REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT made and entered into as of this ___ day of
August, 1998 by and between VDC Corporation Ltd., a Bermuda corporation (the
"Company"), and Xxxx Xxxxxxxx, an individual residing at 000 Xxxx 00xx Xxxxxx,
Xxxxxxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000 ("Holder").
BACKGROUND
WHEREAS, on even date herewith, the Company completed the purchase of all
of the outstanding membership interests in Masatepe Communications, U.S.A., LLC,
a Delaware limited liability company ("LLC"), pursuant to the terms of a
Purchase Agreement dated as of July 31, 1998 by and among the Company, Activated
Communications, L.P. and Holder (the "Purchase Agreement");
WHEREAS, pursuant to a Letter Agreement of even date herewith the Company
has agreed to issue to Holder 21,428 shares of its Common Shares, par value
$2.00 per share ("Common Stock") in accordance with the terms of the Letter
Agreement.
WHEREAS, pursuant to an Option to Purchase Common Shares of VDC Corporation
Ltd. of even date herewith granted in connection with the Employment Agreement
of even date herewith (the "Employment Agreement") by and between the Company
and the Holder, the Company has agreed to issue to Holder options to purchase
Common Stock in accordance with the terms of the Option Agreement.
WHEREAS, in order to induce Holder and the Company to enter into the
foregoing transactions, the Company has agreed to provide Holder with the
registration rights set forth in this Agreement.
Article 1 CERTAIN DEFINITIONS.
In addition to the other terms defined in this Agreement, the following
terms shall be defined as follows:
"Brokers' Transactions" has the meaning ascribed to such term pursuant to
Rule 144 under the Securities Act.
"Business Day" means any day on which the New York Stock Exchange ("NYSE")
is open for trading.
"Common Stock" means any outstanding Common Shares of the Company.
"Company" means VDC Corporation Ltd., a Bermuda corporation, or any
successor thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the relevant time.
"Holder" means Holder for so long as (and to the extent that) he owns any
Registrable Securities, and each of his heirs and personal representatives who
become registered owners of Registrable Securities or securities exercisable,
exchangeable or convertible into Registrable Securities.
"Outstanding" means with respect to any securities as of any date, all such
securities therefore issued, except any such securities therefore canceled or
held by the Company or any successor thereto (whether in its treasury or not) or
any affiliate of the Company or any successor thereto shall not be deemed
"Outstanding" for the purpose of this Agreement.
"Person" means an individual, a partnership (general or limited),
corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
"Registrable Security(ies)" means the Common Stock issued to the Holder
pursuant to the Letter Agreement, the Option Agreement, and any additional
shares of Common Stock or other equity securities of the Company held by the
Holder, provided that: as to any particular Registrable Securities, such
securities shall cease to constitute Registrable Securities (i) when a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of thereunder, or (ii) when and to the extent such securities are
permitted to be publicly sold pursuant to Rule 144 (or any successor provision
to such Rule) under the Securities Act or are otherwise freely transferable to
the public without further registration under the Securities Act, or (iii) when
such securities shall have ceased to be Outstanding and, in the case of clause
(ii), the Company shall, if requested by the Holder or Holders thereof, have
delivered to such Holder or Holders the written opinion of independent counsel
to the Company to such effect.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with the registration requirements set forth in
this Agreement including, without limitation, the following: (i) the fees,
disbursements and expenses of the Company's counsel(s), accountants, and experts
in connection with the registration under the Securities Act of Registrable
Securities; (ii) all expenses in connection with the preparation, printing and
filing of the registration statement, any preliminary prospectus or final
prospectus, any other offering documents and amendments and supplements thereto,
and the mailing and delivery of copies thereof to the underwriters and dealers,
if any; (iii) the cost of printing or producing any agreement(s) among
underwriters, underwriting agreement(s) and blue sky or legal investment
memoranda, any selling agreements, and any other documents in connection with
the offering, sale
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or delivery of Registrable Securities to be disposed of; (iv) all fees
(including legal fees) disbursement and expenses incurred in connection with the
filing of securities with the Securities and Exchange Commission; (v) any other
expenses in connection with the qualification of Registrable Securities for
offer and sale under state securities laws, including the fees and disbursements
of counsel for the underwriters in connection with such qualification and in
connection with any blue sky and legal investment surveys; (v) the filing fees
incident to securing any required review by the NASDAQ Stock Market of the terms
of the sale of Registrable Securities to be disposed of and any blue sky
registration or filing fees, and (vi) the fees and expenses incurred in
connection with the listing of Registrable Securities on each securities
exchange (or the NASDAQ Stock Market) on which Company securities of the same
class are then listed; provided, however, that Registration Expenses with
respect to any registration pursuant to this Agreement shall not include (x)
expenses of any Holder's counsel, or (y) any underwriting discounts or
commissions attributable to Registrable Securities, each of which shall be borne
by the Holder.
