REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of April 26, 1999, is entered into by and among DynamicWeb
Enterprises Inc., a New Jersey corporation, with headquarters
located at 000 Xxxxx 00 Xxxx, Xxxx. X, Xxxxxxxxx, Xxx Xxxxxx
00000 (the "Company"), and the undersigned buyers (each, a
"Buyer" and collectively, the "Buyers").
WHEREAS:
A. In connection with the Securities Purchase Agreement by
and among the parties dated as of April 26, 1999 (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement,
to issue and sell to the Buyers 235,295 shares of the Company's
Common Stock, par value $.0001 per share (the "Common Shares");
and
B. To induce the Buyers to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933 Act"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyers hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall
have the following meanings:
a. "Investor" means a Buyer, any transferee or
assignee thereof to whom a Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 and any transferee or
assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9.
b. "Person" means a corporation, a limited liability
company, an association, a partnership, an organization, a
business, an individual, a governmental or political subdivision
thereof or a governmental agency.
c. "Register," "registered," and "registration" refer
to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the
1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement(s) by the United
States Securities and Exchange Commission (the "SEC").
d. "Registrable Securities" means the Common Shares
purchased pursuant to the Securities Purchase Agreement and any
shares of capital stock issued or issuable with respect to the
Common Shares as a result of any stock split, stock dividend,
recapitalization, exchange, anti-dilution rights or similar event
or otherwise.
e. "Registration Statement" means a registration
statement of the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities
Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall
prepare, and, as soon as practicable but in no event later than
sixty (60) calendar days after the date of issuance of the
relevant Common Shares, file with the SEC a Registration
Statement or Registration Statements (as is necessary) on
Form S-2 or Form S-3 covering the resale of all of the
Registrable Securities. The initial Registration Statement
prepared pursuant hereto shall register for resale at least that
number of Company common stock shares equal to the number of
Registrable Securities as of the date immediately preceding the
date the Registration Statement is initially filed with the SEC,
subject to adjustment as provided in Section 3(b). The Company
shall use its best efforts to have the Registration Statement
declared effective by the SEC as soon as practicable, but in no
event later than one-hundred eighty (180) calendar days after the
issuance of the relevant Common Shares.
b. Piggy-Back Registrations. If at any time prior to
the expiration of the Registration Period (as defined in
Section 3(a)) the Company proposes to file with the SEC a
Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its
securities the Company shall promptly send to each Investor
written notice of the Company's intention to file a Registration
Statement and of such Investor's rights under this Section 2(b)
and, if within five (5) days after receipt of such notice, such
Investor shall so request in writing, the Company shall include
in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, subject to
the priorities set forth in Section 2(b) below. No right to
registration of Registrable Securities under this Section 2(b)
shall be construed to limit any registration required under
Section 2(a). The obligations of the Company under this
Section 2(b) may be waived by the Buyers. If an offering in
connection with which an Investor is entitled to
registration under this Section 2(b) is an underwritten offering,
then each Investor whose Registrable Securities are included in
such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an
underwritten offering using the same underwriter or underwriters
and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Company common stock
included in such underwritten offering. If a registration
pursuant to this Section 2(b) is to be an underwritten public
offering and the managing underwriter(s) advise the Company in
writing, that in their reasonable good faith opinion, marketing
or other factors dictate that a limitation on the number of
shares of Company common stock which may be included in the
Registration Statement is necessary to facilitate and not
adversely affect the proposed offering, then the Company shall
include in such registration: (1) first, all the securities
requested to be registered by the Investors and other holders of
securities entitled to participate in the registration, as of the
date hereof, (2) second, up to the full number of securities
proposed to be registered for the account of the holders of
securities entitled to inclusion of their securities in the
Registration Statement by reason of demand registration rights,
and (3) third, all securities the Company proposes to sell for
its own account.
c. Allocation of Registrable Securities. The initial
number of Registrable Securities included in any Registration
Statement and each increase in the number of Registrable
Securities included therein shall be allocated pro rata among the
Investors based on the number of Registrable Securities held, or
which could be held, by each Investor at the time the
Registration Statement covering such initial number of
Registrable Securities or increase thereof is declared effective
by the SEC. In the event that an Investor sells or otherwise
transfers any of such Person's Registrable Securities, each
transferee shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any Common Shares
included in a Registration Statement and which remain allocated
to any Person which ceases to hold any Registrable Securities
shall be allocated to the remaining Investors, pro rata based on
the number of Registrable Securities then held by such Investors.
