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RESTATED EQUITY PURCHASE AGREEMENT
RESTATEMENT, dated as of March 30, 1999, of the Agreement, dated as
of August 15, 1996, as amended by the Amendment Agreement, dated as of July 23,
1998, by and among XXXXX ONLINE, INC. (F/K/A CYBERNET DATA SYSTEMS, INC.), a
Delaware corporation with principal executive offices at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxx ("EOI"); XXXXX & CO., INC., a Delaware (formerly a New
York) corporation with principal executive offices at 000 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx ("Xxxxx"); GLOBIX CORPORATION, a Delaware corporation with
offices at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Globix"); XXXX XXXXXXXXXX
and XXXXX XXXXXXXXXX, individuals residing at 0 XxXxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxx (respectively "Xxxx Xxxxxxxxxx" and "Xxxxx Xxxxxxxxxx", or
collectively, the "Current Shareholders"); and XXXXXXX XXXXXXXX, an individual
residing at 000 Xxxx Xxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Xxxxxxxx").
W I T N E S S E T H :
WHEREAS, EOI, Xxxxx, the Current Shareholders and Xxxxxxxx entered
into the August 15, 1996 Equity Purchase Agreement (the "Original Agreement"),
which provided for the purchase by Xxxxx of shares of EOI's capital stock from
EOI, the Current Shareholders and Xxxxxxxx and set forth certain rights and
obligations of the parties with respect to the ownership, purchase and
alienation of stock of EOI; and
WHEREAS, Globix entered into a Securities Purchase Agreement with
EOI on July 23, 1998 and, as a consequence thereof, the parties to the Original
Agreement and Globix entered into the Amendment Agreement of July 23, 1998 (the
"Amendment Agreement") which,
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among other things, deleted Xxxxxxxx as a party to the Original Agreement as
amended by the Amendment Agreement (except with respect to the provisions
relating to his sale of shares of EOI to Xxxxx), and added Globix as a party to
the Original Agreement as amended by the Amendment Agreement, effective July 23,
1998, and otherwise amended certain terms of the Original Agreement; and
WHEREAS, the parties desire to restate the Original Agreement as
amended by the Amendment Agreement into one document (hereinafter called this
"Agreement") and to extend the maturity of the New Notes (as hereinafter
defined);
NOW, THEREFORE, for and in consideration of their mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties named above intending
to be bound hereby now mutually agree as follows:
1. Stock Purchases by Xxxxx. By means of the three (3) transactions
described below in Sections 1(A), (B) and (C), Xxxxx or its nominee will
simultaneously acquire an aggregate of two hundred fifty thousand (250,000)
shares of EOI's capital stock, which will cumulatively represent approximately
one sixth (1/6) of EOI's outstanding capital stock as of the consummation of
such transactions, and the total cost to Xxxxx for such 250,000 shares will not
exceed $850,000. The date upon which these three transactions will occur is
hereinafter called the "Closing Date," and the parties will use their best
efforts to consummate such transactions on August 15, 1996.
(A) On the Closing Date, EOI will issue one hundred thousand
(100,000) new shares of its capital stock (the "New Shares") to Xxxxx or to
Xxxxx'x nominee, thereby raising to 1,521,989 the aggregate number of its shares
which on such date are either outstanding or
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issuable pursuant to outstanding warrants. On the date of the issuance of the
New Shares, Xxxxx will pay EOI an aggregate gross purchase-price of $500,000 for
the New Shares, representing the negotiated price of $5.00 per share. As
provided later in Section 2 of this Agreement, Xxxxx may apply its preexisting
credit of $112,500 towards the aforementioned purchase-price for the New Shares,
in which case Xxxxx'x actual remittance to EOI for the New Shares will be in the
net amount of $387,500, payable on the Closing Date. Immediately upon payment of
this net purchase-price, all of the New Shares will be duly registered in the
name of Xxxxx or its nominee and will be deemed to be fully-paid and
non-assessable, with full voting power, and none of them will be restricted in
any way. If any transfer tax is applicable to the issuance of the New Shares,
the parties will each pay one half thereof within thirty (30) days after the
issuance of the New Shares. The proceeds EOI receives from this new issue will
be reinvested in its "XXXXX ONLINE" business described later herein.
(B) Secondly, again on the Closing Date, the Current Shareholders
will jointly and severally sell to Xxxxx or its nominee, and Xxxxx or its
nominee will purchase from the Current Shareholders, one hundred thousand
(100,000) shares of EOI capital stock from among the previously issued and
outstanding shares owned on such date by one or both of the Current Shareholders
personally (the "Strausberg Shares"). Upon the transfer of the Strausberg
Shares, Xxxxx or its nominee will pay the Current Shareholders an aggregate
purchase-price of $250,000 for them, representing the negotiated price of $2.50
per share. Unless otherwise agreed, the purchase-price will be paid in equal
halves to each of Xxxx Xxxxxxxxxx and Xxxxx Xxxxxxxxxx. Immediately upon payment
of this purchase-price, all of the 100,000 Strausberg Shares will be duly
registered in the name of Xxxxx or its nominee and will be deemed to be
fully-paid and non-assessable, with full voting power. None of the Strausberg
Shares will be
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restricted in any way once they have been transferred to Xxxxx or its nominee,
and either EOI or one or both of the Current Shareholders will bear all the
costs of removing any restrictive legends or other limitations that may
currently apply to the Strausberg Shares. If any transfer tax is applicable to
the issuance of the Strausberg Shares, the Current Shareholders will bear one
half thereof and Xxxxx will bear the other half.
