REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of March 3, 2000, among Net Value Holdings, Inc., a Delaware
corporation (the "Company"), and the parties who have executed this Agreement
and whose names appear on Schedule I hereto (each party listed on Schedule I
hereto is sometimes individually referred to herein as a "Purchaser" and all
such parties are sometimes collectively referred to herein as the "Purchasers").
The Company and the Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used herein and not otherwise defined shall
have the meanings given to such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "affiliated," controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
Commonwealth of Massachusetts generally are authorized or required by law or
other government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value
$0.01per share.
"Demand Registration" has meaning set forth in Section 2(a)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 8(c)
hereof.
"Indemnifying Party" has the meaning set forth in Section 8(c)
hereof.
"Losses" has the meaning set forth in Section 8(a) hereof.
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"Majority Holders" means the Holders of at least sixty (60%)
percent of the Registrable Securities.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Purchase Agreement" means the Series C Preferred Stock
Purchase Agreement, dated as of the date hereof, by and among the Company and
the Purchasers.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means any shares of the Company's
Common Stock (i) issuable upon exercise of the Compensation Warrant (as defined
in the Purchase Agreement), (ii) issuable on conversion of the shares of the
Company's Series C Preferred (as defined in the Purchase Agreement) issued to
any Holder in payment of a dividend upon the Series C Preferred and not
otherwise included in the registration statement filed in connection with the
Purchase Agreement and (iii) issued with respect thereto as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise.
"Registration Statement" means any registration statements
contemplated by Sections 2(a) and 3(a), including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
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"Special Counsel" means one special counsel to the Holders,
chosen by the Holder of a majority of the Registrable Securities, for which the
Holders will be reimbursed by the Company pursuant to Section 7.
"Trading Day" means a day on which the primary market on which
the shares of the Company's Common Stock are traded or quoted is open for
trading.
"Underwritten Registration or Underwritten Offering" means a
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement.
2. Required Registration
(a) Requests for Registration At
any time, and from time to time, the Majority Holders
may request in writing that the Company effect the
registration under the Securities Act of all or part
of their respective Registrable Securities (but in no
event less than 25% of the aggregate Registrable
Securities) for sale in the manner specified in such
request, and on a form that may be used for the
registration of such Registrable Securities. Within
ten days after receipt of any request pursuant to
this Section 2(a) the Company will give written
notice of such request to all other holders of
Registrable Securities (whether or not such holders
could make a request for registration pursuant to the
preceding sentence), and will include in such
registration all Registrable Securities with respect
to which the Company has received written requests
for inclusion therein within thirty (30) days after
the receipt of the Company's notice; provided,
however, that the Company shall not be required to
register any Registrable Securities pursuant to this
Section 2(a) that are eligible for sale pursuant to
Rule 144 without regard to volume restrictions. All
registrations requested pursuant to the foregoing are
referred to herein as "Demand Registrations".
(b) Number of Demand Registrations.
The Company shall be obligated to register
Registrable Securities pursuant to a Demand
Registration on as many occasions as may be
reasonably requested by the Majority Holders to
effect the sale of the Registrable Securities, not to
exceed one (1) Demand Registration in any period of
twelve (12) consecutive months.
(c) Priority on Demand
Registrations. If a Demand Registration is an
Underwritten Offering the Holders of a majority of
the Registrable Securities to be included in such
offering shall be entitled to designate the lead
underwriter and the Company may designate one or more
co-managing underwriters. In such event, and if the
managing underwriters advise the Company and such
Holders in writing that in their opinion the amount
of Registrable Securities and other securities, if
any,
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proposed to be sold in such Underwritten Offering (i)
creates a substantial risk that the price per share
in such registration will be materially and adversely
affected or (ii) exceeds the number of Registrable
Securities and other securities, if any, which can be
sold in such offering, and based on such
determination recommends inclusion in such
registration statement of fewer Registrable
Securities then proposed to be sold by the Holders,
then the number of Registrable Securities of the
Holders included in such registration statement shall
be reduced pro rata among such Holders (based upon
the number of Registrable Securities requested to be
included in the registration); provided, however,
that if securities are being offered for the account
of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction
of the number of Registrable Securities intended to
be offered by the Holders than the fraction of
similar reductions imposed on such other persons or
entities (including the Company). No Holder may
participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell its Registrable
Securities on the basis provided in any underwriting
agreements approved by the Persons entitled hereunder
to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other
documents required under the terms of such
arrangements.