d. Legal Counsel. Subject to Section 5 hereof, the
Buyers shall have the right to select one legal counsel to review
and oversee any offering pursuant to this Section 2 ("Legal
Counsel"), which shall be Xxxxxx Xxxxxx & Xxxxx or such other
counsel as thereafter designated by the holders of a majority of
Registrable Securities. The Company shall reasonably cooperate
with Legal Counsel in performing the Company's obligations under
this Agreement.
e. [Reserved.]
f. Rule 416. The Company and the Investors each
acknowledge that each Registration Statement prepared in
accordance hereunder shall include an indeterminate number of
Registrable Securities pursuant to Rule 416 under the 1933 Act so
as to cover any and all Registrable Securities which may become
issuable (i) to prevent dilution resulting from stock splits,
stock dividends or similar transactions and (ii) if permitted by
law, by reason of the anti-dilution provisions contained in
Section 9 of the Securities Purchase Agreement in accordance with
the terms thereof (collectively, the "Rule 416 Securities"). In
this regard, the Company agrees to use all reasonable efforts to
ensure that the maximum number of Registrable Securities which
may be registered pursuant to Rule 416 under the 1933 Act are
covered by each Registration Statement and, absent guidance from
the SEC or other definitive authority to the contrary, the
Company shall use all reasonable efforts to affirmatively support
and to not take any position adverse to the position that each
Registration Statement filed hereunder covers all of the Rule 416
Securities. If the Company determines that the Registration
Statement filed hereunder does not cover all of the Rule 416
Securities, the Company shall immediately (i) provide to each
Investor written evidence setting forth the basis for the
Company's position and the authority therefor and (ii) prepare
and file an amendment to such Registration Statement or a new
Registration Statement in accordance with Section 2(g).
g. Sufficient Number of Shares Registered. In the
event the number of shares available under a Registration
Statement filed pursuant to Section 2(a) or 2(b) is insufficient
to cover all of the Registrable Securities or an Investor's
allocated portion of the Registrable Securities pursuant to
Section 2(c) (a "Deficit Failure"), the Company shall amend the
Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as
to cover at least two hundred percent (200%) of such Registrable
Securities in each case, as soon as practicable, but in any event
not later than fifteen (15) days after the necessity therefor
arises. The Company shall use it best efforts to cause such
amendment and/or new Registration Statement to become effective
as soon as practicable following the filing thereof. For
purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed
"insufficient to cover all of the Registrable Securities" if at
any time the number of Registrable Securities is greater than the
number of shares of Company common stock available for resale
under such Registration Statement.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable
Securities be registered pursuant to Section 2(b) or at such time
as the Company is obligated to file a Registration Statement with
the SEC pursuant to Section 2(a) or 2(g), the Company will use
its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have
the following obligations:
a. The Company shall promptly prepare and file with
the SEC a Registration Statement with respect to the Registrable
Securities (on or prior to the sixtieth (60th) calendar day after
the date of issuance of any Common Shares for the registration of
Registrable Securities pursuant to Section 2(a)) and use its best
efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as possible
after such filing (but in no event later than one-hundred eighty
(180) calendar days after the issuance of any Common Shares for
the registration of Registrable Securities), and keep such
Registration Statement effective at all times until the earlier
of (i) the date as of which the Investors may sell all of the
Registrable Securities without restriction pursuant to
Rule 144(k) promulgated under the 1933 Act (or successor thereto)
or (ii) the date on which the Investors shall have sold all the
Registrable Securities (the "Registration Period"), which
Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they
were made, not misleading.
b. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used
in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933
Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and,
during such period, comply with the provisions of the 1933 Act
with respect to the disposition of all Registrable Securities of
the Company covered by such Registration Statement until such
time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such
Registration Statement.
c. The Company shall permit Legal Counsel to review
and comment upon a Registration Statement and all amendments and
supplements thereto at least three (3) days prior to their filing
with the SEC, and not file any document in a form to which Legal
Counsel reasonably objects. The Company shall not submit a
request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the
prior approval of Legal Counsel, which consent shall not be
unreasonably withheld. The Company shall furnish to Legal
Counsel, without charge, (i) any correspondence from the SEC or
the staff of the SEC to the Company or its representatives
relating to any Registration Statement, (ii) promptly after the
same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one copy of the
prospectus included in such Registration Statement and all
amendments and supplements thereto.