(C) Thirdly, also on the Closing Date, Xxxxxxxx will sell to Xxxxx
or its nominee, and Xxxxx or its nominee will purchase from Xxxxxxxx, fifty
thousand (50,000) shares of EOI capital stock (the "Xxxxxxxx Shares"). Upon such
transfer of the Xxxxxxxx Shares, Xxxxx or its nominee will pay Xxxxxxxx an
aggregate purchase price of $125,000 for them, representing the negotiated price
of $2.50 per share. As of August 1, 1996 the Xxxxxxxx Shares were authorized but
had not yet been issued, although Xxxxxxxx held warrants of EOI which were
convertible into more than that number of shares; therefore, in order to be able
to sell the Xxxxxxxx Shares to Xxxxx or its nominee, Xxxxxxxx will have
converted prior to the Closing Date the number of his warrants that will make
him the lawful and registered owner of at least 50,000 shares of EOI capital
stock on the Closing Date. Xxxxxxxx will bear for his own account all the costs
of such conversion, including the payment of the conversion price of five (5)
cents per share to EOI, and neither Xxxxx nor its nominee will be liable for any
of such expenses or for any payment to EOI relating thereto. Following the
acquisition of the Xxxxxxxx Shares by Xxxxx or its nominee, all the Xxxxxxxx
Shares will be duly registered in the name of Xxxxx or its nominee and will be
deemed to be fully-paid and non-assessable, with full voting power. None of the
Xxxxxxxx Shares will be restricted in any way once they have been transferred to
Xxxxx or its nominee, and EOI will bear all the costs of removing any
restrictive legends or other limitations that may currently apply to the
warrants or which may attach to the Xxxxxxxx
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Shares prior to or as a result of their acquisition by Xxxxx. If any transfer
tax is applicable to the issuance or transfer of the Xxxxxxxx Shares, Xxxxxxxx
will bear one half thereof and Xxxxx will bear the other half. No new warrants
will be issued by EOI to replace those converted by Xxxxxxxx without the prior
express consent of Xxxxx.
(D) The three distinct purchases of EOI stock referred to in
Sections 1(A), (B) and (C) above constitute integral parts of the same equity
acquisition, and Xxxxx or its nominee in its sole discretion may elect not to
complete any or all of these transactions if any one or more of them, for any
reason, cannot be or is not duly consummated simultaneously with the others on
the Closing Date in accordance with this Agreement.
(E) The Closing Date is scheduled for Thursday, August 15, 1996,
subject to postponement by mutual agreement if all the parties concur that such
postponement is necessary. In no event will the Closing Date occur later than
November 18, 1996, unless Xxxxx expressly consents to a postponement of the
Closing Date, and if it has not occurred by then, Xxxxx may, but need not,
terminate this Agreement and will have no further obligations hereunder to any
of the parties.
2. Cancellation of Promissory Notes. Prior to August 15, 1996, Xxxxx
has made two loans to EOI for use as operating capital. On May 22, 1996, Xxxxx
loaned EOI $50,000, while EOI in turn delivered its promissory note in like
amount to Xxxxx. On July 12, 1996, Xxxxx loaned an additional $25,000 to EOI,
and EOI again delivered its promissory note in like amount to Xxxxx. These two
promissory notes (the "Original Notes") provided among other things that if both
the principal amounts were repaid in full on or before November 18, 1996 (the
"Original Notes Maturity Date"), the Original Notes would not bear interest,
although interest will accrue thereafter if not repaid on the Original Notes
Maturity Date. Furthermore,
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letter agreements which accompanied the Original Notes, respectively dated May
21 and July 12, 1996, provided that if Xxxxx were to invest in any EOI stock
within 180 days after the delivery of the Original Notes, the Original Notes
need not be repaid but will be convertible into an aggregate credit of $112,500
applicable towards the purchase-price of EOI's capital stock. Therefore, if the
three simultaneous purchases of EOI stock described in Section 1 hereinabove are
duly consummated in accordance with this Agreement, then Xxxxx or its nominee
may surrender the Original Notes and receive a credit of $112,500 towards the
purchase-price of the New Shares. This is the credit referred to in Section 1(A)
above, which will reduce the purchase-price payable by Xxxxx for the New Shares
from $500,000 to $387,500. Upon the issuance of the New Shares, the Original
Notes will be deemed canceled and so marked. If, however, consummation of the
three stock purchases described in Section 1 should be delayed through no fault
of Xxxxx, and if, further, Xxxxx nevertheless elects to consummate such
purchases at a later date rather than terminating this Agreement, then the
aforementioned credit of $112,500 may still be applied towards the
purchase-price of the New Shares, and the Original Notes will be deemed canceled
as of the actual Closing Date. However, if the Closing Date occurs later than
the Original Notes Maturity Date, any interest which EOI will then owe Xxxxx on
the Original Notes may also be applied by Xxxxx or its nominee towards the
purchase-price of the New Shares.
3. Additional Loans. (A) As of July 23, 1998, Xxxxx has made various
loans to EOI aggregating $500,000 principal amount, evidenced by promissory
notes of EOI, dated January 7, 1997, February 6, 1997, March 4, 1997, April 1,
1997, April 17, 1997, June 24, 1997 and August 1, 1997 (collectively, the "New
Notes"), which New Notes have been unconditionally guaranteed by Xxxx Xxxxxxxxxx
(the "Guarantee"). The New Notes shall
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continue in full force and effect, except that the maturity date of each Note is
hereby extended to February 28, 2000 (the "Extended New Notes Maturity Date");
provided, however, that in the event an initial public offering of EOI (of the
type contemplated by Section 22 hereof) is consummated prior to the Extended New
Notes Maturity Date, then EOI, at the time such initial public offering is
closed, shall pay all the New Notes in full from the proceeds of such offering.
Xxxx Xxxxxxxxxx hereby consents to the Extended New Notes Maturity Date and
agrees and confirms that the Guarantee shall remain in full force and effect
until the payment in full of all amounts due under the New Notes.
(B) Xxxxx hereby irrevocably and unconditionally surrenders all
rights to convert the New Notes into shares of common stock of EOI, par value
$.01 per share (the "Common Stock").
4. Addition and Deletion of Parties. The parties hereby acknowledge
that Globix shall be made a party to this Agreement effective July 23, 1998 and
Globix specifically acknowledges and agrees to be bound by the terms of this
Agreement. The parties further acknowledge that Xxxxxxxx is to be deleted and
removed from this Agreement, effective July 23, 1998, except for Sections 1(C),
9(B) and 9(C) hereof. Each of the Current Shareholders consents and agrees that
each stock certificate evidencing his or her respective shares of Common Stock
shall bear the following legend (and each of Xxxxx and Globix agrees that each
stock certificate evidencing its respective shares of Common Stock shall bear
the second sentence of the following legend): "THE TRANSFER OR SALE OF THIS
SECURITY IS SUBJECT TO THE TERMS OF A RESTATED EQUITY PURCHASE AGREEMENT, DATED
AS OF MARCH __, 1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE COMPANY.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
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ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
SOLD UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
5. Right of Inclusion. From and after July 23, 1998, Xxxxx and
Globix shall have the following rights in the event that the Current
Shareholders, or any one or more of them, wishes, directly or indirectly, to
sell, transfer, assign or otherwise dispose of any of his or her shares of
Common Stock (a "Transfer") to any third party other than to his or her spouse
or children who become a party to this Agreement and assume the Current
Shareholders' obligations hereunder. Such rights will apply to any shares of
Common Stock owned by the Current Shareholders on July 23, 1998 and any shares
they may acquire hereafter by way of a stock split, stock dividend, reverse
stock split, recapitalization, reorganization, merger, consolidation or the like
(the "Owned Securities"). Such rights shall be in addition to, and not in lieu
of, all other rights set forth in this Agreement and are on the following terms:
(A) Transfer Notice. Prior to any Transfer, the Current Shareholder
or Shareholders who have received an offer to purchase all or any part of his or
her shares of Owned Securities shall give written notice of the proposed
Transfer (the "Transfer Notice") to Xxxxx and Globix specifying the type and
number of Owned Securities which such Current Shareholders wish to Transfer (the
"Offered Securities"), the name of the buyer, the proposed purchase price
therefor (the "Price"), and all other material terms and conditions of the
proposed Transfer and setting forth a representation of such Current
Shareholders that the terms reflect an actual, bona fide, arm's-length offer
from an unaffiliated financially responsible person (such offer being herein
called a "Bona Fide Offer" and such prospective buyer being herein called the
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"Buyer"), and an agreement from the Buyer to purchase from Xxxxx and/or Globix
within the time prescribed in said Bona Fide Offer, but not later than the
earlier of the purchase from any selling Current Shareholder or 60 days after
delivery of the Inclusion Notice, as defined below (the "Purchase Offer"), at
the option of Xxxxx and/or Globix, a Pro Rata (as defined below) number of
shares of Xxxxx'x and/or Globix's Common Stock, on the same terms and conditions
as are applicable to the Offered Securities, all of which terms shall be
specified in the Purchase Offer, except that neither Xxxxx nor Globix shall be
required to provide any representation or warranty or other undertaking other
than with respect to its ownership of, and authority to transfer, such shares of
Common Stock free and clear of all liens. As used herein, "Pro Rata" shall mean
that percentage of the total number of shares of Common Stock owned or deemed to
be owned (through derivative securities or otherwise) by Xxxxx and Globix equal
to the proportion of the number of shares of Offered Securities to the total
number of shares of Owned Securities owned or deemed to be owned (through
derivative securities or otherwise) by such selling Current Shareholders.
(B) Xxxxx and Globix's Rights. For a period of thirty (30) days
following its receipt of the Transfer Notice, Xxxxx and Globix shall each have
the right to: (i) to accept the Purchase Offer from Buyer (the "Inclusion
Right"), which right shall be exercisable by delivery to such Current
Shareholders of a notice (the "Inclusion Notice") of acceptance, which right
shall expire if unexercised within such 30-day period; or (ii) to elect not to
accept the Purchase Offer. During such period EOI shall make available to Xxxxx
and Globix any information relating to EOI, financial or otherwise, as Xxxxx or
Globix may reasonable request in order to assist it in determining which of the
foregoing options to elect.
(C) Inclusion Right. If Xxxxx or Globix elects to exercise its
respective
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Inclusion Right and to accept the Purchase Offer, the Buyer shall purchase the
Common Stock with respect to which a Purchase Offer was accepted by Xxxxx and/or
Globix along with the shares of Offered Securities being sold to Buyer by the
Current Shareholders on the terms and for the consideration set forth in the
Purchase Offer within sixty (60) days after the delivery of the Inclusion Notice
(or any earlier time that shares are purchased from any selling Current
Shareholder); provided, however, if such sales are not consummated on or before
such date, the Current Shareholders shall not sell his or her shares thereafter
to Buyer or any other person without first delivering a Transfer Notice and
again offering Xxxxx and Globix the aforesaid Inclusion Right.
(D) When Xxxxx and/or Globix Declines to Exercise its Rights. If
Xxxxx or Globix does not deliver an Inclusion Notice within thirty (30) days
after receipt of a Transfer Notice, then such Current Shareholders shall have
the right, for a period of sixty (60) days from the earlier of (i) the
expiration of such period in which Xxxxx and Globix had to elect to deliver such
notices, or (ii) the date on which the selling holders have received notice from
Xxxxx and Globix that they will not exercise the Right of Inclusion, to sell to
the Buyer the Offered Securities under this Section 5 at a price not less than
the Price and on the other terms set forth in the Transfer Notice. If the
Offered Securities are not sold to the Buyer during such 60-day period, then the
Offered Securities and the rest of the Current Shareholders' shares of Owned
Securities will not thereafter be sold without first delivering a Transfer
Notice and again offering Xxxxx and Globix the aforesaid Inclusion Right.
6. Anti Dilution and Registration Rights. (A) In addition to all
other rights afforded Xxxxx and Globix under the terms of this Agreement, each
of Xxxxx and Globix shall have the right, but not the obligation, to participate
in any transaction in which EOI raises capital
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through the sale of Common Stock or derivative securities to bona fide third
parties, but exclusive of any bona fide options which may be issued after the
date hereof to directors, officers or employees of the Company pursuant to any
stock option plan(s) adopted by the Company ("Capital Transaction") to the
extent, and only to the extent, necessary to maintain the percentage ownership
in EOI (giving effect to any derivative securities owned by each of Xxxxx and
Globix) held by each immediately preceding the Capital Transaction. For purposes
of this Section 6, EOI will give written notice to Xxxxx and Globix of any
Capital Transaction, including the number of shares of Common Stock to be sold
to the third party, the number of shares that each of Xxxxx and Globix shall be
entitled to purchase to maintain their percentage ownership in EOI immediately
proceeding the Capital Transaction, the price for such share and such other
information relating to EOI that Xxxxx and/or Globix may reasonably request.
