Annex II
to
Subscription
Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of
February 28, 1996 (this "Agreement"), is made by and between
INDENET, INC., a Delaware corporation (the "Company"), and the
person named on the signature page hereto (the "Initial
Investor").
W I T N E S S E T H:
WHEREAS, in connection with the Subscription Agreement,
dated as of February 28, 1996, between the Initial Investor and
the Company (the "Subscription Agreement"), the Company has
agreed, upon the terms and subject to the conditions of the
Subscription Agreement, to issue and sell to the Initial Investor
shares (the "Shares") of Common Stock, $.001 par value (the
"Common Stock"), of the Company upon the terms and subject to the
conditions of the Subscription Agreement;
WHEREAS, in connection with the Note Purchase
Agreement, dated as of February 28, 1996, between the Initial
Investor and the Company (the "Note Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions
of the Note Purchase Agreement, to issue and sell to the Initial
Investor a Convertible Note (the "Note") issued by the Company
which will be convertible into shares (the "Conversion Shares")
of Common Stock, in accordance with the terms of the Note; and
WHEREAS, to induce the Initial Investor to execute and
deliver the Subscription Agreement and the Note Purchase
Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor
statute (collectively, the "Securities Act"), and applicable
state securities laws with respect to the Shares and the
Conversion Shares;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Initial Investor hereby agree
as follows:
1. Definitions.
(a) As used in this Agreement, the following terms
shall have the following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act
or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the
Shares, the Conversion Shares and any shares of Common Stock
issued by the Company in lieu of payment of cash interest on the
Note in accordance with the terms thereof.
(iv) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(b) As used in this Agreement, the term Investor
includes (i) each Investor (as defined above) and (ii) each
person who is a permitted transferee or assignee of the
Registrable Securities pursuant to Section 9 of this Agreement.
(c) Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in
the Subscription Agreement and the Note Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall
prepare, and on or prior to the date which is 15 days after the
date of the closings under the Subscription Agreement and the
Note Purchase Agreement (the "Closing Date"), file with the SEC a
Registration Statement on Form S-3 covering at least 1,100,000
shares of Common Stock as Registrable Securities, and which
Registration Statement shall state that, in accordance with Rule
416 under the Securities Act, such Registration Statement also
covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Note to
prevent dilution resulting from stock splits, stock dividends or
similar transactions or by reason of changes in the conversion
price of the Note in accordance with the terms thereof. If at
any time the number of shares included in the Registration
Statement required to be filed as provided in the first sentence
of this Section 2(a) shall not be sufficient to cover the number
of shares of Common Stock issuable on conversion in full of the
unpaid and unconverted principal amount of the Note, then
promptly, but in no event later than 20 days after such
insufficiency shall occur, the Company shall file with the SEC an
additional Registration Statement on Form S-3 or other applicable
form covering such number of shares of Common Stock as shall be
sufficient to permit such conversion. For all purposes of this
Agreement (other than Section 2(c) hereof) such additional
Registration Statement shall be deemed to be the Registration
Statement required to be filed by the Company pursuant to Section
2(a) of this Agreement, and the Company and the Investors shall
have the same rights and obligations (other than Section 2(c)
hereof) with respect to such additional Registration Statement as
they shall have with respect to the initial Registration
Statement required to be filed by the Company pursuant to this
Section 2(a).
(b) If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Investors who hold a majority in
interest of the Registrable Securities subject to such
underwritten offering shall have the right to select one legal
counsel and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory
to the Company. The Investors who hold the Registrable
Securities to be included in such underwriting shall pay all
underwriting discounts and commissions and other fees and
expenses of such investment banker or bankers and manager
or managers so selected in accordance with this Section 2(b)
(other than fees and expenses relating to registration of
Registrable Securities under federal or state securities laws,
which are payable by the Company pursuant to Section 5 hereof)
with respect to their Registrable Securities and the fees and
expenses of such legal counsel so selected by the Investors.
