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Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
dated as of July 23, 1998
among
NATIONAL NETWORK TECHNOLOGIES INC.
and the
INVESTORS
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Table of Contents
Section 1. Definitions.................................................. 1
Section 2. Required Registration........................................ 2
Section 3. Piggyback Registration....................................... 4
Section 4. Registrations on Form S-3.................................... 5
Section 5. Holdback Agreement........................................... 5
Section 6. Preparation and Filing....................................... 6
Section 7. Expenses..................................................... 9
Section 8. Indemnification.............................................. 9
Section 9. Underwriting Agreement....................................... 12
Section 10. Information by Holder....................................... 12
Section 11. Exchange Act Compliance..................................... 12
Section 12. No Conflict of Rights....................................... 12
Section 13. Termination................................................. 12
Section 14. Successors and Assigns...................................... 13
Section 15. Assignment.................................................. 13
Section 16. Entire Agreement............................................ 13
Section 17. Notices..................................................... 13
Section 18. Modifications; Amendments; Waivers.......................... 14
Section 19. Counterparts; Facsimile Signatures.......................... 14
Section 20. Headings.................................................... 14
Section 21. Governing Law............................................... 15
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REGISTRATION RIGHTS
AGREEMENT, dated as of July, 1998,
among NATIONAL NETWORK
TECHNOLOGIES INC., a Delaware corporation
(the "Corporation"), and the INVESTORS (as
herein defined).
The Investors own shares of Preferred Stock (as hereinafter defined),
which is convertible, as and when set forth in the Corporation's Amended and
Restated Certificate of Incorporation, into Common Stock (as hereinafter
defined) of the Corporation. The Corporation and the Investors deem it to be in
their respective best interests to set forth the rights of the Investors in
connection with public offerings and sales of the Common Stock and are entering
into this Agreement as a condition to and in connection with the Securities
Purchase Agreement (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, the Corporation and the Investors hereby
agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Charter" means the Company's Amended and Restated Certificate of
Incorporation.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.001 par value per share, of
the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Investors" means the persons set forth on Schedule I and each
additional person who shall execute a counterpart signature page hereto, and
includes any successor to, or assignee or transferee of, any such person who or
which agrees in writing to be treated as an Investor hereunder and to be bound
by the terms and comply with all applicable provisions hereof.
"Other Shares" means at any time those shares of Common Stock which do
not constitute Primary Shares or Registrable Shares.
"Preferred Stock" means the Series A Convertible Preferred Stock, $.001
par value per
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share, of the Corporation.
"Primary Shares" means at any time the authorized but unissued shares
of Common Stock and shares of Common Stock held by the Corporation in its
treasury.
"Registrable Shares" means at any time, with respect to any Investor,
the shares of Common Stock held by such Investor, or into which Shares of
Preferred Stock held by such Investor are convertible, which constitute
Restricted Shares.
"Restricted Shares" means shares of Common Stock held by or issuable
upon the conversion of shares of the Preferred Stock held by, any Investor, and
any other securities which by their terms are exercisable or exchangeable for or
convertible into Common Stock or other securities which are so exercisable or
convertible and any securities received in respect thereof, held by such
Investor. As to any particular Restricted Shares, once issued, such Restricted
Shares shall cease to be Restricted Shares when (a) they have been registered
under the Securities Act, and the registration statement in connection therewith
has been declared effective, (b) they are eligible to be sold or distributed
pursuant to Rule 144 within any consecutive three month period (including
without limitation, Rule 144(k)) without volume limitations, or (c) they shall
have ceased to be outstanding.
"Registration Date" means the date upon which the registration
statement pursuant to which the Corporation shall have initially registered
shares of Common Stock under the Securities Act for sale to the public shall
have been declared effective.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto (such as Rule 144A).
"Securities Act" means the Securities Act of 1933 or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated the date hereof, among the Corporation, among others, and the Investors.
SECTION 2. REQUIRED REGISTRATION.
If at any time on or after ninety days after the Registration Date,
holders representing not less than 33-1/3% of the Restricted Shares then
outstanding shall in writing state that such holders desire to sell Registrable
Shares in the public securities markets and request the Corporation to effect
the registration under the Securities Act of Registrable Shares, the Corporation
shall promptly use its best efforts to effect tho registration under the
Securities Act of the Registrable Shares which the Corporation has been so
requested to register; provided, however, that the Corporation shall not be
obligated to effect any registration under the Securities Act except in
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accordance with the Amended and Restated Certificate of Incorporation and the
following provisions:
(a) The Corporation shall not be obligated to use its best
efforts to file and cause to become effective (i) more than two
registration statements initiated pursuant to this Section 2 on Form S-
1 promulgated under the Securities Act or any successor form thereto,
(ii) any registration statement during any period in which any other
registration statement (other than on Form S-4 or Form S-8 promulgated
under the Securities Act or any successor forms thereto) pursuant to
which Primary Shares are to sold has been filed and not withdrawn or
has been declared effective within the prior 90 days.