Each of Xxxxx and Globix shall have thirty days to elect to purchase some or all
of the shares of Common Stock they are entitled to purchase hereunder at the
price paid by the bonafide third party in the Capital Transaction, which payment
shall be made in United States currency against delivery to the purchaser of
certificates registered in its name for the Common Stock purchased. Such Common
Stock purchased shall be duly issued, fully paid and non-assessable and shall be
free and clear of all liens and restrictions on transfer except as provided by
applicable securities laws. Failure to exercise the foregoing right in the case
of one Capital Transaction shall not prevent its exercise in the event of any
subsequent Capital Transaction.
(B) In addition to all other rights afforded Xxxxx and Globix under
the terms of this Agreement, each of Xxxxx and Globix shall have the right to
piggy back registration, all as more particularly set forth in the Registration
Rights Agreement attached hereto as Exhibit A (the "Registration Rights
Agreement"). For this purpose, Xxxxx shall be considered a party to
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the Registration Rights Agreement, the term "Registerable Securities" shall
include any shares of Common Stock now owned or hereafter acquired by Xxxxx, and
Xxxxx shall be considered a "Holder" for all purposes of the Registration Rights
Agreement. No amendment to the Registration Rights Agreement shall serve to
diminish the rights given to Xxxxx hereunder but any improvement in such rights
shall be for the benefit of Xxxxx.
7. Board Membership. The parties hereto agree to vote their
respective shares of Common Stock to (i) authorize the expansion of the Board of
Directors to seven (7) members; and (ii) to elect (and re-elect from time to
time) one designee of Globix and one designee of Xxxxx as members of such Board.
Increase of the Board of Directors to a number greater than seven (7) shall
require the consent of Xxxxx and Globix, which consent shall not be unreasonably
withheld or delayed. In the event that the Current Shareholders should sell or
transfer some or all of their EOI stock, their shares will become restricted in
such a manner as to require the new holder or holders thereof to cause the
election (and reelection) of Xxxxx'x and Globix's designees to the EOI Board of
Directors. Xxxxxx Xxxxxxx is hereby designated as the Xxxxx appointed director
on the EOI Board of Directors; provided, however, that if Xx. Xxxxxxx shall at
any time resign from the Board, Xxxxx may designate a replacement nominee by
written notice to EOI.
8. Representations and Warranties by EOI. As of both August 15, 1996
and the Closing Date, EOI represents and warrants to Xxxxx and its nominee as
follows:
(A) EOI is a Delaware corporation duly organized, validly existing
and in good standing, and that it has all requisite corporate power and legal
authority to own its properties, carry on its businesses as now conducted, issue
its securities, and perform its obligations hereunder, including the approval of
its shareholders and its board of directors to
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agree to such obligations; and EOI will deliver on the Closing Date a good
standing certificate from Delaware;
(B) EOI is duly qualified as a foreign corporation and in good
standing in Connecticut, where its only offices are located , and there is no
other jurisdiction where failure to be qualified, licensed or registered would
have a material adverse effect upon EOI; and EOI will deliver on the Closing
Date a good standing certificate from Connecticut;
(C) EOI is in compliance with all applicable laws and with all
applicable rules and regulations of governmental entities, noncompliance with
which would have a material adverse effect on EOI, on its businesses as now
conducted, or on its right to conduct such businesses or to have its securities
outstanding;
(D) EOI currently has 1,100,000 shares of a single class of Common
Stock issued and outstanding, out of a total authorized aggregate of 2,000,000
shares, which number includes 100,000 shares issued to Xxxxxxxx upon the
conversion of his warrants but does not include the New Shares; and EOI also has
outstanding 321,989 warrants convertible into a like number of additional shares
of the same Common Stock, regardless of whether such stock is referred to in any
particular instrument as having a par value of $.01 or of $.001; and all of such
shares have been duly issued or authorized for issue by EOI's Board of
Directors; all of them comply with any applicable federal or state securities
regulations; and none of the outstanding shares, including those to be issued
under this Agreement, are uncertified;
(E) The documents delivered herewith include true and complete
copies of EOI's certificate of incorporation and by-laws, as well as the full
provisions of its Common Stock and its warrants;
(F) The Board of Directors of EOI currently consists of three (3)
members and
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the maximum permissible size of the board under its by-laws is at least four (4)
members;
(G) All financial statements which EOI has supplied or made
available to Xxxxx on August 15, 1996 or at the Closing Date present fairly the
financial position of EOI as of the dates indicated therein;
(H) There is no suit, action, litigation, preliminary injunction or
administrative, arbitration or other proceeding or governmental investigation or
inquiry pending or, to EOI's knowledge, threatened against EOI which, if
adversely determined, would have a material adverse effect on EOI or on its
ability to perform its obligations hereunder;
(I) EOI has furnished Xxxxx with true and complete copies of all its
material contracts with customers and suppliers, and is not in default
respecting any thereof or, if any default exists or may with the passage of time
come into being, EOI will at or before the Closing Date cure such default,
including any default in the payment of its monetary obligations under, or in
the performance of any material covenant or obligation to be performed pursuant
to, any such contracts, nor is any third party in default in the payment of any
monetary obligation under, or in the performance of any material covenant or
obligation to be performed by it pursuant to, any of such contracts;
(J) EOI's service offerings "XXXXX ONLINE" and "Xxxxx XXXXX ONLINE"
have all necessary governmental approvals and do not violate the rights of any
third party;
(K) The trade name "XXXXX ONLINE" is a registered service xxxx of
EOI, and EOI is the successor in interest to Sindex, Inc. with respect to the
certain Trademark License Agreement between Sindex and the SEC dated September
15, 1995 relating to use of the
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"XXXXX ONLINE" service xxxx; and
(L) The Original Notes and the letter agreements which accompanied
the Original Notes represent binding legal obligations of EOI, until duly
canceled and surrendered by Xxxxx, having all been entered into with full
corporate power and legal authority.
