REGISTRATION RIGHTS AGREEMENT
Agreement made as of this 30th day of September, 1998 between THE
NETPLEX GROUP, INC., a New York corporation (the "Company") and WATERSIDE
CAPITAL CORPORATION, a Virginia corporation (the "Investor").
R E C I T A L S:
A. The Company and the Investor desire to enter into this Registration
Rights Agreement to provide for registration rights with respect to that certain
stock purchase warrant dated September 30, 1998 (the "Warrant") and the common
stock of the Company purchasable by Investor under the Warrant.
1. CERTAIN DEFINITIONS.
Section 1. As used in this Agreement, the following terms shall have
the following meanings:
1.1. Commission means the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act and the
Exchange Act.
1.2. Common Stock means (i) the Company's Common Stock, $.001
par value, as authorized on the date of this Agreement, (ii) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies or in the absence of any
provision to the contrary in the Company's Articles of Incorporation, be
entitled to vote for the election of a majority of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency or provision), and (iii) any other securities into which or for
which any of the securities described in (i) or (ii) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
1.3. Exchange Act means the Securities Exchange Act of 1934, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.4. Holders has the meaning set forth in Section 2.1.
1.5. Person means an individual, corporation, partnership,
limited liability company, joint venture, trust or unincorporated organization
or a government or any agency or political subdivision thereof.
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1.6. Preferred Shares means the shares of the Company's
Preferred Stock (as defined in the Purchase Agreement) purchased by the Investor
pursuant to the Purchase Agreement.
1.7. Purchase Agreement means the Series A Preferred Stock
Purchase Agreement dated the date hereof among the Company, the Investor and the
principal shareholder of the Company.
1.8. Registrable Securities means (i) this Warrant (and any
replacement warrant), (ii) any shares of Common Stock issued on exercise of this
Warrant and (iii) any shares of Common Stock issued upon conversion of the
Preferred Shares owned by the Investor or its permitted successors and assigns.
1.9. Securities Act means the Securities Act of 1933, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
2. REGISTRATION RIGHTS.
Section 2.1. Piggyback Registration. If at any time or times after the
date hereof, the Company shall determine to register any of its Common Stock or
securities convertible into or exchangeable for Common Stock under the
Securities Act whether in connection with a public offering of securities by the
Company (a "primary offering"), a public offering thereof by stockholders (a
"secondary offering"), or both (but not in connection with a registration
effected solely to implement an employee benefit plan or a transaction to which
Rule 145 or any other similar rule of the Commission under the Securities Act is
applicable), the Company will promptly give written notice thereof to the
holders of Registrable Securities (the "Holders") then outstanding, and will use
its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Holders may request in a writing delivered to
the Company within 15 days after the notice given by the Company; provided,
however that in the case of the registration of Common Stock by the Company in
connection with an underwritten public offering, the Company shall not be
required to register Registrable Securities of the Holders in excess of the
amount, if any, of Registrable Securities which the principal underwriter of an
underwritten offering shall reasonably and in good faith agree can be included
without jeopardizing the success of the offering by the Company, and provided,
further, that if any Registrable Securities are not included for this reason,
the Company will permit the Holders of Registrable Securities who have requested
participation and all other holders of securities of the Company having a right
to include securities in such registration who have requested participation in
the offering to participate in the offering proportionately in accordance with
the number of shares of Registrable Securities (in the case of the Investor) or
shares of Common Stock subject to such registration right (in the case of such
other holders) owned or obtainable by them, except that the Company shall first
exclude from such registration, in the following order, all shares of Common
Stock sought to be included therein by (i) any holder thereof not having any
such contractual, incidental registration rights (which the Holders acknowledge
may from time to time be granted by the Board of Directors of the Company to
directors and officers of the Company) and (ii) any holder thereof having
contractual, incidental registration rights subordinate and junior to the rights
of the Holders of Registrable Securities. Without in any way limiting the types
of registrations to which this Section 2.1 shall apply, in the event that the
Company shall effect a "shelf registration" under Rule 415 under the Securities
Act, or any other similar rule or regulation, the Company shall take all
necessary action, including, without limitation, the filing of post-effective
amendments, to permit the Investor to include its Registrable Securities in such
registration in
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accordance with the terms of this Section 2.1. In connection with any offering
under this Section 2.1 involving an underwriting, the Company shall not be
required to include any Registrable Securities in such underwriting unless the
Holders thereof accept the terms of the underwriting as agreed on between the
Company, the Holders and the underwriter selected by the Company. The Company
shall have the right to postpone or withdraw any registration effective pursuant
to the Section 2.1 without obligation to any Holder.
Section 2.2. Form S-3. If the Company becomes eligible to use Form S-3
under the Securities Act (or any successor form), the Company shall use its
reasonable efforts to continue to qualify at all times for registration on Form
S-3. If and when the Company becomes entitled to use Form S-3, the Holders of an
aggregate of not less than 50% of Registrable Securities shall have the right to
request and have effected not more than one registration per year (and not more
than two registrations in total) of shares of Registrable Securities on Form S-3
for a public offering of shares of Registrable Securities. Such requests shall
be in writing and shall state the number of shares of Registrable Securities to
be disposed of and the intended method of disposition of such shares by such
Holder or Holders. The Company shall not be required to cause a registration
statement requested pursuant to this Section 2.3 to become effective before 90
days following the effective date of a registration statement initiated by the
Company, if the request for registration has been received by the Company
subsequent to the giving of written notice by the Company, made in good faith to
the Holders of Registrable Securities to the effect that the Company is
commencing to prepare a Company-initiated registration statement (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 or any other similar rule of the Commission under
the Securities Act is applicable), provided, however, that the Company shall use
its best efforts to achieve such effectiveness promptly following such 90-day
period if the request pursuant to this Section 2.3 has been made before the
expiration of such 90-day period. The Company shall give notice to all Holders
of Registrable Securities of the receipt of a request for registration pursuant
to this Section 2.3 and shall provide a reasonable opportunity for such Holders
to participate in the registration. Subject to the foregoing, the Company will
use its best efforts to effect promptly the registration of all Registrable
Securities on Form S-3 to the extent requested by the Holder or Holders thereof
for purposes of disposition. Notwithstanding the foregoing, the Company shall
not be required to effect a registration under this Section 2.3 if, in the
unqualified opinion of counsel for the Company, which counsel and opinion shall
be reasonably acceptable to the Holders of Registrable Securities, such Holders
may then sell all Registrable Securities proposed to be sold in the manner
proposed to be sold without registration under the Act.
Section 2.3. Registration Expenses. In the event of a registration
described in Sections 2.1, 2.2 and 2.3, all reasonable expenses of registration
and offering of the Company and the Holders participating in the offering
including, without limitation, printing expenses, fees and disbursements of
counsel and independent public accountants, fees and expenses (including counsel
fees of not more than one counsel selected by the selling Holders to represent
the selling Holders) incurred in connection with complying with state securities
or "blue sky" laws, fees of the National Association of Securities Dealers, Inc.
or any stock exchange and fees of transfer agents and registrars, shall be borne
by the Company, except that the Holders shall bear (i) underwriting commissions
and discounts attributable to their Registrable Securities being registered,
(ii) selling commissions and
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(iii) the fees and expenses of a selling Holders' own counsel (other than the
counsel selected to represent all selling Holders).
