enable such
Transfer Restricted Securities or Registrable Shares to be in such
denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two Business Days before any
sale of Transfer Restricted Securities or Registrable Shares made by such
underwriter(s).
(xiii) Use its reasonable best efforts to cause the Transfer
Restricted Securities or the Registrable Shares covered by the Registration
Statement to be registered with or approved by such other U.S. governmental
agencies or authorities as may be necessary to enable the seller or sellers
thereof or the underwriter(s), if any, to consummate the disposition of
such Transfer Restricted Securities or the transfer of the Registrable
Shares.
(xiv) Subject to Section 4(b)(i) above, if any fact or event
contemplated by Section 4(b)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading.
(xv) Cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter that is required to be retained in accordance with the
rules and regulations of the NASD.
(xvi) Otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for each twelve-month period beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
first Registration Statement effected pursuant to this Agreement.
(xvii) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement, and, in connection therewith, cooperate with the trustee
and the holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its reasonable best efforts to cause the
trustee thereunder to execute all documents that may be required to effect
such changes and all other forms and documents required to be filed with
the Commission to enable the Indenture to be so qualified in a timely
manner.
(xviii) Upon the request of the Initial Purchaser, cause all
Transfer Restricted Securities or Registrable Shares, as the case may be,
covered by a Registration Statement to be listed on an internationally
recognized stock exchange.
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(xix) Provide promptly to each Holder upon written request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act after the Effective Date of each
Registration Statement.
(c) Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 4(b)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities or
Registrable Shares pursuant to the applicable Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(b)(xiv) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities or Registrable Shares, as the case
may be, that was current at the time of receipt of such notice.
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by the Initial Purchaser or any Holders with the NASD (and, if applicable,
the fees and expenses of any "qualified independent underwriter" and its counsel
that may be required by the rules and regulations of the NASD)); (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of Transfer
Restricted Securities or Registrable Shares and determination of the eligibility
of Transfer Restricted Securities and Registrable Shares for investment under
the laws of such jurisdictions where (x) the Holders of Transfer Restricted
Securities are located and (y) the selling Holders or underwriters, if any, may
request pursuant to Section 4(b)(xi) hereof; (iii) fees and expenses in
connection with the obtaining of any approval from any relevant authority in the
Federal Republic of Germany; (iv) all expenses of printing (including printing
of Prospectuses); (v) all reasonable fees and disbursements of counsel for the
Company and, subject to Section 5(b) below, the Holders of Transfer Restricted
Securities; (vi) all application, admission and filing fees in connection with
listing or admission on an internationally recognized stock exchange of any
Transfer Restricted Securities or Registrable Shares; (vii) all fees and
disbursements of independent certified public accountants of the Company
(including, without limitation, the expenses of any special audit and comfort
letters required by or incident to such performance); (viii) rating agency fees,
if any, and any fees associated with making the Transfer Restricted Securities,
Registrable Shares and Conversion Shares eligible for trading through The
Depository Trust Company; (ix) Securities Act liability insurance, if the
Company desires such insurance, (x) reasonable fees and expenses of all other
Persons retained by the Company, (xi) internal expenses of the Company
(including, without limitation, all salaries and
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expenses of officers and employees of the Company performing legal or accounting
duties); (xii) the expenses of any annual audit; and (xiii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement.
(b) In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Holders of Transfer Restricted
Securities or Registrable Shares being registered pursuant to such Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel chosen by the Holders of a majority in principal amount of
Notes and in number of Registrable Shares for whose benefit such Registration
Statement is being prepared.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless: (i) each
Holder; (ii) each person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the
persons referred to in this clause (ii) being referred to as a "controlling
person"); and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii), or (iii) hereinafter being referred to as an
"Indemnified Holder"), against any losses, claims, damages or liabilities, joint
or several, or any action in respect thereof to which such Indemnified Holder
may become subject, under the Securities Act, the Exchange Act or otherwise,
insofar as any such losses, claims, damages, liabilities or actions arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Registration Statement or Prospectus or any
amendment or supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Notes and the Conversion Shares under the state
securities or "Blue Sky" laws or filed with the Commission or any securities
association or securities exchange (each an "Application"); (ii) the omission or
alleged omission to state, in such Registration Statement or Prospectus or any
amendment or supplement thereto, or in any Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
(iii) any act or failure to act, or any alleged act or failure to act, by any
Indemnified Holder in connection with, or relating in any manner to, the
Transfer Restricted Securities or Registrable Shares or the registration
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable in the case of any matter covered by this clause (iii) to the extent that
it is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any such
act or failure to act undertaken or omitted to be taken by such Indemnified
Holder through its gross negligence or wilful misconduct), and shall reimburse
each Indemnified Holder promptly upon demand for any legal or other expenses
reasonably incurred by such Indemnified Holder in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, the
Company will not be liable in any such case
12
to the extent that any such loss, claim, damage, liability or action is finally
judicially determined to arise out of or be based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or Prospectus or amendment or supplement thereto or
Application in reliance upon and in conformity with written information
furnished to the Company through the Holders by or on behalf of any Holder (or
its related Indemnified Holder) specifically for use therein. The foregoing
indemnity agreement is in addition to any liability that the Company may
otherwise have to the Indemnified Holders.
(b) In the case of a Resale Registration, each Holder, severally and
not jointly, will indemnify and hold harmless each of the Company, its officers
and employees, each of its directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or other controlling person may become subject under the
Securities Act, the Exchange Act, or otherwise, insofar as such losses, claims,
damages, liabilities or action arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement or Prospectus or any amendment or supplement thereto or
any Application or (ii) the omission or the alleged omission to state therein
any material fact required to be stated therein, or necessary to make the
statements therein not misleading, but in each case only to the extent, that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company through the Holders by or on behalf of any Holder or its related
Indemnified Holder specifically for use therein; and each such Holder shall
reimburse the Company or any director, officer or controlling person for any
legal or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Holder may otherwise have to the Company or any such
director, officer or controlling person. No Holder shall be liable under this
Section 6 for any settlement of any claim or action effected without its
consent, which shall not be unreasonably withheld. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of Transfer
Restricted Securities or Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent it has
been materially prejudiced by such failure; and provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 6.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
13
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such 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 and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but 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 at any time (in addition to one
separate firm constituting local counsel, if appropriate) for all such
indemnified parties, which firm shall be designated in writing by the Holders,
if the indemnified parties under this Section 6 consist of any of the Holders,
or by the Company, if the indemnified parties under this Section 6 consist of
the Company. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use its reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld) 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 (a) includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding and (b) 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, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss of
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party
14
as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and any Holder on the other
from such Holder's sale of Transfer Restricted Securities or Registrable Shares,
as the case may be, or (ii) if the allocation provided by clause (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 (i) above but also the
relative fault of the Company on the one hand and the Holders on the other with
respect to statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or such
Holder, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders of Transfer Restricted Securities or Registrable
Shares agree that it would not be just and equitable if contributions pursuant
to this Section 6(d) were to be determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 6(d) shall be deemed to include, for
purposes of this Section 6(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6(d), no Holder
(or any of their related Indemnified Holders) shall be required to contribute
any amount in excess of the amount by which proceeds received by such Holder
from an offering of Transfer Restricted Securities or Registrable Shares, as the
case may be, exceeds the amount of any damages which such Holder has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Holder's obligations to contribute as provided
in this Section 6(d) are several in proportion to their respective purchase
obligations and not joint. For purposes of this paragraph (d), each person, if
any, who controls any Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Holder, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
7. Rule 144A. The Company hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding, to make available
to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.
8. Participation in Underwritten Registrations. No Holder may
participate in any Underwritten Registration hereunder unless such Holder (a)
agrees to sell such Holder's Transfer Restricted Securities or Registrable
Shares on the basis provided in
15
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements, lockup
letters and other documents required under the terms of such underwriting
arrangements.
9. Selection of Underwriters. The Holders of Transfer Restricted
Securities or Registrable Shares covered by a Registration Statement who desire
to do so may sell such Transfer Restricted Securities or Registrable Shares in
an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the Majority Holders wishing to sell in such
offering; provided, that such investment bankers and managers must be reasonably
satisfactory to the Company.