(d) Restrictions on Registration.
The Company may postpone for up to sixty (60) days
the filing or the effectiveness of a Demand
Registration if at the time of such request to
register the Registrable Securities the Company
furnishes to each Holder seeking to register such
Registrable Securities a certificate signed by a
senior executive officer of the Company stating that
the Company is engaged in any other activity which,
in the good faith determination of the Company's
Board of Directors, is a material non-public event
which would be adversely affected by the requested
registration to the material detriment of the
Company.
3. Piggy-Back Registrations.
(a) Right to Piggyback. Whenever the Company shall determine
to prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, the Company shall send to each Holder of
Registrable Securities written notice of such determination within two (2)
Business Days thereof and, if within twenty (20) days after receipt of such
notice, any such Holder shall so request in writing to participate in such
offering (which request shall specify the Registrable Securities intended to be
disposed of by the Holders), the Company will use its best efforts to effect the
registration under the Securities Act of all
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Registrable Securities which the Company has been so requested to register by
the Holder, to the extent requisite to permit the disposition of the Registrable
Securities so to be registered; provided, that if at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 6 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 3 for the same period as the delay in registering such other
securities.
(b) Priority on Piggy-Back Registration. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 3(b) that are eligible for sale pursuant to Rule 144 without regard
to volume restrictions. In the case of an Underwritten Offering, if the managing
underwriters advise the Company and such Holders in writing that in their
opinion the amount of Registrable Securities proposed to be sold in such
Underwritten Offering (i) creates a substantial risk that the price per share in
such registration will be materially and adversely affected or (ii) exceeds the
number of Registrable Securities which can be sold in such offering, and based
on such determination recommends inclusion in such registration statement of
fewer Registrable Securities then proposed to be sold by the Holders, then (a)
the number of Registrable Securities of the Holders included in such
registration statement shall be reduced pro rata among such Holders (based upon
the number of Registrable Securities requested to be included in the
registration); provided, however, that if securities are being offered for the
account of other persons or entities as well as the Company, such reduction
shall not represent a greater fraction of the number of Registrable Securities
intended to be offered by the Holders than the fraction of similar reductions
imposed on such other persons or entities.
4. Holdback Agreements. Each of the Holders of Registrable Securities
agrees not to effect any public sale or distribution of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the seven (7) days prior to and the 90-day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except in each case as part of such
Underwritten Registration), unless the underwriters managing the registered
public offering otherwise agree; provided, that all officers, directors and
employees of the Company holding at least 1% of the outstanding Common Stock
enter into similar agreements.
5. Registration Procedures. Whenever the Holders of Registrable
Securities have requested that any shares of Registrable Securities be
registered pursuant to this Agreement, the Company shall use its best efforts to
effect the registration and the sale of such Registrable
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Securities in accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:
(a) Preparation of Registration Statement. Prepare and file
with the Commission a registration statement on the appropriate form under the
Securities Act, which form shall be available for the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and use is best efforts to cause such registration statement to become
effective as soon as commercially practicable, and remain effective for such
period as may be reasonably necessary to effect the sale of such securities, not
to exceed nine months (except in the case of a Shelf Registration);
(b) Amendments. Prepare and file with the Commission such
amendments and supplements to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement.
(c) Copies of Prospectus. Furnish such number of Prospectuses
and other documents incident thereto, including any amendment of or supplement
to the Prospectus, as a Holder from time to time may reasonably request.
(d) Registration. Provide a transfer agent and registrar for
all Common Stock registered pursuant to the Registration Statement and a CUSIP
number for all such Common Stock.
(e) Blue Sky. File the documents required of the Company and
otherwise use its best efforts promptly to obtain, if applicable, and maintain
requisite blue sky clearance in (A) all jurisdictions in which any of the
Acquired Securities are originally sold, and (B) all other states specified in
writing by a Holder, provided as to clause (B), however, that the Company shall
not be required to (i) qualify to do business or consent to service of process
in any state in which it is not now so qualified or has not so consented, (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company undue expense or burden, or (v) make any
change in its charter or bylaws, which in each case the Board of Directors of
the Company determines to be contrary to the best interests of the Company and
its stockholders.