(c) Payments by the Company. If the Registration
Statement covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not
effective within 75 days after the Closing Date, then the Company
will make payments to the Initial Investor in U.S. dollars in
such amounts and at such times as shall be determined pursuant to
this Section 2(c). The amount to be paid by the Company to the
Initial Investor shall be determined as of each Computation Date,
and such amount shall be equal to two percent (2%) of the
aggregate purchase price paid by the Initial Investor for the
Shares purchased by the Initial Investor pursuant to the
Subscription Agreement for each Computation Date (each such
amount, as applicable, the "Periodic Amount"); provided, however,
that the Company may elect in lieu of payment of any Periodic
Amount in cash to deliver to the Initial Investor not later than
the due date of such cash payment shares of Common Stock having a
Computed Value equal to the amount of the Periodic Amount if, but
only if, such shares will be included in the Registration
Statement required to be filed pursuant to this Section 2(a).
The full amount of the Periodic Amount shall be paid by the
Company in immediately available funds within three business days
after each Computation Date.
As used in this Section 2(c), the following term shall
have the following meaning:
"Average Market Price" of any security for any period
shall be computed as the arithmetic average of the closing bid
price of such security for each trading day in such period on the
principal trading market for such security.
"Computation Date" means (1) the date which is 76 days
after the Closing Date, unless the Registration Statement
required to be filed by the Company pursuant to Section 2(a)
theretofore has been declared effective by the SEC, and, (2) if
the Registration Statement required to be filed by the Company
pursuant to Section 2(a) has not theretofore been declared
effective by the SEC, each date which is 30 days after a
Computation Date.
"Computed Value" of any share of Common Stock as of any
Computation Date means the product obtained by multiplying (a)
such number of shares of Common Stock times (b) 82% of the
Average Market Price of the Common Stock for the Measurement
Period for such Computation Date.
"Measurement Period" means the period of five consecutive
trading days for the Common Stock ending on (or, if
such Computation Date is not a trading day, on the last trading
day preceding) each Computation Date.
(d) Piggy-Back Registrations. If at any time the
Company shall determine to prepare and file with the SEC a
Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any
of its equity securities, other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock
option or other employee benefit plans, the Company shall send to
each Investor who is entitled to registration rights under this
Section 2(d) written notice of such determination and, if within
ten (10) days after receipt of such notice, such Investor shall
so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that
if, in connection with any underwritten public offering for the
account of the Company the managing underwriter(s) thereof shall
impose a limitation on the number of shares of Common Stock which
may be included in the Registration Statement because, in such
underwriter(s)' judgment, such limitation is necessary to effect
an orderly public distribution, then the Company shall be
obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to
which such Investor has requested inclusion hereunder. Any
exclusion of Registrable Securities shall be made pro rata among
the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be
included by such Investors; provided, however, that the Company
shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities the holders of
which are not entitled by right to inclusion of securities in
such Registration Statement; and provided further, however, that,
after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such
securities in the Registration Statement, based on the number of
securities for which registration is requested except to the
extent such pro rata exclusion of such other securities is
prohibited under any written agreement entered into by the
Company with the holder of such other securities prior to the
date of this Agreement, in which case such other securities shall
be excluded, if at all, in accordance with the terms of such
agreement. No right to registration of Registrable Securities
under this Section 2(d) shall be construed to limit any
registration required under Section 2(a) hereof. The obligations
of the Company under this Section 2(d) may be waived by Investors
holding a majority in interest of the Registrable Securities and
shall expire after the Company has afforded the opportunity for
the Investors to exercise registration rights under this Section
2(d) for two registrations; provided, however, that any Investor
who shall have had any Registrable Securities excluded from any
Registration Statement in accordance with this Section 2(d) shall
be entitled to include in an additional Registration Statement
filed by the Company the Registrable Securities so excluded.
Notwithstanding any other provision of this Agreement, if the
Registration Statement required to be filed pursuant to Section
2(a) of this Agreement shall have been ordered effective by the
SEC and the Company shall have maintained the effectiveness of
such Registration Statement as required by this Agreement and if
the Company shall otherwise have complied in all material
respects with its obligations under this Agreement, then the
Company shall not be obligated to register any Registrable
Securities on such Registration Statement referred to in this
Section 2(d).
