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15 EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
April 9, 2001, is made and entered into by and between GlobalNet, Inc., a Nevada
corporation (the "Company"), and Crescent International Ltd., an entity
organized and existing under the laws of Bermuda (the "Investor").
WHEREAS, the Company and the Investor have entered into that certain
Securities Purchase Agreement, dated as of April 9, 2001 (the "Securities
Purchase Agreement"), pursuant to which the Company will issue from time to
time, and the Investor shall purchase up to $6,000,000 worth of securities of
the Company, which shall include shares of common stock, par value $0.001 per
share, of the Company (the "Common Stock") and a secured convertible note in the
principal amount of $2,000,000 (the "Convertible Note");
WHEREAS, pursuant to the terms of and in partial consideration for
the Investor entering into the Securities Purchase Agreement, the Company may be
required to issue to the Investor an incentive warrant, exercisable from time to
time within five years following the date of issuance (the "Incentive Warrant")
for the purchase of a number of shares of Common Stock at a price to be
determined as described in such Incentive Warrant;
WHEREAS, pursuant to the terms of and in partial consideration for
the Investor entering into the Securities Purchase Agreement, the Company may be
required to issue protective warrants to the Investor, each of which may become
exercisable from time to time as described in such warrants and in the
Securities Purchase Agreement (collectively, the "Protective Warrants" and
together with the Incentive Warrant and any new or replacement warrants issued
in accordance with the terms of the Protective Warrants and the Incentive
Warrant, the "Warrants") for the purchase of a number of shares of Common Stock
at a price to be determined as described in each such Protective Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Securities Purchase Agreement, the
Company has agreed to provide the Investor with certain registration rights as
described herein;
NOW, THEREFORE, in consideration of the premises, the
representations, warranties, covenants and agreements contained herein, in the
Warrants, in the Convertible Note and in the Securities Purchase Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, intending to be legally bound hereby, the parties hereto
agree as follows (capitalized terms used herein and not defined herein shall
have the respective meanings ascribed to them in the Stock Purchase Agreement):
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ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENTS.
a. Filing of Registration Statements. The Company shall register for
resale all Commitment Shares and Note Conversion Shares issued or issuable to
the Investor pursuant to the Securities Purchase Agreement and all Warrant
Shares issued or issuable upon full exercise of the Warrants. Subject to the
terms and conditions of this Agreement, the Company shall effect such
registration in the manner provided below:
(i) First Registration Statement. On or before the
end of the 20 calendar day period immediately
following the Subscription Date, the Company
shall file with the SEC a registration
statement (the "First Registration Statement")
on Form S-3 if such form is then available to
the Company and, if not, on such form
promulgated by the SEC for which the Company
qualifies, that counsel for the Company shall
deem appropriate and which form shall be
available for the sale of all First Sale
Shares, the Note Conversion Shares, the
Incentive Warrant Shares and any Protective
Warrant Shares, in accordance with the intended
method of distribution of such securities. The
aggregate number of shares to be registered
under the First Registration Statement shall be
equal to 6,000,000 shares;
(ii) Subsequent Registration Statements.
(1) If the Company shall, pursuant to any
Subsequent Sale, require the Investor to
purchase shares of Common Stock not previously
registered and not covered by an effective
Registration Statement filed with the SEC which
is not a Failed Registration Statement (as
hereinafter defined) (an "Unregistered Sale"),
then on or before the end of a 20 calendar day
period immediately following each Closing Date
relating to each such Subsequent Sale, the
Company shall file with the SEC a registration
statement (each a "Subsequent Registration
Statement," and together with the First
Registration Statement and any other
registration statement covering Registrable
Securities or otherwise required to be filed by
the Company with the SEC as provided in this
Agreement, the "Registration Statements" or
each, a "Registration Statement") on Form S-3
if such form is then available to the Company
and, if not, on such form promulgated by the
SEC for which the Company qualifies, that
counsel for the Company shall deem appropriate
and which form shall be available for the sale
of the Subsequent Sale Shares purchased by the
Investor and any Warrant Shares and Note
Conversion Shares that have not been previously
registered, in accordance with the intended
method of distribution of such securities. The
aggregate number of shares to be registered
under each
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Subsequent Registration Statement shall be
equal to (x) the number of Subsequent Sale
Shares purchased by the Investor on the
applicable Closing Date plus (y) a number of
Protective Warrant Shares equal to the number
of Subsequent Sale Shares purchased by the
Investor on the applicable Closing Date plus
(z) any Warrant Shares and Note Conversion
Shares not previously registered;
(2) Prior to any Subsequent Sale which is not
an Unregistered Sale, the Company shall file
with the SEC a Registration Statement on Form
S-3 if such form is then available to the
Company and, if not, on such form promulgated
by the SEC for which the Company qualifies,
that counsel for the Company shall deem
appropriate and which form shall be available
for the sale of the shares of Common Stock to
be purchased by the Investor and any Warrant
Shares and Note Conversion Shares which have
not previously been registered, in accordance
with the intended method of distribution of
such securities. The aggregate number of shares
to be registered under such Registration
Statement shall be determined by the Company.