d. The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration
Statement, without charge, (i) promptly after the same is
prepared and filed with the SEC, at least one copy of such
Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of
the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request) and (iii) such
other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to
time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
e. The Company shall use reasonable efforts to
(i) register and qualify the Registrable Securities covered by a
Registration Statement under such other securities or "blue sky"
laws of such jurisdictions in the United States as Legal Counsel
or any Investor reasonably requests, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to
(x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e) or
(y) subject itself to general taxation in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the
registration or qualification of any of the Registrable
Securities for sale under the securities or "blue sky" laws of
any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for
such purpose.
f. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and
perform its obligations under an underwriting agreement,
in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the
underwriters of such offering.
g. As promptly as practicable after becoming aware of
such event, the Company shall notify Legal Counsel and each
Investor in writing of the happening of any event as a result of
which the prospectus included in a Registration Statement, as
then in effect, includes an untrue statement of a material fact
or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and
promptly prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to Legal
Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The
Company shall also promptly notify Legal Counsel and each
Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered
to Legal Counsel and each Investor by facsimile on the same day
of such effectiveness and by overnight mail), (ii) of any request
by the SEC for amendments or supplements to a Registration
Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-
effective amendment to a Registration Statement would be
appropriate.
h. The Company shall use its best efforts to prevent
the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale
in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each
Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of
the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any
proceeding for such purpose.
i. At the request of any Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such
dates as an Investor may reasonably request (i) if required by an
underwriter, a letter, dated such date, from the Company's
independent certified public accountants in form and substance as
is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to
the underwriters, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed
to the underwriters and the Investors.
j. The Company shall make available for inspection by
(i) any Investor, (ii) Legal Counsel, (iii) any underwriter
participating in any disposition pursuant to a Registration
Statement, (iv) one firm of accountants or other agents retained
by the Investors, and (v) one firm of attorneys retained by such
underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records"), as
shall be reasonably deemed necessary by each Inspector, and cause
the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request; provided,
however, that each Inspector shall hold in strict confidence and
shall not make any disclosure (except to an Investor) or use of
any Record or other information which the Company determines in
good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required
under the 1933 Act, (b) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to
the public other than by disclosure in violation of this or any
other agreement of which the Inspector has knowledge. Each
Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice
to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential.
k. The Company shall hold in confidence and not make
any disclosure of information concerning an Investor provided to
the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other
than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought
in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to such
Investor and allow such Investor, at the Investor's expense, to
undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
l. The Company shall use its best efforts either to
(i) cause all the Registrable Securities covered by a
Registration Statement to be listed on each securities exchange
on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such
exchange, or (ii) secure designation and quotation of all the
Registrable Securities covered by the Registration Statement on
the Nasdaq Small-Cap System. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this
Section 3(l).
m. [Reserved.]
n. The Company shall provide a transfer agent and
registrar of all such Registrable Securities not later than the
effective date of such Registration Statement.
o. If requested by the managing underwriters or an
Investor, the Company shall (i) immediately incorporate in a
prospectus supplement or post-effective amendment such
information as the managing underwriters and the Investors agree
should be included therein relating to the sale and distribution
of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities
being sold to such underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the
underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; (ii) make all
required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement
if requested by a shareholder or any underwriter of such
Registrable Securities.
p. The Company shall use its best efforts to cause
the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
q. [Reserved.]
r. The Company shall otherwise use its best efforts
to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder and the Company shall
use its best efforts to file with the SEC in a timely manner all
reports and documents required of the Company under the 1933 Act
and the 1934 Act (as defined in Section 6(a)).
s. Within two (2) business days after the
Registration Statement which includes the Registrable Securities
is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to
the transfer agent for such Registrable Securities (with copies
to the Investors whose Registrable Securities are included in
such Registration Statement) confirmation that the Registration
Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A.
t. [Reserved.]
u. The Company shall take all other reasonable
actions necessary to expedite and facilitate disposition by the
Investors of Registrable Securities pursuant to a Registration
Statement.
v. Notwithstanding anything to the contrary contained
in this Agreement, unless the Registrable Securities are being
registered pursuant to Section 2(b) of this Agreement, the
Registration Statement shall register only the Registrable
Securities.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first
anticipated filing date of the Registration Statement, the
Company shall notify each Investor in writing of the information
the Company requires from each such Investor if such Investor
elects to have any of such Investor's Registrable Securities
included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding
itself and the Registrable Securities held by it as shall be
reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.