"SEC" means the United States Securities and Exchange Commission, or such
other federal agency at the time having the principal responsibility for
administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, all as the same shall be in effect
at the relevant time.
Article 2 PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. If at any time after the date hereof, the Company
proposes to file a registration statement under the Securities Act (except with
respect to registration statements on Forms X-0, X-0, or any other form not
available for registering the Registrable Securities for sale to the public),
with respect to an offering of Common Stock, then the Company shall in each case
give written notice of such proposed filing to the Holders of Registrable
Securities at least 45 days before the anticipated filing date of the
registration statement with respect thereto (the "Piggyback Registration"), and
shall, subject to Sections 2(b) and 2(c) below, include in such Piggyback
Registration such amount of Registrable Securities as the Holder may request
within 20 days of the receipt of such notice. In any event, the company shall
register Holder's Registrable Securities not later than the date of the
registration of the shares of VDC Common Stock issued to Activated
Communications L.P. pursuant to the Purchase Agreement.
(b) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriter advises the Company in writing that in its opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company shall include in such registration (i)
first, the securities the Company proposes to sell, (ii) second, the Registrable
Securities requested to be included in such registration to the extent that the
number of shares to be registered will not, in the opinion of the managing
underwriter, adversely affect the offering of the securities pursuant to clause
(i), pro rata among the Holders of such Registrable Securities on the basis of
the number
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of shares owned by such Holder and (iii) third, provided that all Registrable
Securities requested to be included in the registration statement have been so
included, any other securities requested to be included in such registration.
(c) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company's
securities other than the Holders of Registrable Securities, and the managing
underwriter advises the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the Company
shall include in such registration (i) first, the securities requested to be
included therein by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration, to the
extent that the number of shares to be registered will not, in the opinion of
the managing underwriter, adversely affect the offering of the securities
pursuant to clause (i), pro rata among the Holders of such securities on the
basis of the number of shares so requested to be included therein owned by each
such Holder, and (iii) third, other securities requested to be included in such
registration.
Article 3 HOLDBACK AGREEMENTS.
The Holder of Registrable Securities shall not effect any public sale or
distribution (including sales pursuant to Rule 144) of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the 60 days prior to and the 120-day period beginning on
the effective date of any underwritten primary registration undertaken by the
Company (except as part of such underwritten registration), unless the
underwriter managing the registered public offering otherwise agrees.
Article 4 REGISTRATION PROCEDURES.
Whenever the Holder of Registrable Securities has requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
shall use its best efforts to effect the registration of the resale of such
Registrable Securities and pursuant thereto the Company shall as soon as
practicable:
(a) prepare and file with the SEC a registration statement with respect to
the resale of such Registrable Securities and use its best efforts to cause such
registration statement to become effective thereafter (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the Holder of the
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents shall be subject to the review
and consent of such counsel);
(b) notify the Holder of Registrable Securities of the effectiveness of
each registration statement filed hereunder and prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
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comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as Holder
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition of the Registrable Securities owned by the sellers in such
jurisdictions (provided that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each securities
exchange or trading system on which similar securities issued by the Company are
then listed;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary underwriting agreements (containing terms
acceptable to the Company) as the Holder of Registrable Securities being sold or
the underwriters, if any, reasonably requests (although the Company has no
obligation to secure any underwriting arrangements on behalf of the Holder); and
(i) make available for inspection during normal business hours by any
seller of Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all
information reasonably requested by
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any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
Article 5 REGISTRATION EXPENSES.
All Registration Expenses in connection with any of the registration events
identified within this Agreement shall be borne by the Company. All other
expenses shall be borne by the Holder.
Article 6 INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law, the
Holder of Registrable Securities, its officers and directors and each Person who
controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue statement
of material fact or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished to the Company by such Holder for use therein or by such
Holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company shall provide reasonable and customary
indemnification to such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of the
Holder of Registrable Securities.
(b) In connection with any registration statement in which the Holder of
Registrable Securities is participating, such Holder shall furnish to the
Company in writing such information and affidavits with respect to the Holder
and the Securities held by such Holder as the Company reasonably requests for
use in connection with any such registration statement or prospectus and, to the
extent permitted by law, shall indemnify the Company, its directors and officers
and each Person who controls the Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished by such Holder.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
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indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel (other than local counsel retained for the
convenience of the parties) for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
(e) If the indemnification provided for in this Section 6 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, liabilities or expenses referred to therein, 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 losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the action which resulted in such losses,
claims, damages, liabilities or expenses, as well as other relevant equitable
considerations. The relative fault of such indemnifying party and the
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue statement of a material
fact or omission or alleged omission to state a material fact, has been made, or
relates to, information supplied by such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by
such party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees reasonably
incurred by such party in connection with any investigation or proceeding.
Article 7 OBLIGATION OF HOLDERS.
(a) In connection with each registration hereunder, Holder will furnish to
the Company in writing such information with respect to such Holder and the
securities held by such Holder, and the proposed distribution by them as shall
be reasonably requested by the Company in order to assure compliance with
federal and applicable state securities laws, as a condition precedent to
including such Holder's Registrable Securities in the registration statement.
Each Holder also shall agree to promptly notify the Company of any changes in
such information included in the registration statement or prospectus as a
result of which there is an untrue
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statement of material fact or an omission to state any material fact required or
necessary to be stated therein in order to make the statements contained therein
not misleading in light of the circumstances then existing.
(b) In connection with each registration pursuant to this Agreement, the
Holder included therein will not effect sales thereof until notified by the
Company of the effectiveness of the registration statement, and thereafter will
suspend such sales after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update a
registration statement or prospectus. At the end of any period during which the
Company is obligated to keep a registration statement current, the Holder
included in said registration statement shall discontinue sales of shares
pursuant to such registration statement upon receipt of notice from the Company
of its intention to remove from registration the shares covered by such
registration statement which remain unsold, and such Holder shall notify the
Company of the number of shares registered which remain unsold immediately upon
receipt of such notice from the Company.
Article 8 INFORMATION BLACKOUT.
(a) At any time when a registration statement effected pursuant to this
Agreement relating to Registrable Securities is effective, upon written notice
from the Company to the Holders that the Company has determined in good faith
that sale of Registrable Securities pursuant to the registration statement would
require disclosure of non-public material information not otherwise required to
be disclosed under applicable law (an "Information Blackout"), all Holders shall
suspend sales of Registrable Securities pursuant to such registration statement
until the earlier of:
(i) thirty (30) days after the Company makes such good faith
determination; and
(ii) such time as the Company notifies the Holders that such material
information has been disclosed to the public or has ceased to be
material or that sales pursuant to such registration statement may
otherwise be resumed (the number of days from such suspension of sales
by the Holders until the day when such sale may be resumed hereunder
is hereinafter called a "Sales Blackout Period").
(b) Notwithstanding the foregoing, there shall be no more than two (2)
Information Blackouts during the term of this Agreement and no Sales Blackout
Period shall continue for more than thirty (30) consecutive days.
(c) For the purposes of section 4(b), the period of time during which the
Company is required to maintain the effectiveness of registration statement
shall be extended by the duration of the sales blackout period.
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Article 9 MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to that
jurisdiction's conflict of laws provisions. For the purposes of this paragraph,
the term "current" shall mean the time at which any dispute, issue or question
shall arise hereunder. The parties hereby consent to the jurisdiction of the
federal and state courts of Delaware for the purpose of enforcing the terms and
conditions of this agreement, including but not limited to, any action brought
to entice any award entered in connection with an arbitration brought hereunder.
(b) Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by the Company, one by the Holder and the third by the said two
arbitrators, or if they cannot agree, then the third arbitrator shall be
appointed by the American Arbitration Association. The third arbitrator shall be
chairman of the panel and shall be impartial. The arbitration shall take place
in Philadelphia, Pennsylvania. The decision of a majority of the Arbitrators
shall be conclusively binding upon the parties and final, and such decision
shall be enforceable as a judgment in any court of competent jurisdiction. Each
party shall pay the fees and expenses of the arbitrator appointed by it, its
counsel and its witnesses. The parties shall share equally the fees and expenses
of the impartial arbitrator.
(c) Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and the Holders.
(e) Notices. All communications under this Agreement shall be sufficiently
given if delivered by hand or by overnight courier or mailed by registered or
certified mail, postage prepaid, addressed,
(i) if to the Company, to:
VDC Corporation Ltd.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Chief
Executive Officer
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with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx Xxxxxxxxx Professional Corporation
00 Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
or, in the case of the Holder, at such address as each such Holder shall have
furnished in writing to the Company; or at such other address as any of the
parties shall have furnished in writing to the other parties hereto.
With a copy to:
Tab X. Xxxxxxxxx, Esq.
Xxxxxxxxx, Xxxxxx & Xxxx, L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx - Xxxxx 0000
Xxx Xxxx, XX 00000
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Entire Agreement; Survival; Termination. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, intending to be legally bound hereby, the parties have
executed this Registration Rights Agreement as of the date first written above.
VDC CORPORATION LTD.
By: /s/ Xxxxxxxxx X. Xxxxx
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Xxxxxxxxx X. Xxxxx
Chief Executive Officer
HOLDER:
By: /s/ Xxxx Xxxxxxxx
-------------------------
Xxxx Xxxxxxxx
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