REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Agreement (this "Agreement") is made and entered into as of
February 10, 2000, by and between NetWolves Corporation, a New York corporation
(the "Company"), and Computer Concepts Corp., a foreign corporation ( the
"Holder").
The parties hereby agree as follows:
1. Definitions.
(a) Registerable Securities. The terms "Registerable Securities" and
"Restricted Securities" shall mean the Company's common stock, par value $.0033
per share (the "Common Stock"), which is acquired by the Holder pursuant to the
terms of the Agreement (the "Agreement") dated the date hereof between the
Company and Holder, including in each case any shares received in connection
with any stock split, stock divided, recapitalization, reclassification or other
distribution payable or issuable in shares of Common Stock.
(b) Restricted Securities. For the purposes of this Agreement, shares will
cease to be Restricted Securities when (i) a registration statement covering
such Restricted Securities has been declared effective and they have been
disposed of pursuant to such effective registration statement, or (ii) they are
distributed to the public under the Securities Act of 1933, as amended (the
"Securities Act"), or (iii) they have been otherwise transferred and the
Company, in accordance with applicable law and regulations, has delivered new
certificates or other evidences of ownership for them not subject to any stop
transfer order or other restriction on transfer.
(c) Registerable Securities. As to any particular shares, such shares will
cease to be Registerable Securities when they cease to be Restricted Securities.
2. Piggyback Registration. Commencing August 15, 2000, the Company may not file
any registration statement with the Securities and Exchange Commission (other
than registration statements of the Company filed or to be filed on Form S-8 or
Form S-4 including supplements thereto, or an underwritten registration
statement in which the underwriter determines not to include the registered
holder's shares in such registration) unless the Company provides the registered
holder with not less than ten business days notice of its intention to file such
registration statement and provides the purchaser the option to include any or
all of the applicable Warrant Shares therein. The piggyback registration rights
granted to the registered holder pursuant to this Section shall continue until
all of the Warrant Shares have been sold in accordance with an effective
registration statement or upon the expiration of this Warrant. The Company will
pay all of its registration expenses in connection therewith. The Company agrees
to indemnify and hold harmless the Registered Holder against any and all loss,
claim, damage and expense whatsoever reasonably incurred in defending any
litigation commenced or threatened, or any claim whatsoever based upon any
untrue statement of a material fact contained in any registration statement or
the prospectus or any omission of a material fact except for material facts or
omissions resulting from written information provided by the Registered Holder.
The Registered Holder agrees to similarly indemnify the Company from any loss,
claim, damage and expense whatsoever based on written information furnished in
respect of the Registered Holder by or on behalf of the Registered Holder in
connection with the registration statement or prospectus.
3. Demand Registration.
(a) Right to Demand. Subject to Section 3(b) hereof, at any time after
the August 15, 2000, the Holder may make a written request to the Company for
registration under the Securities Act of all or part of their Registerable
Securities (a "Demand Registration"). The Company will include in such
registration all Registerable Securities with respect to which the Company has
received written request for inclusion therein. Any request made pursuant to
this Section 3(a) will specify the aggregate amount of the Registerable
Securities to be registered and will also specify the intended methods of
disposition thereof.
(b) Number of Demand Registrations. The Holder shall be entitled to
one Demand Registration, the registration expenses of which shall be borne by
the Company. The Company shall not be deemed to have effected a Demand
Registration unless and until such Demand Registration is declared effective.
(c) Priority on Demand Registrations. If a Demand Registration is
being underwritten and if the managing underwriter or underwriters of such
Demand Registration advises the Company in writing that in its opinion the
number of securities proposed to be sold in such Demand Registration exceeds the
number which can be sold in such offering, the Company will include in such
registration only the number of securities that, in the opinion of such managing
underwriter or underwriters, can be sold.
(d) Selection of Underwriters. If any Demand Registration is an
underwritten offering, the Company will select a managing underwriter or
underwriters to administer the offering, which managing underwriter or
underwriters shall be reasonably satisfactory to the Holder.
(e) Notwithstanding anything in the foregoing Section 3 to the
contrary, the Company shall not be obligated to effect a Demand Registration at
any time when the Company, in the good faith judgment of its Board of Directors,
reasonably believes that the filing thereof at the time requested, or the
offering of securities pursuant thereto, would be detrimental to the interests
of Company or its shareholders, provided that notice of such determination be
given to the Holder within 10 days after written demand. The effectuation of a
Demand Registration cannot be suspended, pursuant to the provisions of the
preceding sentence, for more than 45 days after the date of the Board's
determination referenced in the preceding sentence.
4. Registration Procedures.
The Company will, in connection with any registration pursuant to
Section 3:
(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement on any appropriate form under the
Securities Act, which form shall be available for the sale of Registerable
Securities in accordance with the intended method or methods of distribution
thereof, and use its reasonable efforts to cause such registration statement to
become effective; provided that at least one business day before filing with the
Commission of a registration statement or prospectus or any amendments or
supplements thereto, including documents incorporated by reference after the
initial filing of any registration statement, the Company will furnish to the
Holder of Registerable Securities draft copies of such registration statement,
and, upon the request of the Holder, shall continue to provide 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 the Holder may reasonably
request in order to facilitate the disposition of the Registerable Securities
owned by the Holder and to change the registration statement as it relates to
the Holder as requested by such seller on a timely basis, and to reasonably
consider other changes to the registration statement (but not including any
document incorporated therein by reference) reasonably requested by such Holder
on a timely basis, in light of the requirements of the Securities Act and any
other applicable laws and regulations; and provided, further, that as to
documents incorporated by reference, the Company shall provide documents
incorporated by reference promptly upon request after the filing of such
documents;
(b) prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration statement effective for up to 16 months; and cause the
related prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed to the extent required pursuant to Rule 424 under
the Securities Act, during such 16 month period; and otherwise comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during the applicable period
in accordance with the intended methods of disposition by the Holder;
(c) use its best efforts to cause all Registerable Securities to be
listed, subject to notice of issuance, by the date of the first sale of
Registerable Securities pursuant to such registration statement, on each
securities exchange, if any, on which the Company's Common Stock is then listed.
The Company may require the Holder of Registerable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
The Holder agrees, that, upon receipt of any notice from the Company
of the happening of any event which causes the prospectus not to be deemed
current, the Holder will forthwith discontinue disposition of Registerable
Securities pursuant to the registration statement covering such Registerable
Securities until the Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(c)(1) hereof, or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed, and until it has received copies of any additional or
supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by the Company, the Holder will deliver to the Company (at
the expense of the Company) all copies, other than permanent file copies then in
the Holder's possession, of the prospectus covering such Registerable Securities
current at the time of receipt of such notice.
5. Registration Expenses.
All expenses incident to the performance of or compliance with this
agreement by the Company, including, without limitation, all registration and
filing fees of the Commission, the National Association of Securities Dealers
Inc. and other agencies, 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 Registerable Securities), rating agency
fees, printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the fees and expenses incurred
in connection with the listing, if any, of the securities to be registered on
any securities exchange and fees and disbursements of counsel for the Company
and the Company's independent certified public accountants; securities acts
liability insurance (if the Company elects to obtain such insurance), the fees
and expenses of any special experts retained by the company in connection with
such registration, and the fees and expenses of any other person retained by the
company (but not including any underwriting discounts or commissions
attributable to the sale of Registerable Securities or other out-of-pocket
expenses of the Holder (or the agents who act on its behalf) unless
reimbursement is specifically approved by the Company) will be borne by the
Company. All such expenses are herein called "Registration Expenses".
6. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, the Holder of
Registerable Securities, its officers and directors and each person who controls
such holder (within the meaning of the Securities Act), and any agent thereof
against all losses, claims, damages, liabilities and expenses incurred by such
party pursuant to any actual or threatened suit, action, proceeding or
investigation (including reasonable expenses of investigation) arising out of or
based upon any untrue or alleged untrue statement of a material fact contained
in any registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same arise out of or are based upon, any such
untrue statement or omission based upon information with respect to the Holder
furnished in writing to the Company by such holder expressly for use therein.
