1
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
BETWEEN
SAGE NETWORKS, INC.
AND
WEB HOSTING ORGANIZATION LLC
Dated as of December 8, 1997
2
TABLE OF CONTENTS
Page
----
1. Definitions .............................................................1
2. Required Registration ...................................................2
3. Incidental Registration .................................................3
4. Registration Procedures .................................................3
5. Expenses ................................................................5
6. Indemnification and Contribution ........................................5
7. Market Stand-Off Agreement ..............................................8
8. Miscellaneous ...........................................................8
3
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of December __, 1997,
between SAGE NETWORKS, INC., a Delaware corporation (the "Company") and WEB
HOSTING ORGANIZATION LLC (the "Investor").
WITNESSETH
WHEREAS, the Company and the Investor have entered into a
Subscription Agreement (the "Purchase Agreement"), dated as of the date hereof,
pursuant to which the Company issued and sold to the Investor, and the Investor
purchased from the Company, an aggregate of 1,000,000 shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock"); and
WHEREAS, in order to induce the Investor to enter into the Purchase
Agreement (and to purchase such shares of Common Stock) the Company has agreed
to provide certain registration rights with respect thereto;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is agreed as follows:
1. Definitions. The following terms shall have (unless otherwise provided
elsewhere in this Registration Rights Agreement) the following respective
meanings (such meanings being equally applicable to both the singular and plural
form of the terms defined):
"Agreement" means this Registration rights Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"Common Stock" has the meaning given to it in the recitals hereto.
"Indemnified Party" has the meaning given to it in Section 6(c).
"Indemnifying Party" has the meaning given to it in Section 6(c).
"NASD" means the National Association of Securities Dealers, Inc.,
or any successor corporation thereto.
4
"Purchase Agreement" has the meaning given to it in the recitals
hereto.
"Registering Security Holder" has the meaning given to it in Section
3.
"Registrable Securities" means, collectively, (i) the shares of
Common Stock issued and sold to the Investor pursuant to the Purchase Agreement,
(ii) any shares of Common Stock hereafter acquired by the Investor, or (iii) any
shares of Common Stock hereafter distributed to the Investor by the Company as a
stock dividend, stock spit, recapitalization, reclassification or otherwise;
provided, however, that any such securities shall cease to be Registrable
Securities when (i) such securities shall have been registered under the
Securities Act, the registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of pursuant to such effective registration
statement, (ii) such securities shall have been otherwise transferred, if new
certificates or other evidences of ownership for them not bearing a legend
restricting further transfer and not subject to any stop transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act or any state securities law then in
force, (iii) such securities shall cease to be outstanding or (iv) such
securities shall be eligible for sale pursuant to Rule 144(k) under the
Securities Act or any successor rule which permits resale of such securities
without restriction.
2. Required Registration. From and after the earlier of December __,
1998 or 180 days after the closing of the Company's first underwritten public
offering of its capital stock, after receipt of a written request from the
Investor the Company shall, as expeditiously as is possible, use its best
efforts to effect the registration under the Securities Act of all shares of
Registrable Securities which the Company has been so requested to register;
provided, however, that, subject to the provisions of the immediately following
sentence, the Company shall not be required to effect more than three
registrations of Registrable Securities pursuant to this Section 2. In order to
count as an "effected" registration statement, such registration statement shall
not have been withdrawn and all Registrable Securities registered pursuant to it
(excluding any overallotment shares) shall have been sold. The Company shall
have the right to defer the filing of any registration statement requested
pursuant to this Section 2 for a period not to exceed ninety (90) days if in the
good faith determination of the Board of Directors of the Company the filing of
such registration statement would be seriously detrimental to the Company.
2
5
3. Incidental Registration. If the Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders (the
"Registering Security Holders") a Registration Statement under the Securities
Act on any form (other than a Registration Statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of the Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities to be sold for cash with respect to any class of
equity security (as defined in Section 3(a)(11) of the Securities Exchange Act)
of the Company, it will give written notice to the Investor at least 30 days
before the initial filing with the Commission of such Registration Statement,
which notice shall set forth the intended method of disposition of the
securities proposed to be registered by the Company. The notice shall offer to
include in such filing the aggregate number of shares of Registrable Securities
as the Investor may request.
The Company shall thereupon include in such filing the number of
shares of Registrable Securities for which registration is so requested, subject
to the next sentence, and shall use its best efforts to effect registration
under the Securities Act of such shares. If the managing underwriter of a
proposed public offering shall advise the Company in writing that, in its
opinion, the distribution of the Registrable Securities requested to be included
in the registration concurrently with the securities being registered by the
Company or such Registering Security Holder would materially and adversely
affect the distribution of such securities by the Company or such Registering
Security Holder, then all Registering Security Holders shall reduce the amount
of securities each intended to distribute through such offering on a pro rata
basis. If, after excluding all securities desired to be offered by the
Registering Security Holders, the managing underwriter of the proposed public
offering shall advise the Company in writing that, in its opinion, the
distribution of the Registrable securities requested to be included in the
registration concurrently with the securities being registered by the Company
would materially and adversely affect the distribution of such securities, then
the Investor shall reduce the amount of Registrable Securities it intends to
distribute to the extent necessary to permit such distribution.
4. Registration Procedures. If the Company is required by the
provisions of section 2 or 3 to use its best efforts to effect the registration
of any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the dis-
3
6
position of such securities by the holders thereof, but not to exceed 180 days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of 180 days;
(c) furnish to the Investor such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as such selling security holders may reasonably request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as each
holder of such securities shall request (provided, however, that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any jurisdiction in which it is not then qualified or to file any
general consent to service of process), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such Registration
Statement;
(e) furnish, in connection with any registration of
Registrable Securities, on the date that such shares of Registrable Securities
are delivered to the underwriters for sale pursuant to such registration or, if
such Registrable Securities are not being sold through underwriters, on the date
that the Registration Statement with respect to such shares of Registrable
Securities becomes effective, (1) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Investor, in customary form and covering
matters of the type customarily covered in such legal opinions; and (2) a
comfort letter dated such date, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and if such
Registrable Securities are not being sold through underwriters, then to the
Investor and, if such accountants refuse to deliver such letter to the Investor,
then to the Company in a customary form and covering matters of the type
customarily covered by such comfort letters and as the underwriters or such
holder(s) shall reasonably request;
4
7
(f) enter into customary agreements (including an underwriting
agreement in customary form with customary indemnification provisions) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities; and
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the Registration Statement, an earnings
statement covering the period of at least 12 months beginning with the first
full month after the effective date of such Registration Statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act.
It shall be a condition precedent to the obligation of the Company
to take any action pursuant to this Agreement in respect of the securities which
are to be registered at the request of the Investor that (i) the Investor shall
furnish to the Company such information regarding the securities held by the
Investor and the intended method of disposition thereof as the Company shall
reasonably request and as shall be required under the Securities Act in
connection with the action taken by the Company and (ii) that the Investor shall
deliver and perform under such underwriting agreement as may be reasonably
requested by the underwriters.
5. Expenses. All expenses incurred in complying with this Agreement,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for the Company and counsel for the Investor, expenses
of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to Section 4(d), shall be paid by the Company, except that the Company
shall not be liable for any fees, discounts or commissions to any underwriter in
respect of the securities sold by the Investor.
6. Indemnification and Contribution. (a) In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
this Agreement, the Company shall indemnify and hold harmless the Investor, its
directors and officers, and each other Person (including each underwriter) who
participated in the offering of such Registrable Securities and each other
Person, if any, who controls the Investor or such participating Person within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, the Investor or any such director or officer or
participating Person or controlling Person may become subject under the
Securities Act, the Securities Exchange Act, state securities or blue sky laws
or any other statute or at common
5
8
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue or alleged untrue
statement of any material fact contained in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, (ii) any 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
Securities Act, the Securities Exchange Act, state securities or blue sky laws,
any other statute or common law; and the company shall reimburse the Investor or
such director, officer or participating Person or controlling Person for any
legal or any other expenses reasonably incurred by the Investor or such
director, officer or participating Person or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus, prospectus or amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Investor specifically for use therein. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Investor
or such director, officer or participating Person or controlling Person, and
shall survive the transfer of such securities by the Investor.
(b) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Investor
shall indemnify and hold harmless the Company, its directors and officers, and
each other Person (including each underwriter) who participated in the offering
of such Registrable Securities and each other Person, if any, who controls the
company or such participating Person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director or officer or participating Person or
controlling Person may become subject under the Securities Act, the Securities
Exchange Act, state securities or blue sky laws or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case where such statement or
omission is in conformity with written information
6
9
provided by the Investor expressly for use therein, and shall reimburse the
Company or such director, officer or participating Person or controlling Person
for any legal or any other expenses reasonably incurred by the Company or such
director, officer or participating Person or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Investor shall not be liable for any amounts
in excess of the net proceeds received by it for the sale of its shares. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or such director, officer or participating
Person or controlling Person, and shall survive the transfer of such securities
by the Investor.
(c) Each party entitled to indemnification under this Section
6 shall give notice to the party required to provide indemnification promptly
after such indemnified party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the indemnifying party to assume the
defense of any such claim or any litigation resulting therefrom; provided, that
counsel for the indemnifying party, who shall conduct the defense of such claim
or litigation, shall be approved by the indemnified party (whose approval shall
not be unreasonably withheld); and, provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 6. The indemnified
party may participate in such defense at such party's expense; provided,
however, that the indemnifying party shall pay such expense 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 the
indemnified party and any other party represented by such counsel in such
proceeding. No indemnifying party, in the defense of any such claim or
litigation shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation, and no indemnified party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
indemnifying party.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
7
10
considerations; provided that in the case of the Investor, such contribution
shall not exceed any amounts in excess of the net proceeds received by the
Investor for the sale of its shares. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not also guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Investor under this
Section 6 shall survive the completion of any offering of Registrable Shares in
a registration statement under Sections 2 and 3, and otherwise.
7. Market Stand-Off Agreement. If requested by an underwriter of
securities of the Company the Investor shall not sell or otherwise transfer or
dispose of any securities held by it during the one hundred twenty (120) day
period following the effective date of a Registration Statement; provided, that
all officers and directors of the Company, as well as all beneficial owners of
greater than 10% of the Company's Common Stock, enter into similar agreements.
8. Miscellaneous.
(a) No Inconsistent Agreements. This agreement supersedes all
prior agreements regarding registration rights between the Company and the
Investor and all such prior agreements are deemed terminated hereby. The Company
is a party to no other agreements regarding registration rights. The Company
will not hereafter enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement. It is understood and agreed that the Company shall not enter
into any agreement other than this Agreement pursuant to which any
8
11
holder of securities is given the right to require that the Investor's
securities be registered under the Securities Act. The Company may enter into
agreements other than this Agreement pursuant to which the holders of the
Company's securities are granted incidental registration rights; provided,
however, that any such agreement shall provide that, in the event that an
underwriter determines that the distribution of all securities requested to be
included in the registration would materially and adversely affect the
distributions of such securities by the Company or the Investor, the security
holders party to such other agreement shall reduce the number of their
securities proposed to be registered (to zero, if necessary), prior to the
Investor reducing the number of its securities proposed to be registered.
(b) Remedies. The Investor, 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. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departure from the provisions hereof
may not be given unless the Company and the Investor has approved the same in
writing.
(d) Notices. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall be sufficiently given or made if in
writing and (i) delivered in person with receipt acknowledged, (ii) sent by
registered or certified mail, return receipt requested, postage prepaid, (iii)
sent by overnight courier with guaranteed next-day delivery, or (iv) sent by
telex or telecopier, in each case addressed follows:
(i) If to the Investor, to it at:
WEB Hosting Organization LLC
c/o Charterhouse Group International, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
9
12
(ii) If to the Company, to it at:
Sage Networks, Inc.
00 Xxxx Xxx Xxx Xxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) Business Days after the same
shall have been deposited in the United States mail, one business day after sent
by overnight courier or on the day telexed or telecopied.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon (i) the successors of each of the parties hereto
and (ii) the assigns of the Investor, including any Person to whom Registrable
Securities are transferred if the transferee or assignee acquires at least
twenty-five percent (25%) of the then outstanding Registrable Securities, or if
the transferee or assignee of Registrable Securities is a member or other
affiliate of the Investor; provided that any such transferee or assignee shall
execute a counterpart of, or shall otherwise become bound in writing by the
requirements of, this Agreement and be considered an "Investor" for purposes of
this Agreement.
(f) Mergers, Etc. The Company shall not, directly or
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to "Registrable Shares" shall be deemed to
be references to the securities which holders of then Registrable Shares would
be entitled to receive in exchange for Registrable Shares under any such merger,
consolidation or reorganization; provided, however, that the provisions of this
Section 8(f) shall not apply in the event of any merger, consolidation or
reorganization in which the Company is not the surviving corporation if all
holders of then Registrable Shares are entitled to receive in exchange for such
Registrable Shares consideration consisting solely of (i) cash, (ii) securities
of the acquiring corporation which may be immediately sold to the public without
registration under the Securities Act, or (iii) securities of the acquiring
corporation which the acquiring corporation has agreed to register within 90
10
13
days of completion of the transaction for resale to the public pursuant to
the Securities Act.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware (i.e.,
without regard to its conflicts of law rules).
(i) Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
[END OF TEXT]
11
14
[SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights agreement as of the date first above written.
SAGE NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Title: Co-Chairman
WEB HOSTING ORGANIZATION LLC
By: /s/ Xxx X. Xxxxx
-------------------------------------
Title: Vice President