c. In the event any Investor elects to participate in
an underwritten public offering pursuant to Section 2, each such
Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing
and qualifications fees, printers and accounting fees, and fees
and disbursements of counsel for the Company and fees and
disbursements of Legal Counsel, shall be paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and
defend each Investor who holds such Registrable Securities, the
directors, officers, partners, employees, agents, representatives
of, and each Person, if any, who controls any Investor within the
meaning of the 1933 Act or the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and any underwriter (as defined in
the 0000 Xxx) for the Investors, and the directors and officers
of, and each Person, if any, who controls, any such underwriter
within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs,
attorneys' fees, amounts paid in settlement or expenses, joint or
several, (collectively, "Claims") incurred in investigating,
preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto ("Indemnified Damages"), to which any of them may
become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the
securities or other "blue sky" laws of any jurisdiction in which
Registrable Securities are offered ("Blue Sky Filing"), or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the
statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the 1933 Act,
the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities
pursuant to a Registration Statement or (iv) any material
violation of this Agreement (the matters in the foregoing
clauses (i) through (iv) being, collectively, "Violations"). The
Company shall reimburse the Investors and each such underwriter
or controlling person, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person or
underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or
any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to
Section 3(d); (ii) with respect to any preliminary prospectus,
shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented,
if such prospectus was timely made available by the Company
pursuant to Section 3(d), and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to
the use giving rise to a violation and such Indemnified Person,
notwithstanding such advice, used it; (iii) shall not be
available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus
made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(d); and (iv) shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and
shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to
the same extent and in the same manner as is set forth in
Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, each Person, if
any, who controls the Company within the meaning of the
1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim or
Indemnified Damages to which any Indemnified Party may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based
upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by
such Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(d), such
Investor will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent
shall not be unreasonably withheld; provided, further, however,
that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not
exceed the net proceeds to such Investor as a result of the sale
of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then
amended or supplemented.
c. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in
any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the
commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Company shall pay reasonable fees for
only one separate legal counsel for the Investors, and such legal
counsel shall be selected by the Investors holding a majority in
interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or
defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified
Person which relates to such action or claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its written consent,
provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim
or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to
the matter for which indemnification has been made. The failure
to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in
its ability to defend such action.
e. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are
received or Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be
in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying
party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under Section 6 to
the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. LIQUIDATED DAMAGES.
The Company agrees that the Buyers will suffer damages
if (x) the Company violates any provision of or fails to fulfill
its obligations pursuant to this Agreement or (y) the Company
fails to file with the SEC a Registration Statement on Form S-2
covering the resale of all of the Registrable Securities, within
fourteen (14) calendar days after the issuance of the relevant
Common Shares, (a "Registration Default") and that it would not
be possible to ascertain the extent of such damages.
Accordingly, in the event of such Registration Default, the
Company hereby agrees to pay liquidated damages ("Liquidated
Damages") to each Buyer following the occurrence of such
Registration Default in an amount determined by multiplying
(i) $.085 per Common Share then held by such Buyer by (ii) the
percentage derived by dividing (A) the actual number of days
elapsed from the first day of the date of the Registration
Default or the prior 30-day period, as applicable, to the day
such Registration Default has been completely cured by (B) 30, in
cash, or at the Buyer's option, in the number of shares of
Company common stock equal to the quotient of (v) the dollar
amount of the Liquidated Damages on the Payment Date (as defined
below) by (w) the closing bid price of the Company's common stock
as of the date of the Registration Default (as quoted in the
Principal Market or the market or exchange where the Company's
common stock is then traded). The Liquidated Damages payable
pursuant hereto shall be payable within five (5) business days
from the end of the calendar month commencing on the first
calendar month in which the Registration Default occurs (each, a
"Payment Date"). In the event the Buyer elects to receive the
Liquidated Damages amount in shares of Company common stock, such
shares shall also be considered Registrable Securities and shall
have the registration rights set forth in this Agreement.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any
portion of Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the
further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state
securities laws; provided, however, that the transferee or
assignee may subsequently transfer or assign all or any portion
of the Registrable Securities if an exemption from registration
under the 1933 Act is applicable to such transfer or assignment;
(iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only with the written consent of the Company and Investors who
then hold two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to
less than all of the holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of
this Agreement unless the same consideration also is offered to
all of the parties to this Agreement.
