REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 2, 2002, by and between
eB2B Commerce, Inc., a New Jersey corporation (the "Company"), and each of
Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx (the "Stockholders", and collectively with such
other designated transferees or assignees of Stockholders, if any, the
"Rightsholders").
WHEREAS, this Agreement has been entered into in connection with an
Agreement and Plan of Merger, dated as of January 2, 2002 (the "Merger
Agreement"), among the Company, Bac-Tech Systems, Inc., a New York corporation,
and the Stockholders.
NOW, THEREFORE, it is agreed as follows:
1. Registerable Securities. The term "Registerable Securities" shall mean
any of the shares of (i) common stock, par value $.0001 per share, of the
Company ("Common Stock"), and (ii) Common Stock underlying the Series D
convertible preferred stock, par value $.0001 per share, of the Company,
received by the Stockholders pursuant to the Merger Agreement and other
securities received in connection with any stock split, stock dividend,
reorganization, recapitalization, reclassification or other distribution payable
or issuable upon such shares. For the purposes of this Agreement, securities
will cease to be Registerable Securities when (A) such Registerable Securities
are distributed to the public pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), or pursuant to an exemption from the registration
requirements of the Securities Act, including, but not limited to, Rules 144 and
144A promulgated under the Securities Act, (B) such Registrable Securities are
eligible for immediate resale pursuant to to Rule 144(k) promulgated under the
Securities Act, or (C) such Registerable Securities have been otherwise
transferred and the Company, in accordance with applicable law and regulations,
has delivered new certificates or other evidences of ownership for such
securities which are not subject to any stop transfer order or other restriction
on transfer and such Registrable Securities may be publicly resold (without
volume or method of sale restrictions) without registration under the Securities
Act.
2. Registration Rights.
(a) Piggyback Registration.
(i) If, at any time commencing one year after the Closing Date (as
defined in Section 1.2 of the Merger Agreement) and on or prior to six
years from the Closing Date, the Company proposes to file a registration
statement (a "Piggyback Registration Statement") under the Securities Act with
respect to an offering by the Company or any selling stockholders of any of its
equity securities (other than a registration statement of Form S-4 or Form S-8,
or any successor form or a registration statement filed solely in connection
with an exchange offer, a business combination transaction or an offering of
securities solely to the existing stockholders or employees of the Company),
then the Company shall in each case give written notice (the "Piggyback Notice")
of such proposed filing to the Rightsholders at least twenty (20) days before
the anticipated filing date of such Piggyback Registration Statement, which
Piggyback Notice shall offer the Rightsholders the opportunity to include in
such Piggyback Registration Statement
such amount of Registrable Securities as they may request. Each of the
Rightsholders electing to have his Registrable Securities registered pursuant to
this Section 2(a)(i) shall advise the Company of such election in writing within
ten (10) days after the date of receipt of the Piggyback Notice, specifying the
amount of Registrable Securities for which registration is requested (the
"Piggyback Election"). The Company shall include in any such Piggyback
Registration Statement all Registrable Securities so requested to be included;
provided that the Company has received the Piggyback Election and subject to
limitations set forth in Section 2(a)(ii) below; and, provided, further, nothing
herein shall prevent the Company from, at any time, abandoning or delaying any
registration pursuant to this Section 2(a). Notwithstanding anything contained
herein, all of the Registerable Securities will be included in the Company's
next Amendment to its Registration Statement on Form SB-2, and all pre- and
post-effective amendments thereto.
(ii) Notwithstanding the foregoing, if the underwriter(s) of any such
offering of the Company shall be of the opinion that the total amount or kind of
securities held by the Rightsholders and any other persons or entities entitled
to be included in such offering would adversely affect the success of such
offering, then the amount of securities to be offered for the accounts of
Rightsholders shall be reduced pro rata to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by the underwriter(s) thereof, whereupon the Company shall only be
obligated to register such limited portion (which may be none) of the
Registrable Securities with respect to which such Rightsholders have provided a
Piggyback Election. In no event shall the Company be required pursuant to this
Section 2(a)(ii) to reduce the amount of securities proposed to be registered by
it for its own account.
(iii) No registration pursuant to a request or requests referred to in
this Section 2(a) shall be deemed to be a Demand Registration (as
hereinafter defined).
(b) Demand Registration.