b. Effectiveness of the Registration Statements. The following
conditions for effectiveness shall apply to the Registration Statements required
to be filed by the Company with the SEC pursuant to paragraph (a) above, without
limiting the Company's obligation to file such Registration Statements. The
Company shall use its best efforts: (i) to have the First Registration Statement
declared effective by the SEC in no event later than 90 calendar days after the
Closing Date relating to the First Sale, and (ii) to have each Subsequent
Registration Statement declared effective by the SEC in no event later than 60
calendar days after the Closing Date relating to each Unregistered Sale, and in
any event prior to any further Subsequent Sales. The Company shall ensure that
all Registration Statements and any amendments thereto remain in effect for a
period ending 180 days following the later of (1) the date of expiration of the
Incentive Warrant Exercise Period (as such term is defined in the Incentive
Warrant) if the Incentive Warrant has not been exercised in full and (2) the
date all Registrable Securities issued or issuable to the Investor pursuant to
the Stock Purchase Agreement may be sold by the Investor without registration
and without any time, volume or manner limitations pursuant to Rule 144(k) (or
any similar provision then in effect) under the Securities Act; provided that
such period shall be extended one day for each day after the applicable
Effective Date that any Registration Statement covering Registrable Securities
is not effective during the period such Registration Statement is required to be
effective pursuant to this Agreement; and provided further that the Company
shall not be required to ensure that any Registration Statement covering
Registrable Securities remain in effect for such period if the shares registered
thereunder shall have become freely tradable pursuant to Rule 144(k) of the
Securities Act as such Rule may be amended from time to time, or have otherwise
been sold.
c. Failure to Obtain or Maintain Effectiveness of Registration
Statements.
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(i) In the event the Company fails for any reason
to obtain the effectiveness of any Registration
Statement within the time periods set forth in
Section 1.1(b) (a "Tardy Registration
Statement") or in the event that the Company
fails for any reason to maintain the
effectiveness of any Registration Statement (or
the underlying prospectus) covering Registrable
Securities for the time period set forth in
Section 1.1(b) (an "Ineffective Registration
Statement" together with a Tardy Registration
Statement, a "Failed Registration Statement")
or upon the occurrence of any event of the kind
described in Section 2.1(g)(iv) hereof (unless
the Registrable Securities covered by such
Registration Statement shall have become freely
tradable pursuant to Rule 144(k) of the
Securities Act or have been otherwise sold),
then, in either event an amount equal to two
percent (2.0%) of the aggregate Purchase Price
of all of the Registrable Securities covered by
any such Failed Registration Statement then
held by the Investor for each calendar month
and for each portion of a calendar month, pro
rata (the "Failed Registration Statement Fee"),
during any period of such ineffectiveness or,
in the case of the occurrence of an event of
the kind described in Section 2.1(g)(iv)
hereof, until the Investor shall have received
copies of the supplemental or amended
prospectus contemplated by Section 2.1(g)(iv)
hereof (an "Ineffective Period"), shall become
due and payable to Investor.