9. Representations and Warranties by the Current Shareholders and
Xxxxxxxx. As of both August 15, 1996 and the Closing Date:
(A) The Current Shareholders jointly and severally warrant and
represent to Xxxxx and its nominee that they are the lawful owners of one
million (1,000,000) shares of EOI capital stock including the Strausberg Shares,
with full power to undertake their obligations in this Agreement, but they are
not the owners of any of the warrants of EOI;
(B) Xxxxxxxx warrants and represents to Xxxxx and its nominee that
he is the lawful owner of the 100,000 shares of EOI capital stock which include
the Xxxxxxxx Shares, with full power to undertake his obligations in this
Agreement, but he is not the owner of any warrants convertible into EOI capital;
and
(C) The Current Shareholders and Xxxxxxxx jointly and severally
warrant and represent to Xxxxx and its nominee that, to the best of their
knowledge and belief respectively, (i) the financial statements of EOI delivered
to Xxxxx present its financial position fairly as of the dates upon which they
were delivered; (ii) there is no litigation or other legal or governmental
process pending or threatened against EOI or against them individually which, if
adversely determined, would have a material adverse effect on EOI and its
businesses, on their respective equity interests in EOI, or on their ability to
perform their obligations under this Agreement; and (iii) EOI is in compliance
with all applicable laws and all rules and regulations of governmental entities,
noncompliance with which would have a material adverse effect on EOI and its
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businesses, on their respective equity interests in EOI, or on their ability to
perform their obligations under this Agreement.
10. Representations and Warranties by Xxxxx. Xxxxx represents and
warrants to EOI as of August 15, 1998 that it has all necessary corporate
authority to enter into this Agreement and to make the investments in EOI called
for by this Agreement. More specifically, Xxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
Furthermore, at a regular meeting on June 27, 1996, attended by all its members,
the Board of Directors of Xxxxx expressly authorized the purchases of EOI stock
contemplated by Section 1 of this Agreement and empowered Xxxxx'x management to
negotiate and execute this Agreement and the License referred to hereinbelow in
Section 12. No shareholder action is required in order to make this Agreement a
fully binding obligation of Xxxxx and its nominee. In addition, Xxxxx represents
that it is purchasing EOI securities for investment purposes only and for its
own account and not with a view to distribution thereof. Xxxxx understands that
the securities purchased hereunder are restricted securities in that they have
not been registered under federal or state securities laws and, as such, no
securities purchased hereunder may be transferred or sold by Xxxxx or its
nominee, except as provided below in Section 13, unless Xxxxx furnishes EOI with
an opinion of counsel reasonably acceptable to EOI, which states that either the
securities have been registered under the Securities Act of 1933, as amended,
and all applicable state securities laws, or that such proposed transfer or sale
is exempt from registration under such securities laws. Xxxxx understands that
the purchase of EOI securities may involve a substantial degree of risk and that
such securities are suitable only for an investor of substantial means who has
no need for liquidity in this investment. There is currently no public market
for EOI's securities and none is currently
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anticipated. Finally, Xxxxx represents that it has had the opportunity to obtain
any and all information on EOI necessary in order for Xxxxx to make a decision
as to the advisability of purchasing EOI securities, and has also had the
opportunity to ask questions of EOI's officers regarding its businesses.
11. Approval by EOI Board and Shareholders. On or prior to the
Closing Date, the Board of Directors of EOI will have ratified and confirmed
both this Agreement and the License (defined hereinafter) as binding obligations
of EOI. Furthermore, to the extent that the corporate charter or by-laws of EOI
may render such action necessary or desirable, or applicable law may require the
same, EOI will obtain consent to and ratification of this Agreement and of the
License by its shareholders on or prior to the Closing Date. On the Closing
Date, EOI will supply Xxxxx with reasonably acceptable written evidence of such
actions by its board and its shareholders.
12. XXXXX ONLINE. One of the principal objectives of the
transactions outlined in this Agreement is to involve Xxxxx in the sponsorship
and future development and promotion of EOI's proprietary electronic service
offering known as "XXXXX ONLINE". It is the basic function of this Internet
service to disseminate in a convenient fashion to subscribers, with certain
value-added enhancements and the omission of headers and certain coding, most of
the growing volume of financial and corporate information that is being filed
electronically in the Securities and Exchange Commission's XXXXX System. EOI's
reasons for wishing to involve Xxxxx in the further development of this offering
include its recognition of the marketing value of the "Xxxxx" name in the realm
of financial and corporate reporting, as well as the considerable expertise
Xxxxx already has with electronic filings and data management generally, and the
financial resources that Xxxxx can bring to any such collaboration. EOI has also
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designed and developed, in collaboration with Xxxxx and its affiliates, a
special version or edition of XXXXX ONLINE to be licensed exclusively to Xxxxx,
to be known as "Xxxxx XXXXX ONLINE", with the following principal
characteristics:
(A) The SEC's real-time XXXXX database will be reformatted and
certain value-added subsets of information will be added for on-line browsing on
the World Wide Web using the XXXXX ONLINE proprietary software and will be
accessible at the Web site "xxxx://xxx.Xxxxx-xxxxxx.xxx/xxxxx".
(B) The Xxxxx name and proprietary logo will be prominently
displayed.
(C) If EOI upgrades XXXXX ONLINE at any time, the corresponding
upgrades and enhancements will be incorporated into the service offering.
(D) The E-mail watchlist function of XXXXX ONLINE will not be
included.
(E) Xxxxx and EOI will from time to time collaborate to improve the
service offering with particular emphasis on the ease of accessibility of the
XXXXX data and the effectiveness of the service offering as a marketing tool in
the promotion of XXXXX ONLINE itself.
(F) Xxxxx XXXXX ONLINE will be royalty-free and at no cost to Xxxxx
as long as Xxxxx holds an equity interest in EOI, but if Xxxxx ceases to hold
any equity interest in EOI a new royalty structure will be agreed upon through
good-faith, arms-length negotiations between EOI and Xxxxx which are based upon
the fair market value of such a service offering and which will properly reflect
the contributions which Xxxxx will already have made in the design, development
and promotion of XXXXX ONLINE and of Xxxxx XXXXX ONLINE.