(f) Notification. As promptly as practicable after becoming
aware of such event, the Company shall notify each Holder of the happening of
any event, of which the Company has knowledge, as a result of which the
Prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (including without limitation any transfer of Registrable Securities
by a person named as a selling shareholder in a Registration Statement), and use
its best efforts promptly to prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
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(g) Stop Orders; Suspensions. The Company shall use its best
efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, and, if such an order is issued, to
obtain the withdrawal of such order at the earliest practicable moment
(including in each case by amending or supplementing such Registration
Statement) and to notify each Holder who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof (and if such Registration
Statement is supplemented or amended, deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request).
(h) Listing. (i) Cause all Registrable Securities relating to
such Registration Statement to be listed or authorized for quotation on each
securities exchange or automated quotation system on which similar securities
issued by the Company are then listed or quoted and, if no similar securities
issued by the Company are then listed or quoted, cause the original listing or
quotation of such Registrable Securities, (ii) maintain such listing of all such
Registrable Securities, (iii) provide the Holders evidence of such listing, (iv)
refrain from taking any action which may result in the delisting or suspension
of the Common Stock with respect to such listing and (v) pay all fees and
expenses in connection with satisfying its obligations hereunder.
(i) Certain Agreements. Enter into such customary agreements
(including, if there is an underwriter, underwriting agreements in customary
form including, without limitation, the requirement to obtain an opinion of
counsel to the company and a "comfort letter" from the independent public
accountants to the Company in the usual and customary form for such an
underwritten offering).
(j) Due Diligence. Make available for inspection by any seller
of Registrable Securities, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company that is
customary, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
Registration Statement
(k) Responses to the Commission. The Company agrees to respond
fully and completely to any and all comments on a Registration Statement
received from the Commission staff as promptly as possible but in no event later
than ten (10) Business Days of the receipt of such comments, regardless of
whether such comments are in oral or written form.
(l) Confirmation of Effectiveness. Within two (2) Business
Days after a Registration Statement which covers applicable Registrable
Securities is ordered effective by the Commission, the Company shall deliver,
and shall cause legal counsel for the Company to deliver, to the transfer agent
for such Registrable Securities (with copies to the Holders whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the Commission in the form
attached hereto as Exhibit A.
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(m) Earnings Statement. Comply in all material respects with
all applicable rules and regulations of the Commission and make generally
available to its securityholders earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158.
(n) Cooperation. Cooperate, and cause the Company's officers,
directors, employees and independent accountants to cooperate, with the selling
holders of Registrable Securities and the managing underwriters, if any, in the
sale of the Registrable Securities and take any actions necessary to promote,
facilitate or effectuate such sale.
(o) Best Efforts. Otherwise use its best efforts to take all
steps necessary to effect the registration of the Registrable Securities.
6. Obligations of the Holders. In connection with the registration of
the Registrable Securities, the Holders 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 Holder that such Holder 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)
Business Days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Holder of the information the Company
requires from each such Holder.
(b) Each Holder, by such Holder'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 Holder has notified the Company in
writing of such Holder's election to exclude all of such Holder's Registrable
Securities from the Registration Statement.
(c) In the event Holders holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Holder agrees to enter into and perform such Holder's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Holder has notified the
Company in writing of such Holder's election not to participate in such
underwritten distribution.
(d) Each Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Sections 5(f)
or 5(g), such Holder will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Sections 5(f) or 5(g) and, if so directed
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by the Company, such Holder 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 Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(e) No Holder may participate in any underwritten distribution
hereunder unless such Holder (i) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
(f) Each Holder agrees that all resales of Registrable
Securities that are covered by an effective Registration Statement shall be made
only in compliance with applicable provisions of the Securities Act and
applicable state law, including without limitation Regulation M under the
Securities Act.