(ii) If Failed Registration Statement Fees accrue
with respect to any Ineffective Registration
Statement, payment of such Failed Registration
Statement Fees shall be made on the first
Trading Day after the earlier to occur of (1)
the expiration of the applicable Ineffective
Period and (2) the last day of each calendar
month during an Ineffective Period.
d. Restricted Period. While in possession of material non-public
information received from the Company, the Investor shall not dispose of any
Registrable Securities until such information is disclosed to the public (a
"Restricted Period"); provided that, if such Restricted Period exceeds 120 days,
the liquidated damages described in Section 1.1(c) hereof shall be increased to
three percent (3.0%) until such restricted Period shall have elapsed.
e. Failure to Register Sufficient Number of Shares. If the number of
Note Conversion Shares and Protective Warrant Shares included in the First
Registration Statement or each Subsequent Registration Statement is less than
the total number of Note Conversion Shares issuable upon conversion at the
Conversion Price (as such term is defined in the Convertible Note) and
Protective Warrant Shares issuable upon exercise at the Exercise Price (as such
term is defined in each Protective Warrant) (such deficit in the number of
shares is referred to herein as the "Deficit Shares"), then (i) the Company
shall immediately amend such Registration Statement (or file a new Registration
Statement) to cover the Deficit Shares (such amended or new Registration
Statement is referred to herein as a "Deficit Shares Registration Statement")
and (ii) the Company shall pay to the Investor in immediately available funds
into an account designated by the Investor an amount equal to 2.0% of the
product of (x) the number of Deficit Shares multiplied by (y) the Bid Price of
the Common Stock on the applicable Effective Date, for each calendar month and
for each portion of a calendar month, pro rata, during the period from the
Effective Date of the applicable Registration Statement to the Effective Date of
the applicable Deficit Shares Registration Statement.
f. Liquidated Damages. The Company and the Investor hereby
acknowledge and agree that the sums payable under subsections 1.1(c), 1.1(d) and
1.1(e) hereof shall constitute liquidated damages and not penalties. The parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to estimate precisely,
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(ii) the amounts specified in such subsections bear a reasonable proportion and
are not plainly or grossly disproportionate to the probable loss likely to be
incurred in connection with any failure by the Company to obtain or maintain the
effectiveness of a Registration Statement, (iii) one of the reasons for the
Company and the Investor reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Investor are sophisticated business parties and have
been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm's length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company will effect the registration
of the Registrable Securities in accordance with the intended methods of
disposition thereof as furnished to the Company by any proposed seller of such
Registrable Securities prior to the filing of a Registration Statement therefor.
Without limiting the foregoing, the Company in each such case will do the
following as expeditiously as possible, but in no event later than the deadline,
if any, prescribed therefor in this Agreement:
a. The Company shall (i) prepare and file with the SEC the
Registration Statement(s) covering the shares as described in subsection 1.1(a)
above; (ii) use its best efforts to cause such filed Registration Statement(s)
to become and remain effective (pursuant to Rule 415 under the Securities Act or
otherwise) for the period prescribed by Section 1.1(b); (iii) prepare and file
with the SEC such amendments and supplements to each Registration Statement and
the prospectus used in connection therewith as may be necessary to keep each
Registration Statement effective for the time period prescribed by Section
1.1(b); and (iv) comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by each Registration Statement
during such period in accordance with the intended methods of disposition by the
Investor set forth in each Registration Statement.
b. The Company shall file all necessary amendments to each
Registration Statement in order to effectuate the purpose of this Agreement, the
Securities Purchase Agreement, the Convertible Note and the Warrants.
c. Five Trading Days prior to filing each Registration Statement or
prospectus, or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein), the
Company shall deliver to the Investor and one firm of counsel representing the
Investor, in accordance with the notice provisions of Section 4.8, copies of
such Registration Statement as proposed to be filed, together with exhibits
thereto, which documents will be subject to review and comment by the Investor
and such counsel, and thereafter deliver to the Investor and such counsel, in
accordance with the notice provisions of Section 4.8, such number of copies of
such Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents or
information as the Investor or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities.
d. The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each broker as directed by the Investor such
number of conformed copies of such
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Registration Statement and of each amendment and supplement thereto (in each
case including all exhibits and documents incorporated by reference), such
number of copies of the prospectus contained in such Registration Statement
(including each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 promulgated under the Securities Act relating to
the Registrable Securities, and such other documents, as may be reasonably
requested to facilitate the disposition of the Registrable Securities.
e. After the filing of each Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all commercially reasonable actions required to
prevent the entry of such stop order or to remove it if entered.
f. The Company shall use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as the Investor may reasonably (in light of
its intended plan of distribution) request, and (ii) cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities in the United States as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable the Investor to
consummate the disposition of the Registrable Securities; provided, however,
that the Company will not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (f), subject itself to taxation in any such jurisdiction, or consent
or subject itself to general service of process in any such jurisdiction.
g. The Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities: (i)
receipt of any request for additional information by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or related prospectus; (ii) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company promptly shall make available to
the Investor any such supplement or amendment to the related prospectus.