Section 2.4. Further Obligations of the Company. Whenever under the
preceding sections of this Agreement the Company is required to register
Registrable Securities, it shall also do the following:
2.4.1 Use its best efforts to diligently prepare for
filing with the Commission a registration statement and such amendments and
supplements to such registration statement and the related prospectus as
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the sale of securities covered
by such registration statement for the period necessary to complete the proposed
public offering,
2.4.2 Furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such holder may
reasonably request to facilitate the public offering of his Registrable
Securities;
2.4.3 Enter into any underwriting agreement with
provisions reasonably required by the proposed underwriter for the selling
Holders, if any,
2.4.4 Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or "blue-sky" laws of such jurisdictions as any selling Holder of
Registrable Securities may reasonably request, provided that the Company shall
not be required to register in any states which shall require it to qualify to
do business or subject itself to general service of process as a condition of
such registration;
2.4.5 Notify the selling Holders (i) when a registration
statement has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any requests by the Commission or
any state securities authority for amendments and supplements to a registration
statement and prospectus or for additional information after the registration
statement has become effective, (iii) of the issuance by the Commission or any
state securities authority of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(iv) if, between the effective date of a registration statement and the closing
of any sale of Registrable Securities covered thereby, the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, and (v) of the happening of any event during the
period the registration statement is effective which makes any statement made in
such registration statement or the related prospectus untrue in any material
respect or which requires the making of any changes in such registration
statement or prospectus in order to make the statements therein not misleading;
2.4.6 Make reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of a registration statement;
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2.4.7 Cooperate with the selling Holders to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to such registration statement and not bearing
any restrictive legends and registered in such names as the selling Holders may
reasonably request at least 5 days before the closing of any sale of Registrable
Securities;
2.4.8 On the occurrence of any event contemplated by
Section 2.5.5(v) above, use reasonable efforts to prepare a supplement or
post-effective amendment to a registration statement or the related prospectus
or any document incorporated therein by reference or file any other required
documents so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Company shall notify the selling Holders to suspend use of the prospectus as
soon as reasonably practicable and the selling Holders shall suspend use of the
prospectus until the Company has amended or supplemented the prospectus to
correct such mistake or omission. At such time as such public disclosure is
otherwise made or the Company determines in good faith that such disclosure is
not necessary the Company shall promptly to notify the selling Holders of such
determination, amend or supplement the prospectus if necessary to correct any
untrue statement or omission therein and furnish the selling Holders such
numbers of copies of the prospectus as so amended or supplemented as the selling
Holders may reasonably request; and
2.4.9 Use best efforts to cause the Registrable
Securities to be listed on any stock exchange or quotation system on which the
Common Stock has been listed.
Section 2.5 Company's Right to Delay Registration. If at the time of
any request to register Registrable Securities under Sections 2.1, 2.2 or 2.3,
the Company is engaged or has fixed plans to engage within 90 days of the time
of the request in a registered public offering as to which the Holders of
Registrable Securities may include Registrable Securities pursuant to Sections
2.1, 2.2 or 2.3, or is engaged in any other activity which, in the good faith
determination of the Company's Board of Directors, would be adversely effected
by the requested registration to the material detriment of the Company, then the
Company may, at its option, direct that such requests be delayed for a period
not in excess of four (4) months from the effective date of such offering or the
date of commencement of such other material activity, as the case may be or, if
earlier, such time as any such material detriment would not occur.
3. INDEMNIFICATION. Incident to any registration referred to in this
Agreement, and subject to applicable law, the Company will indemnify each
underwriter, each Holder of Registrable Securities so registered, and each
person controlling any of them within the meaning of the Securities Act or the
Exchange Act against all claims, losses, damages and liabilities, including
legal and other expenses reasonably incurred in investigating or defending
against the same, arising out of any untrue statement of a material fact
contained in any prospectus or other document (including any related
registration statement) or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any violation by the Company of the Securities
Act, any state securities or "blue-sky" laws or any rule or regulation
thereunder in connection with such registration provided, however, that the
Company will not be liable in any case to the extent that any such claim, loss,
damage or liability may have been caused by an untrue statement or omission
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based on information furnished in writing to the Company by such Holder
expressly for use therein. In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this Agreement, each
seller of Registrable Securities, jointly and severally, will indemnify and hold
harmless the Company, each of its directors and officers and each underwriter
(if any) and each person, if any, who controls the Company or any such
underwriter within the meaning of the Securities Act or the Exchange Act against
any claim, losses, damages and liabilities, including legal and other expenses
reasonably incurred in investigating or defending it against the same, arising
out of any untrue statement of a material fact contained in any prospectus or
other document (including any related registration statement) or any omission to
state therein a material fact required to be stated therein or necessary to make
the statement therein not misleading, if the statement or omission was made in
reliance on and in conformity with information furnished in writing to the
Company by or on behalf of such selling Holder, specifically for use in
connection with the preparation of such registration statement, prospectus
amendment of supplement; provided, however, that the obligations of such selling
Holders hereunder shall be limited to an amount equal to the proceeds to each
Holder of Registrable Securities sold as contemplated herein.
4. RULE 144 REQUIREMENTS. When the Company becomes subject to the periodic
reporting requirements of the Exchange Act, the Company shall use its best
efforts to take all action as may be required as a condition to the availability
of Rule 144 under the Securities Act (or any successor exemptive rule afterwards
in effect). In connection therewith, the Company shall furnish to any Holder of
Registrable Securities, on request, a written statement executed by the Company
as to the steps it has taken to comply with the current public information
requirements of Rule 144.