(b) The Corporation may delay the filing or effectiveness of
any registration statement for a period of up to 90 days after the date
of a request for registration pursuant to this Section 2 if at the time
of such request (i) the Corporation is engaged, or has fixed plans to
engage within 90 days of the time of such request, in a firm commitment
underwritten public offering of Primary Shares in which the holders of
Registrable Shares may include Registrable Shares pursuant to Section 3
or (ii) the Corporation reasonably determines that such registration
and offering would interfere with any material transaction involving
the Corporation, as approved by the Board of Directors, provided,
however, that the Corporation may only delay the filing or
effectiveness of a registration statement pursuant to this Section 2(b)
for a total of 180 days after the date of a request for registration
pursuant to this Section 2.
(c) With respect to any registration pursuant to this Section
2, the Corporation shall give notice of such registration to the
Investors who do not request registration hereunder and to the holders
of all Other Shares that are entitled to registration rights and the
Corporation may include in such registration any Primary Shares or
Other Shares; provided, however, that if the managing underwriter
advises the Corporation that the inclusion of all Registrable Shares,
Primary Shares and/or Other Shares proposed to be included in such
registration would interfere with the successful marketing (including
pricing) of the Registrable Shares proposed to be included in such
registration, then the number of Registrable Shares, Primary Shares
and/or Other Shares proposed to be included in such registration shall
be included in the following order:
(i) First, the Registrable Shares requested to be
included in such registration (or, if necessary, such
Registrable Shares pro rata among the holders thereof based
upon the number of Registrable Shares requested to be
registered by each such holder);
(ii) second, the Primary Shares; and
(iii) third, the Other Shares which are entitled to
registration rights.
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(d) If the holders of the Registrable Shares requesting to be
included in a registration pursuant to this Section 2 so elect, the
offering of such Registrable Shares pursuant to such registration shall
be in the form of an underwritten offering. The holders of Registrable
Shares then holding 75% of the Registrable Shares requested to be
included in such registration shall select one or more nationally
recognized firms of investment bankers reasonably acceptable to the
Company to act as the lead managing underwriter or underwriters in
connection with such offering.
(e) At any time before the registration statement covering
Registrable Shares becomes effective, the holders of 75% of such shares
may request the Corporation to withdraw or not to file the registration
statement. In that event, if such request of withdrawal shall not have
been caused by, or made in response to, the material adverse effect of
an event on the business, properties, condition, financial or
otherwise, or operations of the Corporation, the holders shall have
used one of their demand registration rights under this Section 2 and
the Corporation shall no longer be obligated to register Registrable
Shares pursuant to the exercise of such one registration right pursuant
to this Section 2 unless the remaining holders shall pay to the
Corporation the expenses incurred by the Corporation through the date
of such request.
SECTION 3. PIGGYBACK REGISTRATION.
If the Corporation at any time proposes for any reason to register
Primary Shares or Other Shares under the Securities Act (other than on Form S-4
or Form S-8 promulgated under the Securities Act or any successor forms
thereto), it shall give written notice to the Investors of its intention to so
register such Primary Shares or Other Shares at least 30 days before the initial
filing of such registration statement and, upon the written request, delivered
to the Corporation within 20 days after delivery of any such notice by the
Corporation, of the Investors to include in such registration Registrable Shares
(which request shall specify the number of Registrable Shares proposed to be
included in such registration and shall state that such Investors desire to sell
such Registrable Shares in the public securities markets), the Corporation shall
use its best efforts to cause all such Registrable Shares to be included in such
registration on the same terms and conditions as the securities otherwise being
sold in such registration; Provided, however, that if the managing underwriter
advises the Corporation that the inclusion of all Registrable Shares requested
to be included in such registration would interfere with the successful
marketing (including pricing) of the Primary Shares or Other Shares proposed to
be registered by the Corporation, then the number of Primary Shares, Registrable
Shares and Other Shares proposed to be included in such registration shall be
included in the following order:
if the Corporation proposes to register Primary Shares, or Primary
Shares and Other Shares:
(a) first, the Primary Shares; and
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(b) second, the Registrable Shares requested to be included in
such registration (or, if necessary, such Registrable Shares pro rata
among the holders thereof based upon the number of Registrable Shares
requested to be registered by each such holder); and
(c) third, the Other Shares requested to be included in such
registration (or, if necessary, such Other Shares pro rata among the
holders thereof based upon the number of Other Shares requested to be
registered by each such holder).
Without in any way limiting the number of registrations in which the
Corporation shall be required to include Registrable Securities at the request
of the required number of Investors pursuant to this Section 3 and Section 4
below, the Corporation shall only be responsible for the costs and expenses
(including all expenses under Section 7 below) of up to four piggyback
registrations pursuant to this Section 3 and up to four S-3 registrations
pursuant to Section 4 below.
SECTION 4. REGISTRATIONS ON FORM S-3.
Anything contained in Section 2 to the contrary notwithstanding and
subject to the last sentence of Section 3, at such time as the Corporation shall
have qualified for the use of Form S-3 promulgated under the Securities Act or
any successor form thereto, the holders of the Registrable Shares then
outstanding shall have the right to request in writing an unlimited number of
registrations of Registrable Shares on Form S-3 or such successor form of
Registrable Shares, which request or requests shall (a) specify the number of
Registrable Shares intended to be sold or disposed of and the holders thereof,
(b) state the intended method of disposition of such Registrable Shares and (c)
relate to Registrable Shares having an aggregate offering price of at least
$250,000. A requested registration on Form S-3 or any such successor form in
compliance with this Section 4 shall not count as a registration statement
initiated pursuant to Section 2 but shall otherwise be treated as a registration
initiated pursuant to, and shall, except as otherwise expressly provided in this
Section 4, be subject to Section 2, including, without limitation, Section 2(a).
SECTION 5. HOLDBACK AGREEMENT.
If the Corporation at any time shall register shares of Common Stock
under the Securities Act (including any registration pursuant to Sections 2, 3
or 4 hereof) for sale to the public, the Investors shall not sell publicly, make
any short sale of, grant any option for the purchase of, or otherwise dispose
publicly of, any Registrable Shares (other than those shares of Common Stock
included in such registration pursuant to Sections 2, 3 or 4 hereof) without the
prior written consent of the Corporation, for a period designated by the
Corporation in writing to the Investors, which period shall begin not more than
10 days prior to the effectiveness of the registration statement pursuant to
which such public offering shall be made and shall not last more than 90 days
after the effective date of such registration statement. The Corporation shall
obtain the agreement of any person permitted to sell shares of stock in a
registration to be bound by and to
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comply with this Section 5 as if such person was an Investor hereunder.
SECTION 6. PREPARATION AND FILING.
If and whenever the Corporation is under an obligation pursuant to the
provisions of this Agreement to use its best efforts to effect the registration
of any Registrable Shares, the Corporation shall, as expeditiously as
practicable:
(a) use its best efforts to cause a registration statement
that registers such Registrable Shares to become and remain effective
for a period of 90 days or until all of such Registrable Shares have
been disposed of (if earlier);
(b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a
prospectus relating thereto or any amendments or supplements relating
to such a registration statement or prospectus, to one legal counsel
selected by 75% of the Investors initiating such Registration, and
timely identified to the Corporation (the "Investors' Counsel"), copies
of all such documents proposed to be filed (it being understood that
such five-business-day period need not apply to successive drafts of
the same document proposed to be filed so long as such successive
drafts are supplied to the Investors' Counsel in advance of the
proposed filing by a period of time that is customary and reasonable
under the circumstances);
(c) 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 for at least a period of 90 days or until all of
such Registrable Shares have been disposed of (if earlier) and to
comply with the provisions of the Securities Act with respect to the
sale or other disposition of such Registrable Shares;
(d) notify in writing the Investors' Counsel of the receipt by
the Corporation of any notification with respect to (i) any comments by
the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto, (ii) the issuance by the Commission
of any stop order suspending the effectiveness of such registration
statement or prospectus or any amendment or supplement thereto or the
initiation or threatening of any proceeding for that purpose and (iii)
the suspension of the qualification of such Registrable Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purposes;
(e) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the Investors reasonably request and do any and all
other acts and things which may be reasonably necessary or advisable
to enable the Investors to consummate the disposition in such
jurisdictions of the
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Registrable Shares owned by the Investors; provided, however, that the
Corporation will not be required to qualify generally to do business,
subject itself to general taxation or consent to general service of
process in any jurisdiction where it would not otherwise be required to
do so but for this paragraph (e) or to provide any material undertaking
or make any changes in its By-laws or the Amended and Restated
Certificate of Incorporation of the Corporation which the Board of
Directors determines to be contrary to the best interests of the
Corporation or to modify any of its contractual relationships then
existing;
(f) furnish to the Investors holding such Registrable Shares
such number of copies of a summary prospectus, if any, or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
Investors may reasonably request in order to facilitate the public sale
or other disposition of such Registrable Shares;
(g) without limiting subsection (e) above, and subject in each
case to the limitations contained therein, use its best efforts to
cause such Registrable Shares to be registered with or approved by such
other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Corporation to enable the
Investors holding such Registrable Shares to consummate the disposition
of such Registrable Shares;
(h) notify the Investors holding such Registrable Shares on a
timely basis at any time when a prospectus relating to such Registrable
Shares is required to be delivered under the Securities Act within the
appropriate period mentioned in subparagraph (a) of this Section 6, 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 light of the circumstances then existing and, at the
request of the Investors, prepare and furnish to such Investors a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(i) subject to the execution of confidentiality agreements in
form and substance satisfactory to the Corporation, make available upon
reasonable notice and during normal business hours, for inspection by
the Investors holding such Registrable Shares, any underwriter
participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by the
Investors or underwriter (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents
and properties of the Corporation (collectively, the
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"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Corporation's
officers, directors and employees to supply all information (together
with the Records, the "Information") reasonably requested by any such
Inspector in connection with such registration statement. Any of the
Information which the Corporation determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, shall not be disclosed by the Inspectors unless (i) the
disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the registration statement, provided that
such disclosure is made only after consultation with the Corporation,
(ii) the release of such Information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public, other than
by any party hereto in breach of its obligations hereunder; the
Investors agree that they will, upon learning that disclosure of such
Information is sought in a court of competent jurisdiction, give notice
to the Corporation and allow the Corporation, at the Corporation's
expense, to undertake appropriate action to prevent disclosure of the
Information deemed confidential;
(j) use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in customary form
and at customary times and covering matters of the type customarily
covered by cold comfort letters under the circumstances;
(k) use its best efforts to obtain from its counsel an opinion
or opinions in customary form;
(l) provide a transfer agent and registrar (which may be the
same entity and which may be the Corporation) for such Registrable
Shares;
(m) issue to any underwriter to which the Investors holding
such Registrable Shares may sell shares in such offering certificates
evidencing such Registrable Shares;
(n) list such Registrable Shares on any national securities
exchange on which any shares of the Common Stock are listed or, if the
Common Stock is not listed on a national securities exchange, use its
best efforts to qualify such Registrable Shares for inclusion on the
automated quotation system of the National Association of Securities
Dealers, Inc. (the "NASD") or such other national securities exchange
as the holders of seventy-five percent of such Registrable Shares shall
reasonably request;
(o) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, including by making
available to its securityholders earning statements that satisfy the
provisions of Section 11 (a) of the Securities Act; and
(p) subject to all the other provisions of this Agreement, use
its best efforts to take all other steps necessary to effect the
registration of such Registrable Shares contemplated hereby.
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Each holder of the Registrable Shares, upon receipt of any notice from
the Corporation of any event of the kind described in Section 6(h) hereof, shall
forthwith discontinue disposition of the Registrable Shares pursuant to the
registration statement covering such Registrable Shares until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 6(h) hereof, and, if so directed by the Corporation, such holder shall
deliver to the Corporation all copies, other than permanent file copies then in
such holder's possession, of the prospectus covering such Registrable Shares at
the time of receipt of such notice.
SECTION 7. EXPENSES.
All expenses (other than underwriting discounts and commissions
relating to the Registrable Shares, as provided in the last sentence of this
Section 7) incurred by the Corporation in complying with Section 6, including,
without limitation, all registration and filing fees, fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Corporation's counsel and accountants and reasonable fees and
expenses of the Investors' Counsel, shall be paid by the Corporation in
connection with Registrations the costs of which the Corporation is required to
bear pursuant to Sections 2 and 3 hereof; provided, however, that all
underwriting discounts, selling commissions applicable to the Registrable Shares
and Other Shares shall become by the holders selling such Registrable Shares and
Other Shares, in proportion to the number of Registrable Shares and Other Shares
sold by each such holder.
SECTION 8. INDEMNIFICATION.