(e) Eligibility for Form S-3. The Company
represents and warrants that it meets the requirements for the
use of Form S-3 for registration of the sale by the Initial
Investor and any Investor of the Registrable Securities and the
Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
3. Obligations of the Company. In connection with
the registration of the Registrable Securities, the Company
shall:
(a) prepare promptly, and file with the SEC not later
than 15 days after the Closing Date, a Registration Statement
with respect to the number of Registrable Securities provided in
Section 2(a), and thereafter to use its best efforts to cause
each Registration Statement relating to Registrable Securities to
become effective as soon as possible after such filing, and keep
the Registration Statement effective pursuant to Rule 415 at all
times until such date as is three years after the Closing Date,
which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading;
(b) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with
the Registration Statement as may be necessary to keep the
Registration Statement effective at all times until such date as
is three years after the Closing Date, and, during such period,
comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company
covered by the Registration Statement until such time as all of
such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its
legal counsel, (1) promptly after the same is prepared and
publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, each letter written by or on
behalf of the Company to the SEC or the staff of the SEC and each
item of correspondence from the SEC or the staff of the SEC
relating to such Registration Statement (other than any portion
of any thereof which contains information for which the Company
has sought confidential treatment) and (2) such number of copies
of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents, as
such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement
under such securities or blue sky laws of such jurisdictions as
the Investors who hold a majority in interest of the Registrable
Securities being offered reasonably request, (ii) prepare and
file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations
and qualifications as may be necessary to maintain the
effectiveness thereof at all times until such date as is three
years after the Closing Date, (iii) take such other actions as
may be necessary to maintain such registrations and
qualifications in effect at all times until such date as is three
years after the date such Registration Statement is first ordered
effective by the SEC and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto (I) to qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
Section 3(d), (II) to subject itself to general taxation in any
such jurisdiction, (III) to file a general consent to service of
process in any such jurisdiction, (IV) to provide any
undertakings that cause more than nominal expense or burden to
the Company or (V) to make any change in its charter or by-laws,
which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the
Company and its stockholders;
(e) in the event Investors who hold a majority in
interest of the Registrable Securities being offered in the
offering select underwriters for the offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary
indemnification and contribution obligations, with the
underwriters of such offering;
(f) as promptly as practicable after becoming aware of
such event, notify each Investor of the happening of any event of
which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and use
its best efforts promptly to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably
request.
(g) as promptly as practicable after becoming aware of
such event, notify each Investor who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the SEC of any stop
order or other suspension of effectiveness of the Registration
Statement at the earliest possible time;
(h) permit a single firm of counsel designated as
selling stockholders' counsel by the Investors who hold a
majority in interest of the Registrable Securities being sold to
review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their
filing with the SEC;
(i) make generally available to its security holders
as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 under the
Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement;
(j) at the request of the Investors who hold a
majority in interest of the Registrable Securities being sold,
furnish on the date that Registrable Securities are delivered to
an underwriter, if any, for sale in connection with the
Registration Statement (i) a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters; and (ii) an opinion, dated such
date, from counsel representing the Company for purposes of such
Registration Statement, in form and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors;
(k) make available for inspection by any Investor, any
underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other
agent retained by any such Investor or underwriter (collectively,
the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary
to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided,
however, that each Inspector shall hold in confidence and shall
not make any disclosure (except to an Investor) of any Record or
other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) the
information in such Records has been made generally available to
the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector
until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to
the Company) with the Company with respect thereto, substantially
in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the
Records deemed confidential. The Company shall hold in
confidence and shall not make any disclosure of information
concerning an Investor provided to the Company pursuant to
Section 4(e) hereof unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made
generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give
prompt notice to such Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a
protective order for, such information;
(l) use its best efforts (i) to cause all the
Registrable Securities covered by the Registration Statement to
be listed on the Nasdaq SmallCap Market or such other principal
securities market on which securities of the same class or series
issued by the Company are then listed or traded or (ii) if
securities of the same class or series as the Registrable
Securities are not then listed on the Nasdaq SmallCap Market or
any such other securities market, to arrange for at least two
market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities;
(m) provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than
the effective date of the Registration Statement;
(n) cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such
denominations or amounts as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may
request; and, within three business days after a Registration
Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause
legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such
Registration Statement) an instruction substantially in the form
attached hereto as Exhibit 1 and an opinion of such counsel, if
required by the Company's transfer agent, in the form attached
hereto as Exhibit 2; and
(o) take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the
Registrable Securities pursuant to the Registration Statement.
4. Obligations of the Investors. In connection
with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(a) It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant
to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable
Securities and shall execute such documents in connection with
such registration as the Company may reasonably request. At
least four (4) days prior to the first anticipated filing date of
the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such
Investor (the "Requested Information") if any of such Investor's
Registrable Securities are eligible for inclusion in the
Registration Statement. If at least one (1) business day prior
to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then
the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) In the event Investors holding a majority in
interest of the Registrable Securities being registered determine
to engage the services of an underwriter, each Investor agrees to
enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable
Securities, unless such Investor has notified the Company in
writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration
Statement;
(d) Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3(f) or 3(g), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in such
Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice; and
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell
such Investor's Registrable Securities on the basis provided in
any underwriting arrangements approved by the Investors entitled
hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and (iii)
agrees to pay its pro rata share of all underwriting discounts
and commissions and other fees and expenses of investment bankers
and any manager or managers of such underwriting and legal
expenses of the underwriters applicable with respect to its
Registrable Securities, in each case to the extent not payable by
the Company pursuant to the terms of this Agreement.
5. Expenses of Registration. All reasonable
expenses, other than underwriting discounts and commissions and
other fees and expenses of investment bankers and other than
brokerage commissions, incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing and qualifications
fees, printers and accounting fees and the fees and disbursements
of counsel for the Company and the Investors, shall be borne by
the Company; provided, however, that the Investors shall bear the
fees and out-of-pocket expenses of the one legal counsel selected
by the Investors pursuant to Section 2(b) hereof.
6. Indemnification. In the event any Registrable
Securities are included in a Registration Statement under this
Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such
Registrable Securities, the directors, if any, of such Investor,
the officers, if any, of such Investor, each person, if any, who
controls any Investor within the meaning of the Securities Act or
the Exchange Act, any underwriter (as defined in the Securities
Act) for the Investors, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and
each person, if any, who controls any such underwriter within the
meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof,
or any prospectus included therein: (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or
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, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or
any state securities law (the matters in the foregoing clauses
(i) through (iii) being, collectively, "Violations"). Subject to
the restrictions set forth in Section 6(d) with respect to the
number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses incurred by them
in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) (I)
shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any
Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available
by the Company pursuant to Section 3(c) hereof; (II) with respect
to any preliminary prospectus shall not inure to the benefit of
any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; and
(III) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent
of the Company, which consent shall not be unreasonably withheld.
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
indemnify and hold harmless, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any
underwriter and any other stockholder selling securities pursuant
to the Registration Statement or any of its directors or officers
or any person who controls such stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by
such Investor expressly for use in connection with such
Registration Statement; and such Investor will reimburse any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section
6(b) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent
of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim as
does not exceed the amount of the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to
such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer
of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section
6(b) with respect to any preliminary prospectus shall not inure
to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in
any distribution, to the same extent as provided above, with
respect to information so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the
commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified
Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Company shall pay for only one separate
legal counsel for the Investors; such legal counsel shall be
selected by the Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to
which the Claim relates. The failure to deliver written notice
to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that
the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the
indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6,
(b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Reports under Exchange Act. With a view to
making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The
rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the
Investors to any transferee of all or any portion of such
securities (or all or any portion of any note of the Company
which is convertible into such securities) of Registrable
Securities only if: (a) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time
after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written
notice of (i) the name and address of such transferee or assignee
and (ii) the securities with respect to which such registration
rights are being transferred or assigned, (c) immediately
following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, and (d)
at or before the time the Company received the written notice
contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of
the provisions contained herein.
10. Amendment of Registration Rights. Any provision of
this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and Investors who hold a majority in interest of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of
record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more
persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such
Registrable Securities.
(b) Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be
sufficiently given when personally delivered (by hand, by
courier, by telephone line facsimile transmission or other means)
or sent by certified mail, return receipt requested, properly
addressed and with proper postage pre-paid (i) if to the Company,
at IndeNet, Inc., 0000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: President, (ii) if to the Initial
Investor, at the address set forth under its name in the
Subscription Agreement and (iii) if to any other Investor, at
such address as such Investor shall have provided in writing to
the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 11(b),
and shall be effective, when personally delivered, upon receipt
and, when so sent by certified mail, four days after deposit with
the United States Postal Service.
(c) Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver
thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of California
applicable to agreements made and to be performed entirely within
such State. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any
other provision hereof.
(e) This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter
hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof,
this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the
context may require.
(h) The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) The Company acknowledges that any failure by the
Company to perform its obligations under this Agreement,
including, without limitation, the Company's obligations under
Section 3(n), or any delay in such performance could result in
direct damages to the Investors and the Company agrees that, in
addition to any other liability the Company may have by reason of
any such failure or delay, the Company shall be liable for all
direct and consequential damages caused by any such failure or
delay.
(j) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the
other party hereto by telephone line facsimile transmission of a
copy of this Agreement bearing the signature of the party so
delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto duly authorized as of day and year first above written.
INDENET, INC.
By__________________________
Name:
Title:
INITIAL INVESTOR:
GFL PERFORMANCE FUND LIMITED
By__________________________
Name:
Title:
EXHIBIT 1
to
Registration
Rights
Agreement
[Company Letterhead]
[Date]
[Name and address of Transfer Agent]
Ladies and Gentlemen:
This letter shall serve as our irrevocable authorization
and direction to you (1) to transfer or re-register the
certificates for the shares of Common Stock, $.001 par value (the
"Common Stock"), of IndeNet, Inc., a Delaware corporation (the
"Company"), represented by certificate numbers ______ and ______
for an aggregate of _______ shares (the "Outstanding Shares") of
Common Stock presently registered in the name of [Name of
Investor] upon surrender of such certificate to you,
notwithstanding the legend appearing on such certificates, and
(2) to issue shares (the "Conversion Shares") of Common Stock to
or upon the order of the registered holder from time to time on
conversion of the Convertible Note, dated _________, 1996, in the
original principal amount of $________ (the "Note") issued by the
Company upon surrender to you by such registered holder for
conversion of the Note and a properly completed and duly executed
Conversion Notice in the form enclosed herewith. The transfer or
re-registration of the certificates for the Outstanding Shares by
you should be made at such time as you are requested to do so by
the record holder of the Outstanding Shares. The certificate
issued upon such transfer or re-registration should be registered
in such name as requested by the holder of record of the
certificate surrendered to you and should not bear any legend
which would restrict the transfer of the shares represented
thereby. In addition, you are hereby directed to remove any
stop-transfer instruction relating to the Outstanding Shares.
Certificates for the Conversion Shares should not bear any
restrictive legend and should not be subject to any stop-transfer
restriction.
Contemporaneous with the delivery of this letter, the
Company is delivering to you an opinion of ___________________
as to registration of the Outstanding Shares and the Conversion
Shares under the Securities Act of 1933, as amended.
Should you have any questions concerning this matter,
please contact me.
Very truly yours,
INDENET, INC.
By:___________________________
Name:
Title:
Enclosures
cc: [Name of Investor]
EXHIBIT 2
to
Registration
Rights
Agreement
[Date]
[Name and address
of transfer agent]
INDENET, INC.
Shares of Common Stock
Ladies and Gentlemen:
We are counsel to IndeNet, Inc., a Delaware corporation
(the "Company"), and we understand that [Name of Investor] (the
"Holder") has purchased from the Company (1) an aggregate of
__________ shares (the "Shares") of the Company's Common Stock,
$.001 par value (the "Common Stock"), represented by Certificate
No. ______ and (2) a Convertible Note, dated ___________,
1996, in the original principal amount of $________ (the "Note")
issued by the Company. The Shares were purchased by the Holder
pursuant to a Subscription Agreement, dated as of ____________,
1996, between the Holder and the Company (the "Subscription
Agreement"). The Note was purchased by the Holder pursuant to a
Note Purchase Agreement, dated as of __________, 1996, between
the Holder and the Company (the "Note Purchase Agreement").
Pursuant to a Registration Rights Agreement, dated as of
____________, 1996, between the Company and the Holder (the
"Registration Rights Agreement") entered into in connection with
the purchase by the Holder of the Shares and the Note, the
Company agreed with the Holder, among other things, to register
the Shares and shares of Common Stock issuable upon the
conversion of the Note (the "Conversion Shares") under the
Securities Act of 1933, as amended (the "Securities Act"), upon
the terms provided in the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, on __________, the
Company filed a Registration Statement on Form S-__ (File No.
333-__________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the
Shares and the Conversion Shares, which names the Holder as a
selling stockholder thereunder.
[Other introductory and scope of examination language to
be inserted]
Based on the foregoing, we are of the opinion that the
Shares and the Conversion Shares have been registered under the
Securities Act.
[Other appropriate language to be included.]
Very truly yours,
cc: [Name of Investor]