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h. The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Investor, at its
option, may require that any or all of the representations, warranties and
covenants of the Company also be made to and for the benefit of the Investor).
i. The Company shall make available to the Investor (and will deliver
to Investor's counsel), subject to restrictions imposed by the United States
government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, concerning any Registration
Statement, and also will make available for inspection by the Investor and any
attorney, accountant or other professional retained by the Investor
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with any
Registration Statement. Records that the Company determines, in good faith, to
be confidential and that it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided, however, that prior to any disclosure or release
pursuant to clause (ii), the Inspectors shall provide the Company with prompt
notice of any such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors' obligation not to
disclose such Records; and, provided, further, that if failing the entry of a
protective order or the waiver by the Company permitting the disclosure or
release of such Records, the Inspectors, upon advice of counsel, are compelled
to disclose such Records, the Inspectors may disclose that portion of the
Records that counsel has advised the Inspectors that the Inspectors are
compelled to disclose. The Investor agrees that information obtained by it
solely as a result of such inspections (not including any information obtained
from a third party who, insofar as is known to the Investor after reasonable
inquiry, is not prohibited from providing such information by a contractual,
legal or fiduciary obligation to the Company) shall be deemed confidential and,
if material non-public information, the Investor shall not while in possession
of such information engage in market transactions in the securities of the
Company or its Affiliates unless and until such information is made generally
available to the public. The Investor further agrees that upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, it
will give notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential.
j. To the extent required by law or reasonably necessary to effect a
sale of Registrable Securities in accordance with prevailing business practices
at the time of any sale of Registrable Securities pursuant to a Registration
Statement, the Company shall deliver to the Investor a signed counterpart,
addressed to the Investor, of (1) an opinion or opinions of counsel to the
Company and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily
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covered by opinions of comfort letters, as the case may be, as the Investor
therefor reasonably requests.
k. The Company otherwise shall comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.
l. The Company may require the Investor to furnish promptly in
writing to the Company such information as may be legally required in connection
with any registration including, without limitation, all such information as may
be requested by the SEC or the National Association of Securities Dealers, Inc.
(the "NASD"). The Investor agrees to provide such information requested in
connection with any registration within ten Trading Days after receiving such
written request and the Company shall not be responsible for any delays in
obtaining or maintaining the effectiveness of a Registration Statement caused by
the Investor's failure to timely provide such information. Each seller of
Registrable Securities shall notify the Company as promptly as practicable of
any inaccuracy or change in information previously furnished by such seller to
the Company or of the occurrence of any event, in either case as a result of
which any prospectus relating to the Registrable Securities contains or would
contain an untrue statement of a material fact regarding such seller or its
intended method of disposition of such Registrable Securities or omits to state
any material fact regarding such seller or such seller's intended method of
disposition of such Registrable Securities required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and promptly furnish to the Company
any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such seller or the disposition of such Registrable Securities,
an 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 the light
of the circumstances under which they were made, not misleading.
Section 2.2. REGISTRATION EXPENSES.
a. In connection with each Registration Statement, the Company shall
pay all registration expenses incurred in connection with the registration
thereunder (the "Registration Expenses"), including, without limitation: (i) all
registration, filing, securities exchange listing and fees required by NASD,
(ii) all registration, filing, qualification and other fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities required hereby), (iii) all of the Company's word
processing, duplicating, printing, messenger and delivery expenses, (iv) the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
(v) the fees and expenses incurred by the Company in connection with the listing
of the Registrable Securities, (vi) reasonable fees and disbursements of counsel
for the Company and, subject to paragraph (b) below, the Investor and customary
fees and expenses for independent certified public accountants retained by the
Company (including the expenses of any special audits or comfort letters or
costs associated with the delivery by independent certified public accountants
of such special audit(s) or comfort letter(s) requested pursuant to Section
2.1(j) hereof), (vii) the fees and expenses of any special experts retained by
the Company in connection with such registration, (viii) premiums and other
costs of policies of insurance purchased at the discretion of the
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Company against liabilities arising out of any public offering of the
Registrable Securities being registered, and (ix) any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting fees, discounts, transfer taxes or commissions, if any,
attributable to the sale of Registrable Securities, which shall be payable by
each holder of Registrable Securities pro rata on the basis of the number of
Registrable Securities of each such holder that are included in a registration
under this Agreement.