(b) Indemnification by Holder of Registerable Securities. In
connection with any registration statement in which the Holder is participating,
the Holder shall furnish to the Company in writing such information with respect
to such Holder as the Company reasonably requests for use in connection with any
such registration statement or prospectus, and such Holder shall agree to
indemnify, to the full extent permitted by law, the Company, the directors and
officers of the Company and each person who controls the Company (within the
meaning of the Securities Act) and any agent thereof, against any losses,
claims, damages, liabilities and expenses (including reasonable attorney's fees
and expenses of investigation) incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation arising out of or based
upon any untrue or alleged untrue statement of a material fact or any omission
or alleged omission of a material fact necessary to make the statements therein
(in the case of a prospectus, in the light of the circumstances under which they
are made) not misleading, to the extent, that such untrue statement or omission
is based upon information relating to the Holder furnished in writing to the
Company expressly for use therein.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party of written notice of the commencement of any action,
proceeding, suit or investigation or threat thereof made in writing for which
such indemnified party may claim indemnification or contribution pursuant to
this Agreement, such indemnified party shall notify in writing the indemnifying
party of such commencement or threat; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party hereunder, (x) unless the indemnifying party is actually
prejudiced thereby or (y) otherwise than under this Section 6. In case any such
action, suit or proceeding shall be brought against any indemnified party, and
(i) the indemnified party so notifies the indemnifying party, the indemnifying
party shall be entitled to participate therein (ii) shall assume the defense
thereof, with counsel reasonably satisfactory to the indemnified party and (iii)
shall pay all expenses. The indemnified party shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, unless (i) the indemnifying party has agreed to pay such
fees and expenses, (ii) the indemnifying party failed to assume the defense of
such action, suit or proceeding or to employ counsel reasonably satisfactory to
the indemnified party therein or to pay all expenses or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and the indemnifying party
shall have been advised by counsel that there may be one or more legal defenses
available to the indemnified party which are different from or additional to
those available to the indemnifying party and which may result in a conflict
between the indemnifying party and such indemnified party (in which case, if the
indemnified party elects to employ separate counsel at the expense of the
indemnifying party and so notifies the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified party, it being understood, however,
that the indemnifying party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for the indemnified party,
which firm shall be designated in writing by the indemnified party).
(d) Contribution. 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, damages, 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 (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and indemnified party as well as any 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 or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, 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 a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitation set forth in Section 6(e), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in clauses (i) and (ii) of the
immediately preceding paragraph. 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.
(e) Limitation. Anything to the contrary contained in this Section 6
or in Section 7 hereof notwithstanding, the Holder of Registerable Securities
shall not be liable for indemnification and contribution payments aggregating an
amount in excess of the maximum amount received by such Holder in connection
with any sale of Registerable Securities as contemplated herein.
7. Participation in Underwritten Registrations.
The Holder of Registerable Securities may participate in any
underwritten registration hereunder unless such holder (a) agrees to sell such
Holder's securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and to
comply with Rules 10b-6 and 10b-7 under the Exchange Act, and (b) completes and
executes all questionnaires, appropriate and limited powers of attorney, escrow
agreements, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangement.
8. Additional Provisions.
(a) 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 Holder.
(b) 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,
(1) if to the Company, to:
NetWolves Corporation
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.,
Chairman of the Board
with a copy to:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
(2) if to the Holder,
to:
Computer Concepts Corp.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxxXxxxxx, Xx.,
President
with a copy to:
(c) Successors and Assigns; Holders as Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and assigns, and the agreements of the Company herein shall inure to
the benefit of the Holder of Registerable Securities and its respective
successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning or
construction hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws principles thereof.
(g) Severability; Specific Enforcement. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable in any respect of any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the Holder and the Company shall be enforceable to the fullest
extent permitted by law. The Holder and the Company acknowledge that the other
party would not have an adequate remedy at law for money damages in the event
that any of the covenants or agreements of the other party in this Agreement
were not performed in accordance with its terms and therefore agrees that the
other party shall be entitled to specific enforcement of such covenants or
agreements and to injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) 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 and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This agreement and the
Agreement supersede all prior agreements and understandings between the parties
with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
NetWolves Corporation
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, Chairman
Computer Concepts Corp.
By: /s/ Xxxxxx X. XxxXxxxxx
Xxxxxx X. XxxXxxxxx, President