(G) Xxxxx XXXXX ONLINE will become fully operational on the Closing
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Date, and Xxxxx and its corporate affiliates may begin making unlimited use of
it on that date.
(H) The License of the foregoing rights to XXXXX ONLINE, in
substantially the form annexed hereto as Exhibit B, will be executed by EOI and
Xxxxx no later than the Closing Date (the "License").
13. Assignment of Stock and Other Rights. Notwithstanding anything
to the contrary herein contained, Xxxxx or its nominee may at any time transfer
all or any part of its interest in EOI to a corporate parent, subsidiary,
affiliate or any other corporate or partnership entity owned or controlled by,
or under common ownership or control with, Xxxxx (collectively a "Xxxxx
Affiliate"). Xxxxx may also at any time assign its rights and/or obligations
under this Agreement, including the License, to a Xxxxx Affiliate. In any such
case, Xxxxx or its nominee will give written notice to EOI on or before the
effective date of such a transfer or assignment. However, except as stated
above, no other rights and obligations created by this Agreement may be assigned
or transferred.
14. Certain EOI Covenants. EOI, as of July 23, 1998 and thereafter,
covenants and agrees that:
(A) It will not adopt by written consent (as contrasted to adoption
at a meeting) any resolution or action of the directors or shareholders of EOI
unless Xxxxx receives notice thereof and has signed such consent.
(B) EOI shall deliver to Xxxxx and Globix within 30 days of the end
of each fiscal quarter and year-end a balance sheet, statement of operations and
statement of cash flow prepared in accordance with United States generally
accepted accounting principles consistently applied with prior periods. The
statements shall be certified by the chief financial officer of EOI as so
prepared; provided, however, that if the year end statement is audited by an
independent
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public accountant, such audited statement shall be delivered to Xxxxx and
Globix.
(C) EOI shall not grant or give, directly or indirectly, to any
present or future shareholders of EOI any greater rights as a shareholder,
whether by contract or otherwise, than those granted to Xxxxx and Globix in this
Agreement unless such rights are also concurrently offered to, and may at their
option be accepted by, Xxxxx and/or Globix and shall include Xxxxx and Globix on
the same terms and conditions.
(D) EOI represents, warrants, covenants and agrees that (i) so long
as the Debenture issued on July 23, 1998 to Globix (the "Debenture') is
outstanding (which for the purposes of this Section 14(D) shall mean the entire
term of the Debenture in the event that Globix converts the Debenture prior to
maturity as a result of EOI's proposed prepayment of the Debenture (a "Forced
Conversion")), EOI shall not, after July 23, 1998, issue or reserve for issuance
more than 800,000 shares of Common Stock for options for the benefit of
employees, directors, officers, consultants and agents without the prior written
consent of Globix and Xxxxx, which consent shall not be unreasonably withheld or
delayed and (ii) in the event Globix elects to convert the Debenture (other than
as a result of a Forced Conversion) and Globix or Xxxxx holds of record (i.e.,
not through derivative securities) five (5%) percent or more of the issued and
outstanding Common Stock (in such capacity, a "Principal Shareholder"), EOI
shall not, after the date of such conversion, issue or reserve for issuance more
than that number of shares of Common Stock for options which equals ten (10%)
percent of the issued and outstanding capital stock of EOI, on a fully diluted
basis, for the benefit of employees, directors, officers, consultants and agents
without the prior written consent of Globix and Xxxxx, which consent shall not
be unreasonably withheld or delayed; provided, however, that the rights of Xxxxx
and Globix under this clause (ii) shall expire upon the earlier of (x) with
respect to Globix and Xxxxx, at such time
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that Globix or Xxxxx, as the case may be, no longer is a Principal Shareholder,
(y) the termination of this Agreement or (z) July 23, 2003.
15. Additional EOI Representations and Warranties. EOI represents
and warrants to Xxxxx and Globix as of July 23, 1998 as follows, which
representations and warranties shall survive the execution of the Amendment
Agreement and any subsequent amendments to this Agreement:
(A) The execution, delivery and performance by EOI of the Amendment
Agreement and the Registration Rights Agreement are within EOI's corporate
powers and have been duly authorized by all necessary corporate action on the
part of EOI, including, without limitation, approval by the Board of Directors
and, if required, the shareholders of EOI. This Amendment and the Registration
Rights Agreement have been duly and validly executed by EOI and constitute the
legal, valid and binding agreement of EOI enforceable against it in accordance
with their respective terms.
(B) Attached hereto as Schedule A are the names of all the holders
of the issued and outstanding Common Stock of EOI on July 23, 1998 and the
number of shares held by them, and except as set forth in Schedule A, there is
not outstanding as of July 23, 1998 any securities, shares, rights,
subscriptions, warrants or options that gives any person the right to purchase
or otherwise receive or be issued any shares of capital stock or other equity
interest in EOI or any security of any kind convertible into or exchangeable or
exercisable for any shares of capital stock or other equity interest in EOI.
(C) All of the representations and warranties of EOI contained in
Section 8 hereof are hereby restated as though made on and as of July 23, 1998,
except to the extent of
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revising the same to reflect the issued and outstanding Common Stock as set
forth in Schedule A and to reflect that the Board of Directors currently
consists of four members, one of whom is a nominee of Xxxxx.
(D) True and correct copies of all the documents involved in the
purchase on July 23, 1998 by Globix of a Debenture of EOI in the principal
amount of $1,000,000 and a Warrant to purchase 666,667 shares of Common Stock
has been provided to Xxxxx.
16. Additional Representations and Warranties by the Current
Shareholders. The Current Shareholders, jointly and severally, restate their
representations and warranties contained in Section 9 of this Agreement as
though made on and as of July 23, 1998, which representations and warranties
shall survive the execution of the Amendment Agreement and any subsequent
amendments to this Agreement.
17. Additional Representations and Warranties of Xxxxx. Xxxxx
restates its representations and warranties contained in Section 10 of this
Agreement, other than the third sentence thereof, as though made on and as of
July 23, 1998, which representations and warranties shall survive the execution
of the Amendment Agreement and any subsequent amendments to this Agreement.