b. In addition, the Company shall pay all reasonable fees and
expenses of counsel for the Investor incurred in connection with the review, and
assistance in preparation, of each Registration Statement up to $10,000 per
Registration Statement, unless a greater amount is required due to the nature of
the review performed by Investor's counsel or the extent of assistance provided
by Investor's counsel (an estimate of such greater fees and expenses of such
firm of counsel to the Investor shall be provided to the Company prior to the
undertaking of such counsel's additional review or assistance).
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1. INDEMNIFICATION BY THE COMPANY.
a. The Company agrees to indemnify and hold harmless the Investor,
its partners, Affiliates, officers, directors, employees and duly authorized
agents, and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with its controlling persons from and against any and all losses,
claims, damages, liabilities, costs and expenses (including, without limitation,
any and all reasonable attorneys' fees and disbursements and costs and expenses
of investigating and defending any such claim and any and all amounts paid in
settlement of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted) (collectively, "Damages"),
joint or several, and any action in respect thereof to which the Investor, its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and any such controlling person, becomes subject to under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, as and when incurred, insofar as such Damages (or
actions or proceedings in respect thereof) (i) arise out of, or are based upon,
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, documents filed under the Exchange Act and deemed to be
incorporated by reference into any Registration Statement, application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Registrable Securities under the securities or blue sky laws thereof
or filed with the SEC, amendment or supplement relating to the Registrable
Securities or (ii) arise out of, or are based upon, any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse the
Investor, its partners, Affiliates, officers, directors, employees and duly
authorized agents, and each such controlling person, for any legal and other
expenses reasonably incurred by the Investor, its partners, Affiliates,
officers, directors, employees and duly authorized agents, or any such
controlling person, as incurred, in investigating or defending or preparing to
defend against
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any such Damages or actions or proceedings; provided, however, that the Company
shall not be liable to the extent that any such Damages arise out of the
Investor's failure to send or give a copy of the final prospectus or supplement
at or prior to the written confirmation of the sale of Registrable Securities to
the persons asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such person if such statement or omission was
corrected in such final prospectus or supplement, and provided that the Investor
had been obligated under applicable law to deliver such final prospectus or
supplement to such person; provided, further, that the Company shall not be
liable to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, or any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Investor or
any other person who participates as a seller or as an underwriter in the
offering or sale of such securities, in either case, in any questionnaire or
other request by the Company, or otherwise specifically stating that it is for
use in the preparation thereof and provided that such written information
furnished to the Company by the Investor, or any other person who participates
as a seller or as an underwriter in the offering or sale of such securities, is
not materially altered by the Company. All claims for indemnification shall be
asserted and resolved as set forth in Section 9.2 of the Stock Purchase
Agreement.
b. The Investor agrees to indemnify and hold harmless the Company,
its Affiliates, officers, directors, employees, and duly authorized agents, and
each Person or entity, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, together
with the Affiliates, officers, directors, employees and duly authorized agents
of such controlling Person or entity (collectively, the "Company Controlling
Persons") from and against any Damages, joint or several, and any action in
respect thereof to which the Company, its Affiliates, officers, directors,
employees, and duly authorized agents, and any Company Controlling Person
becomes subject to under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, as and when
incurred, insofar as such Damages (or actions or proceedings in respect thereof)
arise out of an untrue statement or alleged untrue statement or omission or
alleged omission made in a Registration Statement, or any preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Investor in any questionnaire or other request by the Company, or
otherwise specifically stating that it is for use in the preparation thereof;
provided, however, that such written information furnished to the Company by the
Investor is not materially altered by the Company. Notwithstanding the
foregoing, the Investor shall in no event be required to indemnify the Company
for any amount in excess of the amount by which the total price at which the
Registrable Securities of the Investor were sold to the public (less
underwriting discounts and commissions) exceeds the amount actually paid by the
Investor under the Securities Purchase Agreement for such Registrable Securities
sold to the public.