5. TRANSFER OF REGISTRATION RIGHTS. The registration rights of the Holders
under this Agreement may be transferred to any transferee of any Preferred Share
or any Registrable Security who (i) is a Holder of Registrable Securities, (ii)
is an affiliate, as that term is defined in regulations promulgated by the
Commission under the Exchange Act, of a Holder of Registrable Securities
(including a partner of such Holder) or (iii) acquires Registrable Securities,
the Warrant or Preferred Shares. Each such transferee shall be deemed to be a
"Holder" for purposes of this Agreement; provided that no transfer of
registration rights by a Holder under this Section 5 shall create any additional
rights in the transferee beyond those rights granted to Holders in this
Agreement.
6. GRANTING OF REGISTRATION RIGHTS. The Company shall not, without the
prior written consent of the holders of at least a majority in interest of the
Registrable Securities, grant any rights to any Persons to register any shares
of capital stock or other securities of the Company if such rights could
reasonably be expected to be superior to or be on parity with, the rights of the
holders of Registrable Securities granted pursuant to this Agreement.
7. MISCELLANEOUS.
Section 7.1. No Waiver; Cumulative Remedies. No failure or delay on the
part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
These remedies are cumulative and not exclusive of any remedies provided by law.
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Section 7.2. Amendments and Waivers. Except as provided below,
amendments to this Agreement shall require and shall be effective on receipt of
the written consent of: (i) the Company and (ii) the holders of at least a
majority in interest of the Registrable Securities. Except as provided below,
compliance with any covenant or provision in this Agreement may be waived on
written consent by the party or parties whose rights are being waived; provided,
that, if the rights of holders of Registrable Securities are being waived, only
with the written consent of the holders of at least a majority in interest of
the Registrable Securities. Notwithstanding the foregoing, no waivers or
amendments shall be effective to reduce the percentage in interest of the
Registrable Securities the consent of the holders of which is required under
this Section. Any waiver or amendments may be given subject to satisfaction of
conditions stated therein and any waiver or amendments shall be effective only
in the specific instance and for the specific purpose for which given.
Section 7.3. Addresses for Notices. All notices, requests demands and
other communications required by this Agreement shall be in writing (including
telegraphic communication) and mailed, telegraphed or delivered to each
applicable party at the address set forth in the Purchase Agreement or at such
other address any party may inform the party in writing in compliance with this
Section.
All such notices, requests, demands and other communications shall,
when mailed (which mailing must be accomplished by first class mail, postage
prepaid, electronic facsimile transmission, express overnight courier service,
or registered mail, return receipt requested) or telegraphed, and shall be
considered to be delivered two (2) days after dispatch.
Section 7.4. Binding Effect; Assignment. This Agreement shall bind and
inure to the benefit of the parties and their respective heirs, successors and
assigns, except that the Company shall not have the right to delegate its
obligations hereunder or to assign its rights hereunder or any interest herein
without the prior written consent of the holders of at least a majority in
interest of the Registrable Securities.
Section 7.5. Prior Agreements. This Agreement constitutes the entire
agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof, including without limitation
the Original Registration Rights Agreement.
Section 7.6. Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of a provision
contained in this Agreement, for any reason, is invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement,
but this Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of a provision, had never been contained
herein, and such provisions or part reformed so that it would be valid, legal
and enforceable to the maximum extent possible.
Section 7.7. Jurisdiction and Venue. The Company consents to the
jurisdiction of the Circuit Court of the City of Norfolk, Virginia, for the
purpose of any suit, action or other proceeding arising out
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of any of its obligations arising under this Agreement or with respect to the
transactions contemplated hereby, and expressly waives any and all objections it
may have as to venue in such court.
Section 7.8. Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 7.9. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 7.10. Further Assurances. From and after the date of this
Agreement, on the request of any party, the other parties shall execute and
deliver such instruments documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
IN WITNESS, the undersigned have executed this Registration Rights
Agreement as the day and year first above written.
THE NETPLEX GROUP, INC.
By_________________________
Xxxx X. Xxxxx, President
WATERSIDE CAPITAL CORPORATION
By__________________________
Name________________________
Title_________________________