(i) The Rightsholders of a majority in interest of the Registrable
Securities shall have the right at any time commencing one year after the
Closing Date and on or prior to six years from the Closing Date, to make one (1)
written demand upon the Company for registration under the Securities Act of all
or part of their remaining Registrable Securities (a "Demand Registration"). Any
such request shall specify the aggregate amount of Registrable Securities
proposed to be sold and shall also specify the intended method of disposition
thereof. Within fifteen (15) business days after receipt of such request, the
Company shall give written notice (the "Demand Notice") of such registration
request to all other Rightsholders and thereupon shall use reasonable efforts to
register such Registrable Securities (and any of the Company's other equity
securities which may be included therewith pursuant to Section 2(b)(ii) hereof)
and shall include in such registration all Registrable Securities with respect
to which the Company has received written requests for inclusion therein within
ten (10) business days after the receipt by the applicable Rightsholders of the
Demand Notice; provided that the Company shall have the right to delay the
effectiveness of such Demand Registration (a) for such
reasonable period of time until the Company receives or prepares financial
statements for the fiscal period most recently ended prior to such written
request, if necessary to avoid the use of stale financial statements, or (B) if
the Company would be required to divulge in such Demand Registration the
existence of any fact relating to a material business situation, transaction or
negotiation not otherwise required to be disclosed or if the board of directors
of the Company shall determine in good faith that the Demand Registration to be
effected would be materially adverse to the Company, in which case the Company
shall have the right to delay such filing for a period of one hundred (100)
days. The Company shall not be required to effect more than one (1) Demand
Registration pursuant to this Section 2(b).
(ii) The Company shall have the right to include any of its equity
securities in a Demand Registration.
(iii) In the event of an underwritten offering, if the underwriter(s) of
such offering advise the Company and such Rightsholders in writing that in their
opinion the amount of Registrable Securities and other equity securities of the
Company to be included in such offering pursuant to Section 2(b)(ii) hereof
would adversely affect the success of such Demand Registration, then the Company
shall include only the amount of its securities in such Demand Registration as
would not have such adverse effect. If the underwriter(s) then determine that
the amount of Registrable Securities would adversely affect the success of such
offering, the Company shall include in such Demand Registration, on behalf of
such Rightsholders, an amount of Registrable Securities equal to the total
amount that, in the opinion of such underwriter(s), can be sold without any such
adverse effect, and such securities shall be allocated pro rata among all
demanding Rightsholders.
(iv) A registration will not be considered a Demand Registration unless
it has been kept effective for a period of one hundred twenty (120) days
following the date on which such registration statement was declared effective,
except that the registration of a firm commitment underwriting need not be
maintained after the completion of the offering.
(v) In the case of a Demand Registration for an underwritten offering,
the Company shall execute such agreements and provide such documents as
reasonably appropriate and customary in underwritten offerings.
3. Registration Obligations.
(a) Obligations of the Company. The Company will, in connection with any
registration pursuant to Section 2 hereof, prepare and file with the Commission
a registration statement under the Securities Act on any appropriate form chosen
by the Company, in its sole discretion, and prepare and file such amendments and
post-effective amendments to the registration statement as may be necessary to
keep such registration statement effective for up to one hundred twenty (120)
days.
(b) Obligations of Rightsholders. In connection with any registration of
Registerable Securities of a Rightsholder pursuant to Section 2 hereof:
(i) The Company may require that each Rightsholder whose Registerable
Securities are included in such registration statement furnish to the Company
such information regarding the distribution of such Registerable Securities and
such Rightsholder as the Company may from time to time reasonably request in
writing; and
(ii) Each Rightsholder, upon receipt of notice from the Company, shall
forthwith discontinue disposition of Registerable Securities pursuant to the
registration statement covering such Registerable Securities until such
Rightsholder is advised in writing by the Company that the use of the applicable
prospectus may be resumed (which shall have the effect of extending, by the
number of days of discontinuance, the 120 day period set forth in Section
2(b)(iv)).
4. Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) agrees to sell such Rightsholder's securities on the basis provided in any
underwriting arrangements and to comply with Regulation M under the Exchange Act
and (ii) completes and executes all questionnaires, appropriate and limited
powers of attorney, escrow agreements, indemnities, underwriting agreements,
lock-up agreements with respect to securities not being sold and such other
documents reasonably required under the terms of such underwriting arrangement.
5. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Rightsholder and their
respective officers, directors, advisors and agents and employees and each
Person who controls (within the meaning of the Securities Act or the Exchange
Act) such Persons from and against any and all losses, claims, damages,
liabilities (or actions or proceedings in respect thereof, whether or not such
indemnified party is a party thereto) and expenses (including reasonable costs
of investigation and legal expenses), joint or several (each, a "Loss" and
collectively "Losses"), arising out of or based upon (i) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
(including any final, preliminary or summary prospectus contained therein or any
amendment thereof or supplement thereto or any documents incorporated by
reference therein) or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus or preliminary prospectus, in light of the
circumstances under which they were made) not misleading; provided, however,
that the Company shall not be liable to any indemnified party in any such case
to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any such Registration Statement in reliance upon and in conformity with written
information furnished to the Company by such Rightsholder expressly for use in
the preparation thereof. This indemnity shall be in addition to any liability
the Company may otherwise have. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
such Rightsholder or any indemnified party and shall survive the transfer of
such securities by such Rightsholder.