Section 3.2. ARBITRATION. Any controversy, claim or dispute arising out of
or in connection with this Agreement, including any question regarding its
existence, validity, interpretation, breach, or termination, shall be referred
to and finally resolved in accordance with Section 9.3 of the Stock Purchase
Agreement.
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Section 3.3. OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article III (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
Section 3.4. CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any Damages
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and the Investor or seller on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Investor or
seller in connection with such statements or omissions, as well as other
equitable considerations. The relative fault of the Company on the one hand and
of the Investor or seller on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Investor agree that it would not be just and equitable
if contribution pursuant to this Section 3.4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor or seller shall in no event be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of the Investor or seller were sold to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
the Investor or seller has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1. OUTSTANDING REGISTRATION RIGHTS. Except as set forth on
Schedule 4.1 hereto, the Company represents and warrants to the Investor that
there is not in effect on the date hereof any agreement by the Company pursuant
to which any holders of securities of the Company have a right to cause the
Company to register or qualify such securities under the Securities Act or any
securities or blue sky laws of any jurisdiction. The Company hereby covenants
and agrees that until 270 calendar days after the Registration
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Statement has been declared effective by the SEC it will not, without the prior
written consent of the Investor, enter into or amend any agreement by the
Company pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify securities under the Securities Act
or any securities or blue sky laws of any jurisdiction; provided, however, that
the foregoing shall not apply to a Third Party (as such term is defined in the
Stock Purchase Agreement) for which the Investor has elected not to exercise its
right of first refusal pursuant to Section 6.12 of the Stock Purchase Agreement.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities.
Notwithstanding the foregoing, paragraphs (c) and (d) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.
Section 4.3. RULE 144. If the Company is required to file reports under the
Exchange Act, the Company will file in a timely manner, information, documents
and reports in compliance with the Securities Act and the Exchange Act and will,
at its expense, promptly take such further action as holders of Registrable
Securities reasonably may request to enable such holders of Registrable
Securities to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act ("Rule 144"), as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. If at
any time the Company is not required to file such reports, it will, at its
expense, forthwith upon the written request of any holder of Registrable
Securities who intends to make a sale under Rule 144, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
financial officer, as to whether it has complied with such requirements. This
Section 4.3 shall terminate at the same time as the registration rights as
provided in Section 4.2.
Section 4.4. CERTIFICATE. The Company will, at its expense, forthwith upon
the request of any holder of Registrable Securities, deliver to such holder a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's SEC
file number, (d) the number of shares of each class of stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
both parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that
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relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and does not
directly or indirectly affect the rights of other holders of Registrable
Securities may be given by holders of at least a majority of the Registrable
Securities being sold by such holders; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. No course of dealing
between or among any Person having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any person under or by reason of this Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement and agree
to be bound by the provisions of this Agreement as a condition to such holder's
claim to any rights hereunder. This Agreement, together with the Securities
Purchase Agreement, the Convertible Note, the Warrants and the exhibits and
schedules to such agreements together set forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
Section 4.7. SEVERABILITY. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 4.8. NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing and
shall be (i) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (ii) delivered by reputable air courier service with
charges prepaid, or (iii) transmitted by hand delivery, telegram or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the third business day following the date of
mailing by express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur. The addresses
and facsimile numbers for such communications shall be:
If to the Company:
GlobalNet, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Suite 125-D
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Lombard, IL 60148
Attention: Xxxxx Xxxxxx, Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxxx Traurig LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
00, xx Xxxxx-Xxxxx
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Attention: Xxx Xxxx/Maxi Brezzi
Telephone: x00 00 000 00 00
Facsimile: x00 00 000 00 00
with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq./Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 4.8 by giving at least 10 days' prior written
notice of such changed address or facsimile number to the other party hereto.
Section 4.9. GOVERNING LAW. This Agreement shall be construed under the
laws of the State of New York.
Section 4.10. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
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Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 4.14. REMEDIES. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision may be inadequate
compensation for any loss.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
CRESCENT INTERNATIONAL LTD.
By:
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Name:
Title:
GLOBALNET, INC.
By:
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Name:
Title:
