Exhibit 10.23
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of August 1, 2003, (this
"Agreement"), is made by and between FRONTLINE COMMUNICATIONS CORPORATION, a
Delaware corporation (the "Company"), and the person named on the signature page
hereto (the "Buyer").
WITNESETH:
WHEREAS, upon the terms and subject to the conditions of the Stock Purchase
Agreement of even date herewith, between the Buyer and the Company (the "Stock
Purchase Agreement"), the Company has agreed to issue and sell to the Buyer
shares (the "Shares") of Common Stock, $.01 par value (the "Common Stock"), of
the Company; and
WHEREAS, to induce the Buyer to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws with respect to the Shares and the
Warrant Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Investor" means the Buyer.
(ii) "Register," "Registered, " and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
(iii) "Registrable Securities" means the Shares purchased by the Buyer and the
Warrants to be issued to the Buyer and finder by the Company, not to exceed, in
the aggregate, 333,333 Shares.
(iv) "Registration Statement" means a registration statement of the Company
under the Securities Act.
1
(b) Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Stock Purchase Agreement.
2. Piggyback Registration. If the Company, at any time, proposes to register any
of its Securities under the Securities Act, it shall promptly, and in no event
less than fifteen (15) days prior to the filing of a registration statement with
respect to a registration under this Section 2, give written notice to each
Investor of such intention. Upon the written request of any Investor given
within ten (10) days after receipt of any such notice, the Company shall include
in such registration all of the Registrable Securities indicated in such
request, so as to permit the disposition of the Registrable Securities on the
same terms and conditions as the Securities of the Company otherwise being sold
in such registration. If a Investor decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Investor shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statement as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
Notwithstanding any other provision of this Section 2, if the managing
underwriter advises the Company in writing that the inclusion of all Registrable
Securities proposed to be included in such registration would interfere with the
successful marketing of such Securities of the Company, then there shall be
excluded from such registration and underwriting, to the extent necessary to
satisfy such limitation.
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following.
(a) Prepare and file with the SEC a Registration Statement with respect to not
less than the number of Registrable Securities and thereafter use its best
efforts to cause the Registration Statement relating to Registrable Securities
to become effective not later than five (5) days after the Company is notified
by the SEC that the Registration Statement may be declared effective;
(b) Furnish to each Investor whose Registrable Securities are included in the
Registration Statement and its legal counsel identified to the Company, (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor.
(c) As promptly as practicable after becoming aware of such event, notify each
Investor who holds Registrable Securities being sold of the issuance by the SEC
of any stop order or other suspension of the effectiveness of the Registration
Statement;
2
(d) Upon effectiveness of registration, and upon receipt of an Exercise Notice
in the form annexed hereto as Exhibit A, the Company shall (i) instruct the
transfer agent to remove all restrictive legends from the Registrable
Securities; (ii) instruct the transfer agent to issue certificates in such
denominations or amounts as the case may be, as the Buyer may reasonably request
and registered in such names as the Buyer may request; and (iii) remove any stop
transfer order instructions.
4. Obligations of the Investors. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor (the "Requested Information") if such Investor elects to have any
of such Investor's Registrable Securities included in the Registration
Statement. If at least two (2) business days prior to the filing date the
Company has not received the Requested Information from an Investor (a
"Non-Responsive Investor"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor.
(b) Each Investor by such Investor's acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable Securities
from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(c), above, such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities and,
if so directed by the Company, such Investor shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a certificate
of destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
3
5. Expenses of Registration. All reasonable expenses, other than underwriting
discounts and commissions and other fees and expenses of investment bankers and
other than brokerage commissions, incurred in connection with registrations,
filings or qualifications pursuant to Section 3 shall be borne by the Company,
however; if Investor decides to retain counsel, it shall do so at its own
expense.
6. Reports under Exchange Act. With a view to making available to the Investors
the benefits of Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without registration ("Rule
144"), the Company agrees to:
(a) make and keep public information available, as those terms are understood
and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
7. Miscellaneous.
(a) A person or entity is deemed to be a Investor of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered (by hand, by
courier, by telephone line facsimile transmission, receipt confirmed, or other
means) or sent by certified mail, return receipt requested, properly addressed
and with proper postage pre-paid (i) if to the Company, at Xxx Xxxx Xxxx Xxxxx,
0xx Xxxxx, P.O. Box 1548, Xxxxx Xxxxx, XX 00000 with a copy to Xxxx XxXxxxxxxx,
Esq., Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, 0000 X Xxxxxx XX Xxxxx 000,
Xxxxxxxxxx, XX 00000, fax number (000) 000-0000; (ii) if to the Buyer, at the
address set forth under its name in the Stock Purchase Agreement, and (iii) if
to any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 7(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, four (4)
calendar days after deposit with the United States Postal Service.
4
(c) Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in accordance
with the laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based upon forum non conveniens, to the bringing of any such
proceeding in such jurisdictions. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not effect the validity or enforceability of any other provision
hereof.
(e) This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
(f) This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of reference only and
shall not affect the meaning thereof.
(i) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by telephone line facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
5
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
FRONTLINE COMMUNICATIONS CORP.
By: /s/
--------------------------------------
Name: Xxxxxxx X. Xxxx-Xxxxxxxx
Title: Chief Executive Officer
BUYER: XXXXXXX X. XXXXXX
By: /s/
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: n/a
6