(b) Indemnification by the Rightsholder. Each selling Rightsholder agrees
(severally and not jointly) to indemnify and hold harmless, to the full extent
permitted by law, the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act and the Exchange
Act) from and against any Losses arising out of or based upon any untrue
statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement under which such Registrable Securities
were registered under the Securities Act (including any final, preliminary or
summary Prospectus contained therein or any amendment thereof or supplement
thereto or any documents incorporated by reference therein), or necessary to
make the statements therein (in the case of a Prospectus or preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission has been contained in any information furnished in writing by such
selling Rightsholder to the Company specifically for inclusion in such
Registration Statement. This indemnity shall be in addition to any liability
such Rightsholder may otherwise have. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any indemnified party. In no event shall the liability of any selling
Rightsholder hereunder be greater in amount than the dollar amount of the
proceeds received by such Rightsholder under the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided, that any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to select and employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (A) the indemnifying party has agreed in writing
to pay such fees or expenses, (B) the indemnifying party shall have failed to
assume the defense of such claim within a reasonable time after having received
notice of such claim from the Person entitled to indemnification hereunder and
to employ counsel reasonably satisfactory to such Person, (C) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest exists between such Person and the indemnifying party with respect to
such claims or (D) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party (in which case, if the Person notifies the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person). If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its
consent, but such consent may not be unreasonably withheld; provided, that
an indemnifying party shall not be required to consent to any settlement
involving the imposition of any material obligations on such indemnifying party
other than financial obligations for which such indemnified party will be
indemnified hereunder. If the indemnifying party assumes the defense, the
indemnifying party shall have the right to settle such action without the
consent of the indemnified party; provided, that the indemnifying party shall be
required to obtain such consent (which consent shall not be unreasonably
withheld) if the settlement includes any admission of wrongdoing on the part of
the indemnified party or any restriction on the indemnified party or its
officers or directors. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to each indemnified party
of an unconditional release from all liability in respect to such claim or
litigation. The indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate firm
(together with one firm of local counsel) at any one time from all such
indemnified party or parties unless (x) the employment of more than one counsel
has been authorized in writing by the indemnifying party or parties (y) a
conflict or potential conflict exists or may exist (based on advice of counsel
to an indemnified party) between such indemnified party and the other
indemnified parties or (z) an indemnified party has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it that are
different or in addition to those available to the other indemnified parties, in
each of which cases the indemnifying party shall be obligated to pay the
reasonable fees and expenses of such additional counsel or counsels.
6. Registration Expenses.
(a) Except as provided in Section 6(b), the Company shall pay all of the
expenses incurred in connection with a registration under this Registration
Rights Agreement, including, but not limited to, (i) all registration and filing
fees, (ii) "Blue Sky" fees and expenses, (iii) all printing, duplicating, and
delivery expenses, (iv) fees and disbursements of counsel for the Company and of
independent certified public accountants of the Company, (v) all fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange, (vi) internal expenses of the Company (e.g. salaries
and expenses of its officers and employees), and (vii) the expenses of any
audit.
(b) The Company shall not be required to pay underwriting discounts,
selling commissions or transfer taxes attributable to the sale of the
Registrable Securities.
7. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8. Entire Agreement . This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, constitute the
entire agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
9. Severability. In the event that any provision of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
10. Governing Law . This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction of
any state or federal court within the State of New York, in connection with any
matter based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by
the laws of the State of New York for such persons and waives and covenants not
to assert or plead any objection which they might otherwise have to such
jurisdiction and such process.
11. Assignment . The right to cause the Company to register Registerable
Securities pursuant to Section 2 may be assigned; provided, however, during the
one year period after the Closing Date, assignments are limited in accordance
with the terms of the separate lock-up agreement.
12. Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented
without the written consent of each of the parties hereto. Any of the
Stockholders or the Company may, by written notice to the others, (i) waive any
of the conditions to its obligations hereunder or extend the time for the
performance of any of the obligations or actions of the other, (ii) waive any
inaccuracies in the representations of the other contained in this Agreement or
in any documents delivered pursuant to this Agreement, (iii) waive compliance
with any of the covenants of the other contained in this Agreement and (iv)
waive or modify performance of any of the obligations of the other. No action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action or compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provisions.
13. Notices. All notices, requests, demands or other communications
provided for herein shall be in writing and shall be deemed to have been given
when personally delivered or
sent by (i) registered or certified mail, return receipt requested, (ii)
nationally recognized overnight courier service or (iii) facsimile transmission
electronically confirmed addressed to the parties at their addresses set forth
above or to such other person or address as either party shall designate to the
other from time to time in writing forwarded in like manner.
14. Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
15. Further Assurances. Each party hereto covenants and agrees with all
other parties hereto to promptly execute, deliver, file and/or record such
agreements, instruments, certificates and other documents and to do and perform
such other and further acts and things as any other party hereto may reasonably
request or as may otherwise be necessary or proper to consummate and perfect the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by themselves or their duly authorized respective officers, all as of the
date first written above.
EB2B COMMERCE, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CEO
STOCKHOLDERS:
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx
