REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of the day of 1999, executed and delivered by
TeleHubLink Corporation, a company incorporated under the laws of the State of
Delaware, having its principal place of business at 24 New England Executive
Park, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), in favor of the Holders (as defined
below).
WHEREAS, pursuant to the terms and conditions set forth in the Confidential
Private Offering Memorandum of the Company, dated June 8, 1999, including the
exhibits thereto, and any and all supplements thereof and amendments thereto,
and all documents incorporated by reference therein (collectively, the
"Memorandum"), the Company is offering for sale (the "Offering") units
("Units"), each Unit consisting of a 10% Subordinated Convertible Debenture in
the principal amount of $25,000 (the "Debentures"); and
WHEREAS, each of the Debentures provides for the issuance by the Company of
warrants (the "Warrants") to acquire Common Stock of the Company (the "Warrant
Shares"); and
WHEREAS, the Debentures are convertible into shares ("Conversion Shares")
of Common Stock of the Company; and
WHEREAS, pursuant to the terms and conditions set forth in the Memorandum,
including those contained in the subscription agreement ("Subscription
Agreement") which has been executed and delivered by or on behalf of each of the
initial purchasers of Units from the Company (the "Initial Purchasers"), each of
the Initial Purchasers is purchasing the Units for which it has subscribed; and
WHEREAS, the terms and conditions of the Offering provide for the execution
and delivery of this Agreement;
NOW, THEREFORE, in order to induce the Initial Purchasers to purchase the
Units, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged by the Company, the Company hereby agrees as
follows:
1. PIGGYBACK REGISTRATION. (a) If, at any time during the five-year period
commencing on the first anniversary of the Initial Closing (as defined in the
Memorandum), the Company proposes to prepare and file one or more registration
statements or amendments, including post-effective amendments, or supplements
thereto covering any of the Company's equity or debt securities held by the
Company or any of its shareholders, in such case other than pursuant to Form S-8
or successor form (collectively, a "Registration Statement"), it will give
written notice of its intention to do so by registered mail ("Notice"), at least
thirty (30) business days prior to the filing of each such Registration
Statement, to each Person (defined hereafter) who beneficially holds Warrant
Shares, Conversion Shares, Warrants exercisable for Warrant Shares and/or
Debentures convertible into Conversion Shares (such Warrant Shares and
Conversion Shares, including those issued and those issuable upon exercise of
Warrants or conversion of Debentures, collectively referred to herein as
"Registrable Securities") 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 proprietorships,
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.
(b) Upon the written request of a Holder or Holders, made within twenty
(20) business days after receipt of the Notice, that the Company include all or
a portion of the Registrable Securities held by such Holders ("Piggyback
Securities") in the proposed Registration Statement (each such Holder, a
"Requesting Holder"), the Company shall use its best efforts to cause such
Registration Statement to be declared effective under the Securities Act of
1933, as amended (the "Act"), by the Securities and Exchange Commission (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 Holders. However, if, in the written
opinion of the Company's managing underwriter, if any, for the offering
evidenced by such Registration Statement, the inclusion of all or a portion of
the Piggyback Securities, when added to the securities being registered, will
exceed the maximum amount of the Company's securities which can be marketed
either (i) at a price reasonably related to their then-current market value or
(ii) without otherwise materially adversely affecting the entire offering, then
the Company may exclude from such offering all or a portion of the Piggyback
Securities.
(c) If securities are proposed to be offered for sale pursuant to such
Registration Statement by other security holders of the Company and the total
number of 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 managing underwriter (which request shall be made only for the reasons and
in the
manner set forth above), the aggregate number of Piggyback Securities
to be offered by Requesting Holders pursuant to such Registration Statement
shall equal the number which bears the same ratio to the maximum number of
securities that the 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 security holders.
(d) 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) the date that all of the Registrable Securities have been sold
pursuant to a Registration Statement or Rule 144 of the General Rules and
Regulations promulgated under the Act ("Rule 144"), or (ii) the date that the
Holders of the Registrable Securities receive an opinion of counsel to the
Company that all of the Registrable Securities 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 90 days
in any 12-month period for valid business reasons, including the acquisition or
divestiture of assets, public filings with the SEC, pending corporate
developments and similar events.
(e) Anything herein contained to the contrary notwithstanding, the
provisions of this Agreement shall not apply to, and the term "Registrable
Securities" as used in this Agreement shall not include, Warrant Shares or
Conversion Shares after they have been sold by a Holder pursuant to an effective
Registration Statement under the Act or pursuant to Rule 144.
(f) Notwithstanding the provisions of this Section 1, 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 such
proposed Registration Statement or to withdraw the same after its filing but
prior to the effective date thereof.
2. ADDITIONAL COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The
Company covenants and agrees as follows:
(a) In connection with any registration of Registrable Securities pursuant
to Section 1 above, the Company shall furnish each Holder of Registrable
Securities 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
Securities, as shall be reasonably requested by the Holder to permit the Holder
to make a public distribution of such Registrable Securities.
(b) If any stop order shall be issued by the SEC in connection with any
Registration Statement filed pursuant to Section 1 above, the Company will use
its best efforts to obtain the removal of such order.
(c) The Company shall pay all costs, fees, and expenses in connection with
all Registration Statements filed pursuant to Section 1 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 Securities sold by
the Holders pursuant thereto.
(d) The Company will use its best efforts to qualify any Registrable
Securities 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.
3. INDEMNIFICATION AND CONTRIBUTION.
(a) In connection with any Registration Statement covering Registrable
Securities, the Company agrees to indemnify and hold harmless each Holder, the
affiliates of each such Holder, the directors, partners, officers, employees and
agents
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of each such Holder and each person who controls any such Holder within the
meaning of either 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) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
a Registration Statement as originally filed or in any amendment thereof, or in
any preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the 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, 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 Securities ("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 3.
(b) By its participation in a Registration Statement, each Holder shall
be deemed to have agreed to indemnify and hold harmless (i) the Company, (ii)
each of its directors, (iii) each of its officers who signs such Registration
Statement and (iv) each person who controls the Company within the meaning of
either the Act or the Exchange Act to the same extent as the foregoing indemnity
from the Company to each such Holder, but only with respect to written
information relating to such Holder furnished to the Company by or on behalf of
such Holder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any such Holder may otherwise have. Each Holder shall also be
deemed to have agreed to indemnify and contribute to each Underwriter, 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 Company provided in this Section 3. 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 under this Section 3
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 3, notify the indemnifying party in writing of the commencement thereof;
but the failure so to promptly notify the indemnifying party will not relieve
the indemnifying party from liability under Section 3(a) or 3(b) hereof unless
and to the extent that it is materially prejudiced thereby. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party's choice at
the indemnifying party's expense to represent the indemnified party in any
action for which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be reasonably satisfactory to the
indemnified party. 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
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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 3(a) or 3(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 3 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 3, and shall survive the sale by a Holder of
Registrable Securities pursuant to the Registration Statement.
4. 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 the Company has obtained the consent of Holders then
holding a majority of the Registrable Securities.
5. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of,
and be binding upon, the Company, the Holders and the other persons and entities
described in Section 3 hereof and their respective successors, assigns and
transferees, including, without limitation and without the need for an express
assignment, subsequent Holders.
6. THIRD PARTY BENEFICIARIES. The Holders from time to time shall each be a
third party beneficiary of the agreements of the Company contained herein.
7. 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.
8. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of New York applicable to contracts made and to be wholly performed therein.
9. NOTICES. All notices and other communications hereunder shall be in
writing (which shall include publication), and shall be made by hand delivery,
registered first-class mail, telecopier or any courier providing overnight
delivery, (i) if to the Company or an Initial Purchaser, at the address set
forth in the Subscription Agreement and (ii) if to a Holder to the address set
forth on the books and records of the Company. All such notices and other
communications shall be deemed to have been duly given upon receipt.
10. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
Company with respect to the subject matter hereof.
11. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions of this Agreement shall not be in any way impaired or
affected thereby.
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12. 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.
13. 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.
14. 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.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Agreement as of the date above written:
TELEHUBLINK CORPORATION
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
AGREED:
HOLDER SIGNATURE:
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Print Name of Organization
By:-----------------------
(Signature and Title)
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Print Name and Title of
Person Signing
INDIVIDUAL SIGNATURE:
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Signature(s)
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Print Name
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