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of
record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more
Persons with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable
Securities.
b. Any notices, consents, waivers or other
communications required or permitted to be given under the terms
of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation
of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day
after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
DynamicWeb Enterprises Inc.
000 Xxxxx 00 Xxxx, Xxxx. X
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxx Xxxxxxxxxx
With a copy to:
Xxxxxxx & Xxx, P.C.
0000 Xxxxxxxx Xxxx
One Glenhardie Xxxxxxxxx Xxxxxx, Xxx. 000
Xxxxx, XX 00000-0000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Legal Counsel:
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to a Buyer, to it at the address and facsimile number set
forth on the Schedule of Buyers attached hereto, with copies to
such Buyer's representatives as set forth on the Schedule of
Buyers, or at such other address and/or facsimile number and/or
to the attention of such other person as the recipient party has
specified by written notice given to each other party five days
prior to the effectiveness of such change.
c. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a
waiver thereof.
d. This Agreement shall be governed by and construed
in all respects by the internal laws of the State of Illinois
(except for the proper application of the United States federal
securities laws), without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of
Illinois or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State
of Illinois. Each party hereby irrevocably submits to the non-
exclusive jurisdiction of the state and federal courts sitting
the City of Chicago, for the adjudication of any dispute
hereunder. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in
any other jurisdiction.
e. This Agreement and the Securities Purchase
Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein and therein.
This Agreement and the Securities Purchase Agreement supersede
all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
h. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations to be made
by the Investors pursuant to this Agreement shall be made, unless
otherwise specified in this Agreement, by Investors holding a
majority of the Registrable Securities.
k. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual
intent and no rules of strict construction will be applied
against any party.
l. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.
[Signature Page Follows]
PAGE 19
IN WITNESS WHEREOF, the parties have caused this
Registration Rights Agreement to be duly executed as of day and
year first above written.
COMPANY: BUYERS:
DYNAMICWEB ENTERPRISES INC. CRANSHIRE CAPITAL, L.P.
By:___________________________ By: Downsview Capital,
Incorporated, the General
Name: Xxxxx Xxxxxxxxxx Partner
Title: Chief Executive Officer
By:______________________
Name: Xxxxxxxx Xxxxx
Title: President
KEEWAY INVESTMENTS LTD.
By:___________________________
Name:_________________________
Title:________________________
PAGE 20
SCHEDULE OF BUYERS
Investor's Address
Investor Name and Facsimile Number
Cranshire Capital, L.P. 000 Xxxxxxxx Xxxx, Xxx. 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx Xxxxx
(p) 847/784-1544
(f) 847/784-1546
Keeway Investments Ltd. 00 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxx xx Xxx
Xxxxxx Xxxxxxx
0X0 0XX
(p) 011-44-171-323-2131
(f) 011-44-171-323-0733
Attention: Xxxxxx Xxxxxx
PAGE 21
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn: ___________________________
Re: DYNAMICWEB ENTERPRISES INC.
Ladies and Gentlemen:
We are counsel to DynamicWeb Enterprises Inc., a New Jersey
corporation (the "Company"), and have represented the Company in
connection with that certain Securities Purchase Agreement (the
"Purchase Agreement") entered into by and among the Company and
the buyers named therein (collectively, the "Holders") pursuant
to which the Company issued to the Holders shares of its Common
Stock, par value $.0001 per share, (the "Common Shares").
Pursuant to the Purchase Agreement, the Company also has entered
into a Registration Rights Agreement with the Holders (the
"Registration Rights Agreement") pursuant to which the Company
agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement),
including the Common Shares, under the Securities Act of 1933, as
amended (the "1933 Act"). In connection with the Company's
obligations under the Registration Rights Agreement, on April 26,
1999, the Company filed a Registration Statement on [Form S-
2/Form S-3] (File No. _____________) (the "Registration
Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of
the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a
member of the SEC's staff has advised us by telephone that the
SEC has entered an order declaring the Registration Statement
effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on
[ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop
order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened
by, the SEC and the Registrable Securities are available for
resale under the 1933 Act pursuant to the Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:________________________________
cc: [LIST NAMES OF HOLDERS]