(a) In connection with any registration of any Registrable
Shares under the Securities Act pursuant to this Agreement, the
Corporation shall indemnify and hold harmless the holders of
Registrable Shares, each underwriter, broker or any other person acting
on behalf of the holders of Registrable Shares and each other person,
if any, who controls any of the foregoing persons within the meaning of
the Securities Act against any losses, claims, damages or liabilities,
joint or several (or actions in respect thereof), to which any of the
foregoing persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or allegedly untrue statement of a material fact contained in
the registration statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or
arise out of or are based upon 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, with
respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading,
or any violation by the Corporation of the Securities Act or state
securities or blue sky laws applicable to the Corporation and relating
to action or inaction required of the Corporation in connection with
such registration or qualification under such state
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securities or blue sky laws; and shall reimburse the holders of
Registrable Shares, such underwriter, such broker or such other person
acting on behalf of the holders of Registrable Shares and each such
controlling person for any legal or other expenses reasonably
incurrwith investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Corporation shall not
be liable in any such case to the extent that any such loss, claim,
damage, liability or action (including any legal or other expenses
incurred) arises out of or is based upon an untrue statement or
allegedly untrue statement or omission or alleged omission made in said
registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in
conformity with written information furnished to the Corporation
through an instrument duly executed by any holder of Registrable Shares
or his or its counsel or underwriter specifically for use in the
preparation thereof; provided further, however, that the foregoing
indemnity agreement is subject to the condition that, insofar as it
relates to any untrue statement, allegedly untrue statement, omission
or alleged omission made in any preliminary prospectus but eliminated
or remedied in the final prospectus (filed pursuant to Rule 424 of the
Securities Act), such indemnity agreement shall not inure to the
benefit of any Investor, underwriter, broker or other person acting on
behalf of holders of the Restricted Shares from whom the person
asserting any loss, claim, damage, liability or expense purchased the
Restricted Shares which are the subject thereof, if a copy of such
final prospectus had been made available to such person and such
Investor, underwriter, broker or other person acting on behalf of
holders of the Registrable Shares and such final prospectus was not
delivered to such person with or prior to the written confirmation of
the sale of such Registrable Shares to such person.
(b) In connection with any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, each holder of
Registrable Shares shall severally and not jointly indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
preceding paragraph (a) of this Section 8) the Corporation, each
director of the Corporation, each officer of the Corporation who shall
sign such registration statement, each underwriter, broker or other
person acting on behalf of the holders of Registrable Shares and each
person who controls any of the foregoing persons within the meaning of
the Securities Act with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment
or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, if such statement or omission
was made in reliance upon and in conformity with written information
furnished to the Corporation or such underwriter specifically for use
in connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or
document; provided, however, that the maximum amount of liability in
respect of such indemnification shall be limited, in the case of each
seller of Registrable Shares, to an amount equal to the net proceeds
actually received by such Seller from the sale of Registrable Shares
effected pursuant to such
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registration.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to in the
preceding paragraphs of this Section 8, such indemnified party will, if
a claim in respect thereof is made against an indemnifying party, give
written notice to the latter of the commencement of such action. The
failure of any indemnified party to notify an indemnifying party of any
such action shall not (unless such failure shall have a material
adverse effect on the indemnifying party) relieve the indemnifying
party from any liability in respect of such action that it may have to
such indemnified party on account of this Section 8. In case any such
action is brought against an indemnified party, the indemnifying party
will be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection
with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more
legal or equitable defenses available to such indemnified party which
are additional to or conflict with those available to the indemnifying
party, or that such claim or litigation involves or could have an
effect upon matters beyond the scope of the indemnity agreement
provided in this Section 8, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such
indemnified party (but shall have the right to participate therein with
counsel of its choice) and such indemnifying party shall reimburse such
indemnified party and any person controlling such indemnified party for
that portiny counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement
provided in this Section 8. If the indemnifying party is not entitled
to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with
respect to such claim.
(d) If the indemnification provided for in this Section 8 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or
action referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such
loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge,
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access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just and
equitable if contribution pursuant hereto were determined by pro rata
allocation or by any other method or allocation which does not take
account of the equitable considerations referred to herein). No person
guilty of fraudulent misrepresentation shall be entitled to
contribution from any person.
SECTION 9. UNDERWRITING AGREEMENT.
Notwithstanding the provisions of Sections 5, 6, 7 and 8, to the extent
that the Investors shall enter into an underwriting or similar agreement, which
agreement contains provisions covering one or more issues addressed in such
Sections, the provisions contained in such agreement addressing such issue or
issues shall control.
SECTION 10. INFORMATION BY HOLDER.
The Investors shall furnish to the Corporation such written information
regarding the Investors and the distribution proposed by the Investors as the
Corporation may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
SECTION 11. EXCHANGE ACT COMPLIANCE.
From the Registration Date or such earlier date as a registration
statement filed by the Corporation pursuant to the Exchange Act relating to any
class of the Corporation's securities shall have become effective, the
Corporation shall comply with all of the reporting requirements of the Exchange
Act applicable to it (whether or not it shall be required to do so, but
specifically excluding Section 14 of the Exchange Act if not then applicable to
the Corporation) and shall comply with all other public information reporting
requirements of the Commission which are conditions to the availability of Rule
144 for the sale of the Common Stock. The Corporation shall cooperate with the
Investors in supplying such information as may be necessary for the Investors to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.
SECTION 12. NO CONFLICT OF RIGHTS.
The Corporation shall not, after the date hereof, grant any
registration rights which conflict with or impair the registration rights
granted hereby.
SECTION 13. TERMINATION.
This Agreement shall terminate and be of no further force or effect
when there shall no longer be any Registrable Shares outstanding.
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SECTION 14. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Corporation
and the Investors and, subject to Section 15, the respective successors and
assigns of the Corporation and the Investors.
SECTION 15. ASSIGNMENT.
Each Investor may assign its rights hereunder to any purchaser or
transferee of Registrable Shares; provided, however, that such purchaser or
transferee shall, as a condition to the effectiveness of such assignment, be
required to execute a counterpart to this Agreement agreeing to be treated as an
Investor whereupon such purchaser or transferee shall have the benefits of, and
shall be subject to the restrictions contained in, this Agreement as if such
purchaser or transferee was originally included in the definition of an Investor
herein and had originally been a party hereto.
SECTION 16. ENTIRE AGREEMENT.
This Agreement, the Securities Purchase Agreement, and the Stockholders
Agreement (as defined in the Securities Purchase Agreement), each dated as of
the date hereof, and the other writings referred to herein or therein or
delivered pursuant hereto or thereto, contain the entire agreement among the
Investors and the Corporation with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
SECTION 17. NOTICES.
All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written instrument
delivered in person or sent by telecopy, nationally-recognized overnight courier
or first class registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by such party to the other
parties:
(i) if to the Corporation, to:
National Network Technologies Inc.
88 White Street
New York, NY 10013
Telephone: (212) 431-6007
Telecopy: (212) 334-0847
Attention: President
with a copy to:
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Christy & Viener
620 Fifth Avenue
New York, NY 10020
Telephone: (212) 632-5500
Telecopy: (212) 632-5555
Attention: John F. Cambria, Esq.
(ii) if to the Investors, to their respective addresses set
forth on Schedule I hereto, with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 408-2400
Telecopy: (212) 408-2420
Attention: Robert Seber, Esq.
All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.
SECTION 18. MODIFICATIONS; AMENDMENTS; WAIVERS.
The terms and provisions of this Agreement may not be modified or
amended, nor may any provision be waived, except pursuant to a writing signed by
the Corporation and the holders of at least 75% of the Registrable Shares then
outstanding.
SECTION 19. COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable at the Closing (as
defined in the Securities Purchase Agreement) if the originally executed
counterpart is delivered within a reasonable period thereafter.
SECTION 20. HEADINGS.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
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SECTION 21. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed wholly therein by residents thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
NATIONAL NETWORK TECHNOLOGIES
INC.
By: /s/ Hugh O'Kane, Jr.
-------------------------
Name: Hugh O'Kane, Jr.
Title: President
INVESTORS:
LAWRENCE, SMITH & HOREY III, L.P.
BY: LSH PARTNERS III, L.P.,
ITS GENERAL PARTNER
By: /s/ Richard W. Smith
----------------------------
Richard W. Smith
General Partner
ABBOTT CAPITAL 1330 INVESTORS I, LP
BY: ABBOTT CAPITAL 1330 GENPAR, LLC,
ITS GENERAL PARTNER
By: /s/ Thomas W. Hallagan
--------------------------------
Thomas W. Hallagan,
Its Manager
Registration Rights Agreement Signature Page
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SCHEDULE I
INVESTORS
Lawrence, Smith & Horey III, L.P.
Abbott Capital 1330 Investors I, LP
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