18. Merger. This Agreement supersedes any and all other written
agreements and understandings between the parties hereto except the Original
Notes, the New Notes, the Guarantee, the Registration Rights Agreement, the
License and the other documents specifically mentioned in this Agreement. The
Original Note and New Notes will continue to have full force and effect in
accordance with their respective terms, following the execution of this
Agreement until paid in full and canceled in accordance with Section 2 and 3
hereinabove.
19. Equitable Relief. The parties to this Agreement acknowledge
that, if any
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one of them should fail, refuse or be unable to perform his, her or its
obligations under this Agreement at the time specified for such performance, or
if such failure, refusal or inability is threatened, monetary damages may be an
inadequate remedy for the other party or parties who were entitled to the
benefit of such performance. The parties therefore stipulate and agree that such
aggrieved party or parties may at their sole option apply to a court of
competent jurisdiction for equitable relief, including injunction and specific
performance of the unperformed obligations. If the party or parties applying for
such relief are successful in obtaining some or all of the equitable relief
sought, then the parties who failed, refused or were unable to perform their
obligations as required by this Agreement will bear all the court costs involved
in obtaining such relief including the reasonable attorneys' fees of the
aggrieved party or parties. However, regardless of whether equitable relief is
in fact granted in such a case, the aggrieved party or parties will be entitled
to monetary damages representing his, her or its actual losses attributable to
the actual or threatened nonperformance together with reasonable legal fees and
other costs of collecting such monetary damages.
20. Notices. Any notices to be given in connection with this
Agreement must be in writing and will be deemed given when received by the party
for whom they are intended. Such notices shall be addressed to the respective
parties at their addresses first above given and, unless delivered by hand,
shall be sent by registered or certified mail with copies to each of the other
parties. Notices intended for EOI shall be marked to the attention of Xxxx
Xxxxxxxxxx, and those intended for Xxxxx shall be marked to the attention of
Xxxxxx Xxxxxxx.
21. Severability. If any one or more provisions or parts of any
provision contained in this Agreement, or in any related agreement, shall for
any reason be held to be invalid, illegal, unenforceable, or contrary to public
policy in any respect, such invalidity,
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illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or part of a provision had been
limited or modified, consistent with its general intent, to the extent necessary
in order that it shall be valid, legal and enforceable, or if it shall not be
possible so to limit or modify such invalid, illegal or unenforceable provision
or part of a provision, the remaining provisions or part of such provision shall
remain in full force and effect as if such invalid, illegal or unenforceable
provision or part of a provision had never been contained herein.
22. Term. This Agreement shall automatically terminate upon the
happening of any of the following events: dissolution of EOI; the voluntary
agreement by all the parties hereto; the point in time when both Xxxxx and
Globix own no equity interest or derivative securities in EOI; or the
effectiveness of a registration statement filed under the Securities Act of
1933, as amended, covering a public offering of securities of EOI, provided that
such initial public offering is underwritten and as a result of which at least
25% of the then outstanding Common Stock is publicly held and listed on a
national securities exchange or on the NASDAQ National Market System.
23. Miscellaneous. This Agreement may not be altered or amended in
any way except in writing and signed by all the parties, but Xxxxxxxx shall not
be required to sign unless Sections 1(C), 9(B) or 9(C) are changed. This
Agreement may be executed in any number of identical counterparts, each of which
when executed and delivered will be deemed to be an original, but all such
counterparts will constitute one and the same instrument. This Agreement will be
governed by the laws of the State of New York, wherein it has been negotiated
and where Globix and Xxxxx are located, although it is understood that the
corporate powers of EOI and
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the legal characteristics of its securities will, to the extent necessary, be
construed in accordance with the laws of the State of Delaware, wherein it is
incorporated.
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IN WITNESS WHEREOF, the respective parties have duly executed this
Agreement at New York, New York, as of the date first above written.
(Seal) XXXXX ONLINE, INC. f/k/a Cybernet Data Systems, Inc.
By:
/s/ Xxx Xxx
--------------------------------------------
Xxx Xxx, President
(Seal) XXXXX & CO., INC.
By:
/s/ Xxxxx Xxxxx
--------------------------------------------
Xxxxx Xxxxx, Vice President
GLOBIX CORPORATION
By:
/s/ Xxxx Xxxx
--------------------------------------------
Xxxx Xxxx, President & CEO
/s/ Xxxxx Xxxxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxxxx
/s/ Xxxx Xxxxxxxxxx
--------------------------------------------
Xxxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxxx Xxxxxxxx
(Only as to Sections 1(C), 9(B) and 9(C))
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REGISTRATION RIGHTS AGREEMENT
CYBERNET DATA SYSTEMS, INC.
28
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the day of , 1998, by and between Cybernet Data Systems,
Inc., a Delaware corporation (the "Company"), and (the
"Holder").
W I T N E S S E T H:
WHEREAS, the Holder has agreed to purchase the (as such
terms are defined that certain Securities Purchase Agreement of even date
herewith between the Company and the Holder (the "Purchase Agreement")); and
WHEREAS, as additional consideration for the purchase of the by
the Holder, the Company desires to grant to the Holder registration rights with
respect to the Registrable Securities (as hereinafter defined);
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the or upon exercise of the ; and
(ii) any Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the Common Stock, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such person's
registration rights are not assigned; provided, however, that as to any
particular securities that are included in Registrable Securities, such
securities shall cease to be Registrable Securities when (i) such shares shall
have been sold to the public pursuant to a registered public offering or (ii)
such securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act of 1933, as amended (the "1933 Act").
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are exercisable or convertible into,
Registrable Securities;
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2. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holder) its Common Stock under
the 1933 Act in connection with the public offering of such securities solely or
substantially for cash (other than a registration relating solely to a Company
stock plan or a registration on Form S-4 or on any other form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities),
the Company shall, at such time, promptly give the Holder written notice of such
registration in accordance with subparagraph 12(c) hereof. Upon the written
request of the Holder given within thirty (30) days after mailing of such notice
by the Company, the Company shall use its best efforts, subject to the
provisions of Paragraph 6, to cause to be registered under the Securities Act
all of the Registrable Securities that the Holder has requested to be
registered; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Paragraph 2 without
obligation to the Holder. Notwithstanding anything to the contrary contained in
this Agreement, the Company shall have the right to defer the initial filing or
effectiveness of the Registration Statement (A) for such reasonable period of
time until the Company receives or prepares financial statements for the fiscal
period most recently ended prior to such written request, if necessary to avoid
the use of stale financial statements, or (B) if the Company would be required
to divulge in such Registration Statement the existence of any fact relating to
a material business situation, transaction or negotiation not otherwise required
to be disclosed or if the Board of Directors of the Company shall determine in
good faith that the registration to be effected would not be in the best
interest of the Company. The Company may impose stop-transfer instructions with
respect to the Registrable Securities for any period of suspension of
effectiveness of the Registration Statement.
3. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holder,
keep such registration statement effective until this Agreement is terminated
pursuant to Paragraph 11 hereunder.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders covered by such registration statement such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents as
they may reasonably request in order to facilitate the disposition of such
Registrable Securities.
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(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders thereof,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. The Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify the Holder covered by such registration statement at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing. Upon such notification, the Holders shall
immediately cease making offers of Registered Securities and return all
prospectuses to the Company. The Company shall promptly provide the Holders with
revised prospectuses and, following receipt of the revised prospectuses, the
Holders shall be free to resume making offers of the Registered Securities.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(h) Use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock is then listed.
4. Provision of Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of the
Registrable Securities.
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5. Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to
Paragraph 2 for the Holder thereof including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees
relating or apportionable thereto, but excluding the Holder's counsel fees,
underwriting discounts and commissions and to the extent appropriate a pro rata
portion of the nonaccountable expense allowance of underwriters relating to
Registrable Securities.
6. Underwriting Requirements. In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not be
required under Paragraph 2 to include any of the Holder's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder that is a holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and stockholders of the Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
7. Delay of Registration. The Holder shall have no right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Holder of such Registrable Securities, the officers and directors
of each the Holder, any underwriter (as defined in the 0000 Xxx) for the Holder
and each person, if any, who controls the Holder or underwriter within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended ("xxx
0000 Xxx"), against any losses, claims, damages or liabilities joint or several
to which they may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses,
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claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each the Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subparagraph 8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any of the Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls the Holder, against any losses, claims, damages or
liabilities joint or several) to which the Company or any such director, officer
or controlling person may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) 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 by the Holder expressly for use in connection with such registration;
and each the Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subparagraph 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subparagraph 8(b) exceed the gross proceeds from the offering
received by the Holder.
(c) Promptly after receipt by an indemnified party under this Paragraph 8
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Paragraph 8, deliver to the indemnifying party
a written notice of the commencement thereof and the
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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 the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that any indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such actions, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Paragraph 8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Paragraph 8.
(d) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to subparagraph 8(a) or 8(b)
but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the 1933 Act, the
1934 Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee, agent or
counsel of the Company, or any controlling person of the Company), on the one
hand, and the Holders (including for this purpose any contribution by or on
behalf of an indemnified party), on the other hand, shall contribute to the
losses, liabilities, claims, damages, and expenses to which any of them may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Holders, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company and the Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses shall also be considered. The
relative benefits received by the Company, on the one hand, and the Holders, on
the, other hand, shall be deemed to be in the same proportion as the total
proceeds from the offering received by each of the Company on the one hand and
the Holders, on the other hand.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Holders, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and Holders agree that it would be unjust and inequitable
if the respective obligations of the Company and the Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to in this
subparagraph 8(d). No person guilty of a fraudulent misrepresentation (within
the meaning of subparagraph 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this subparagraph 8(d), each person, if any,
who controls a Holder within the meaning
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of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer,
director, stockholder, employee, agent and counsel of the Holders shall have the
same rights of contribution as the Holder, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act and each officer, director, employee, agent and counsel of the
Company, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this subparagraph 8(d). Anything in this
subparagraph 8(d) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This subparagraph 8(d) is intended to supersede any
right to contribution under the 1933 Act, the 1934 Act, or otherwise.
(e) The obligations of the Company and Holders under this Paragraph 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
9. Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 under the 1933 Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public; and
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act.
10. Market Stand-Off' Agreement. The Holder hereby agrees that it shall
not, to the extent requested by the Company and an underwriter of Common Stock
(or other securities) of the Company, sell or otherwise transfer or dispose
(other than to donees who agree to be similarly bound) of any Registrable
Securities during a reasonable and customary period of time, as agreed to by the
Company and the underwriters, not to exceed 180 days, following the effective
date of a registration statement of the Company filed under the 1933 Act;
provided, however, that:
(a) such agreement shall be applicable only to the first such registration
statement of the Company which covers shares (or securities) to be sold on its
behalf to the public in an underwritten offering; and
(b) Xxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxxx, all executive officers, directors,
and shareholders who own or are deemed to own Common Stock in an amount equal to
or in excess of that number of shares of Common Stock owned or deemed to be
owned by Globix Corporation and all other persons with registration rights
(whether or not pursuant to this Agreement) enter into similar agreements.
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In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder thereof until the end of such reasonable and customary period.
11. Termination of Registration Rights. The Company's obligations pursuant
to this Agreement shall terminate as to the Holder of Registrable Securities on
the earlier of (i) when the Holder can remove the restrictive legend on the
Holder's shares pursuant to Rule 144(k) under the 1933 Act (or any such
successor rule) at anytime after an initial public offering or (ii) on the fifth
anniversary of the date hereof.
12. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its obligations
under this Agreement, the Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the provisions
of this of this subparagraph 12(c):
(i) if to the Company:
Cybernet Data Systems, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000.
Copy to:
Xxxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxx Xxxx & Ball P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(ii) if to the Holder:
At the address set forth in the Purchase Agreement
Copy to:
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All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of the Registrable Shares subject to the terms hereof.
(e) 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.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not restrictions, promises
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
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\
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
CYBERNET DATA SYSTEMS, INC.
By:
------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President and CEO
HOLDER:
By:
------------------------------------
Title:
Print Name:
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