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7. Registration Expenses
All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company,
whether or not pursuant to an Underwritten Offering and whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
reasonable fees and expenses (A) with respect to filings required to be made
with the securities exchange or market on which Registrable Securities are
required hereunder to be listed or quoted and (B) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or the Holders of a majority
of Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriters, if any, or by the Holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and one (1) Special Counsel for the Holders (not to exceed $10,000 with
respect to any Demand Registration and $5,000 with respect to any "piggy-back"
registration, (v) Securities Act liability insurance, if the Company so desires
such insurance and (vi) reasonable fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
8. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all joint or several losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, "Losses"), as incurred, arising out of or
relating to (i) any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus, or
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arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that such untrue statements or omissions are
based solely upon and in conformity with information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein,
which information was reasonably relied on by the Company for use therein or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of prospectus or in any
amendment or supplement thereto (provided that the Company amended any
disclosure with respect to the method of distribution upon written notice from
the Holders that such section of the Prospectus should be revised in any way) or
(ii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of Registrable Securities. The Company shall not, however, be liable for
any Losses to any Holder with respect to any untrue or alleged untrue statement
of material fact or omission or alleged omission of material fact if such
statement or omission was made in a preliminary Prospectus and such Holder did
not receive a copy of the final Prospectus (or any amendment or supplement
thereto) at or prior to the confirmation of the sale of the Registrable
Securities in any case where such delivery is required by the Securities Act and
the untrue or alleged untrue statement of material fact or omission or alleged
omission of material fact contained in such preliminary Prospectus was corrected
in the final Prospectus (or any amendment or supplement thereto), unless the
failure to deliver such final Prospectus (as amended or supplemented) was a
result of noncompliance by the Company with Section 5(c) of this Agreement. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished
in writing by such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus; provided, however, that the indemnity
agreement contained in this Section 7(b) shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the prior
written
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consent of such Holder. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, however, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses, or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding, or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the reasonable
expense of the Indemnifying Party). The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on a
monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
12
(d) Contribution. If a claim for indemnification under Section
7(a) or 7(b) is unavailable to an Indemnified Party because of a failure or
refusal of a court of competent jurisdiction to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
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, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party 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 of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 7(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. In no event shall any selling Holder be required to
contribute an amount under this Section 7(d) in excess of the net proceeds
received by such Holder upon sale of the Registrable Securities pursuant to the
Registration Statement giving rise to such contribution obligation.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account 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 guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
(a) Remedies. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
13
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Majority Holders; provided, however, that for the purposes of this
sentence, Registrable Securities that are owned, directly or indirectly, by the
Company, or an Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders and that does not directly or indirectly affect the rights of other
Holders may be given by the Majority Holders to which such waiver or consent
relates. Upon effectiveness of each such amendment or waiver, the Company shall
promptly give written notice thereof to the Holders who have not previously
consented thereto in writing.
(c) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if received by
5:00 p.m. New York City time where such notice is to be received), or the first
Business Day following such delivery (if received after 5:00 p.m. New York City
time where such notice is to be received) or (b) on the first Business Day
following the date of mailing by a nationally recognized overnight courier
service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such communications
are (i) if to the Company to Net Value Holdings, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, President & CEO,
facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, with copies to Klehr, Harrison, ▇▇▇▇▇▇, Branzburg
& ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Esq., facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇ and (ii) if to any Holder to the
address set forth on Schedule I hereto with copies to those specified on the
signature pages hereto or such other address as may be designated in writing
hereafter, in the same manner, by such Person.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement. In addition, the rights
of each Holder hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this Agreement,
shall be automatically assignable by each Holder if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, and (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the
14
provisions of this Agreement. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns.
(e) Counterparts. This Agreement may be executed in any number
of 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. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(f) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts
applicable to agreements entered into and to be performed wholly within such
state.
(g) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(h) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
15
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
NET VALUE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
THE ALTAR ROCK FUND, L.P.
By: Tudor Investment Corporation,
as General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
RAPTOR GLOBAL PORTFOLIO, LTD.
By: Tudor Investment Corporation,
as Investment Advisor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice-President
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND,
LTD.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Management, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Principal
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND,
L.P.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital, LLC
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Principal
SCHEDULE I
Purchasers:
----------
THE ALTAR ROCK FUND, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
RAPTOR GLOBAL PORTFOLIO, LTD.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, LTD.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn.:
Re: Net Value Holdings, Inc.
Ladies and Gentlemen:
We are counsel to Net Value Holdings, Inc., a corporation organized
under the laws of Delaware (the "Company"), and have represented the Company in
connection with that certain Securities Purchase Agreement (the "Purchase
Agreement") entered into by and among the Company and the buyers named therein
(collectively, the "Holders") pursuant to which the Company was required to
issue to the Holders, under certain conditions, securities (the "Securities")
convertible into shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"). Pursuant to the Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on _______________, 2000, the Company filed a Registration Statement
on Form S-3 (File No. _____________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]