10. Miscellaneous.
(a) Remedies. The Company agrees that monetary damages (including the
Liquidated Damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement (other than with respect to Registration Defaults) and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to
their securities to any Person which rights conflict with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. This Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to the Company:
Cybernet Internet Services
International, Inc.
Xxxxxx-Xxxxxx-Xxxx 00-00
00000 Xxxxxxx
Facsimile No: x00-00-000-00000
Attention: Xxxxxx Xxxxxx
16
with a copy to:
Powell, Goldstein, Xxxxxx
& Xxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx X.X. 00000
Facsimile No: x0-000-000-0000
Attention: Xxxxxx X. Xxxx, Esq.
(ii) if to the Initial Purchaser:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No: x0-000-000-0000
Attention: Syndicate Department
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
00 Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Facsimile: x00-000-000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered, five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities and Registrable Shares;
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign acquired Transfer Restricted Securities or Registrable
Shares from such Holder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
17
(h) Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
(i) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(j) Entire Agreement. This 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 Company with respect to
the Transfer Restricted Securities and Registrable Shares. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Submission to Jurisdiction; Appointment of Agent for Service;
Waiver. To the fullest extent permitted by applicable law, the Company
irrevocably submits to the non-exclusive jurisdiction of any federal or state
court in the Borough of Manhattan in the City of Xxx Xxxx, Xxxxxx xxx Xxxxx xx
Xxx Xxxx, Xxxxxx Xxxxxx of America, in any suit or proceeding based on or
arising under this Agreement, and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in any such court. The Company, to
the fullest extent permitted by applicable law, irrevocably and fully waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding
and hereby irrevocably designates and appoints Corporation Services Company (the
"Authorized Agent"), for a period of ten years or until such time as no Transfer
Restricted Securities are outstanding, as its authorized agent upon whom process
may be served in any such suit or proceeding. The Company represents that it
has notified the Authorized Agent of such designation and appointment and that
the Authorized Agent has accepted the same in writing. The Company hereby
irrevocably authorizes and directs its Authorized Agent to accept such service.
The Company further agrees that service of process upon its Authorized Agent and
written notice of said service to the Company mailed by first class mail or
delivered to its Authorized Agent shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. Nothing
herein shall affect the right of any person to serve process in any other manner
permitted by law. The Company agrees that a final action in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other lawful manner. Notwithstanding the
foregoing, any action against the Company arising out of or based on this
Agreement or the transactions contemplated hereby may also be instituted by any
of the Holders, their officers and employees or any person who controls any of
the Holders within the meaning of the Securities Act in any competent court in
the Federal Republic of Germany, and the Company expressly accepts the
jurisdiction of any such court in any such action.
18
The Company hereby irrevocably waives, to the extent permitted by law,
any immunity to jurisdiction to which it may otherwise be entitled (including,
without limitation, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it
arising out of or based on this Agreement or the transactions contemplated
hereby.
The provisions of this Section 10(k) are intended to be effective upon
the execution of this Agreement without any further action by the Company, the
Initial Purchaser or any Holder and the introduction of a true copy of this
Agreement into evidence shall be conclusive and final evidence as to such
matters.
(l) Currency Indemnity. The Company shall indemnify each Holder
against any loss incurred by it as a result of any judgment or order being given
or made and expressed and paid in a currency (the "Judgment Currency") other
than U.S. dollars and as a result of any variation as between (i) the rate of
exchange at which the U.S. dollar amount is converted into the Judgment Currency
for the purpose of such judgment or order and (ii) the spot rate of exchange in
New York, New York at which such Holder on the date of payment of such judgment
or order is able to purchase U.S. dollars with the amount of the Judgment
Currency actually received by such Holder. If the U.S. dollars so purchased are
greater than the amount originally due to such Holder hereunder, such Holder
agrees to pay to the Company an amount equal to the excess of the U.S. dollars
so purchased over the amount originally due to such Holder hereunder. The
foregoing shall constitute a separate and independent obligation of the Company
and the Holder, as the case may be, and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "spot rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversion into, U.S. dollars.
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CYBERNET INTERNET SERVICES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxx
--------------------------------------------
Name: Xxxxxxx Xxxx
Title: President and Chief Executive Officer
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer and Treasurer
20
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
By: /s/ Xxxx Xxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
