AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
(the "Agreement") is made as of May 26, 2000, by and between CyNet, Inc., a
Texas corporation (the "Company"), and Houston Economic Opportunity Fund, L.
P., a Delaware limited partnership ("HEOF"), to be effective as provided in
Section 3.3. This Agreement amends and restates in its entirety that certain
Registration Rights Agreement, dated September 30, 1999, by and between the
Company and HEOF.
This Agreement is being entered into pursuant to that Stock
Exchange Agreement, dated of even date herewith, by and between the Company
and HEOF (the "SERIES C EXCHANGE AGREEMENT").
1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the Class A Common Stock, no par value,
of the Company.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"HOLDERS" shall mean HEOF and any Holder of Registrable
Securities to whom the registration rights conferred by this Agreement
have been transferred in compliance with Section 2.9 hereof.
"INITIATING HOLDER" shall mean any Holder, holding at least
200,000 shares of Registrable Securities, who initiates a demand or
piggyback registration in accordance with this Agreement.
"PREFERRED STOCK" means the Series D Redeemable Convertible
Preferred Stock, no par value per share and stated value $1.25 per
share, of the Company issued to HEOF pursuant to the Stock Purchase
Agreement and the Series C Exchange Agreement.
"REGISTRABLE SECURITIES" means (i) the shares of Common Stock
issuable upon conversion of the Preferred Stock (the "Conversion
Shares"), in payment of dividends in accordance with the terms of the
Preferred Stock ("Dividend Shares") and upon exercise of the Warrant
(the "Warrant Shares"), and upon any stock split, stock dividend,
recapitalization
or similar event with respect to such Conversion Shares, Dividend
Shares, Warrant Shares or any Preferred Stock and (ii) any other
dividend or other distribution with respect to, conversion or exchange
of, or in replacement of, Registrable Securities; PROVIDED, HOWEVER,
that Registrable Securities shall include (but not be limited to) a
number of shares of Common Stock (the "Required Number") equal to no
less than the greater of (x) 3,331,200 shares of Common Stock, or (y)
200% of the maximum number of shares of Common Stock which would be
issuable upon conversion of the Preferred Stock and 100% of the number
of shares of Common Stock which would be issuable upon exercise of the
Warrant, assuming such conversion and exercise of the Warrant occurred
on the date hereof or the date on which a registration statement
including the Registrable Securities is filed by the Company, whichever
date would result in the greater number of Registrable Securities.
Notwithstanding anything contained herein to the contrary, if the
actual number of shares of Common Stock issuable upon conversion of the
Preferred Stock and upon exercise of the Warrant exceeds the Required
Number, the term "Registrable Securities" shall be deemed to include
such additional shares of Common Stock as are necessary to include all
of the shares of Common Stock issuable upon conversion of the Preferred
Stock and upon exercise of the Warrant.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, other than
Selling Expenses (as defined below), incurred by the Company in
complying with Sections 2.1, 2.2 and 2.5 hereof, including, without
limitation, all registration, qualification and filing fees, exchange
listing fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, blue sky fees and expenses, the expense of any
special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which
shall be paid in any event by the Company).
"RULE 144" shall mean Rule 144 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from
time to time, or any similar successor rule that may be promulgated by
the Commission.
"RULE 145" shall mean Rule 145 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from
time to time, or any similar successor rule that may be promulgated by
the Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the
securities registered by the Holders and, except as set forth above,
all fees and disbursements of counsel for any Holder.
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"SERIES C EXCHANGE AGREEMENT" means that certain Stock
Exchange Agreement, dated the date hereof, by and between the Company
and HEOF wherein HEOF agrees to exchange its shares of the Company's
Series C Redeemable Callable Preferred Stock for additional shares of
the Company's Series D Redeemable Convertible Preferred Stock.
"STOCK PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement, dated February 3, 2000, by and between the Company and HEOF.
"WARRANT" means that certain Warrant to purchase shares of
Common Stock in CyNet, Inc., dated September 30, 1999 and expiring on
September 30, 2002, issued by the Company to HEOF.
2. REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall
receive from Initiating Holders at any time after the effective date hereof a
written request that the Company effect a registration, qualification or
compliance with respect to shares of Registrable Securities then outstanding,
the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use all reasonable good faith
efforts to effect such registration, qualification or compliance
(including, without limitation, appropriate qualification under
applicable blue sky or other state securities law and appropriate
compliance with applicable regulations issued under the Securities Act
and any other governmental requirements or regulations) as may be so
requested and as may be reasonably required to permit or facilitate the
sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such
portion of the Registrable Securities of any Holders joining in such
request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the
Company; PROVIDED, HOWEVER, that the Company shall not be obligated to
take any action to effect any such registration, qualification or
compliance pursuant to this Section 2.1:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to
service of process in effecting such registration,
qualification or compliance unless the Company is already
subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) During the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of,
and ending on the date one hundred twenty (120) days
immediately following the effective date of, any registration
statement
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pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan), providing that the
Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become
effective (and provided, further, that the Company cannot,
pursuant to this Section 2.1(a)(ii)(B), delay implementation
of a demand for registration more than once in any twelve (12)
month period);
(C) After the Company has effected two such
registrations pursuant to this subparagraph 2.1(a) and such
registrations have been declared or ordered effective;
PROVIDED, HOWEVER, that in the event that less than seventy
five percent (75%) of the shares requested to be registered by
the Initiating Holder are in fact registered and sold in
connection with any registration, such registrations shall not
be counted as the registrations permitted by this Section
2.1(a)(ii)(C);
(D) If the Initiating Holder does not request that
such offering be firmly underwritten by underwriters selected
by the Initiating Holder (subject to the consent of the
Company, which consent will not be unreasonably withheld); or
(E) If the Company and the Initiating Holder are
unable to obtain the commitment of the underwriter described
in clause (D) above to firmly underwrite the offer.
(b) ADDITIONAL PROVISIONS. Subject to the foregoing clauses
(A) through (E), the Company shall file a registration statement covering the
Registrable Securities so requested to be registered as soon as practicable,
after receipt of the request or requests of the Initiating Holder; PROVIDED that
if the Company shall furnish to such Initiating Holder a certificate signed by
the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company or its stockholders for a registration statement to be filed in the near
future, or that a delay in the filing of any registration statement is necessary
in light of a pending corporate development, then the Company's obligation to
use all reasonable good faith efforts to register, qualify or comply under this
Section 2.1 shall be deferred (with respect to any demand for registration
hereunder) for a period not to exceed one hundred twenty (120) days from the
date of receipt of written request from the Initiating Holder, PROVIDED that the
Company cannot, pursuant to this Section 2.1(b) delay implementation of a demand
for registration more than once in any twelve (12) month period.
(c) UNDERWRITING. In the event that a registration pursuant to
Section 2.1 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 2.1(a)(i). In such event, the right of any Holder to registration
pursuant to Section 2.1 shall be conditioned upon such Holder's participation in
the underwriting arrangements required by this Section 2.1, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
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(d) PROCEDURES. The Company shall (together with the Holders
who have elected to participate in such offering) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Holder, but subject to the Company's reasonable approval.
Notwithstanding anything herein to the contrary, if the managing underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, then the Company shall so
advise all Holders and other holders of Company securities who have registration
rights, and the number of shares that may be included in the registration and
underwriting shall be allocated among the Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by each of
them at the time of filing the registration statement; PROVIDED that the number
of Registrable Securities requested to be included in such registration shall be
reduced only after all securities held by holders of the Company's securities
which are not Registrable Securities, whose rights to distribute such securities
through such underwriting are junior to those of the Holders, have been
eliminated from such registration. No shares of Common Stock to be registered,
which are not Registrable Securities, excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration. No Registrable Securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100) shares.
If any Holder disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to the Company,
the managing underwriter and the Initiating Holders. The Registrable Securities
and/or other securities so withdrawn shall also be withdrawn from registration,
and such Registrable Securities shall be withheld from the market for a period
of one hundred twenty (120) days after the effective date of such registration,
or such other shorter period of time as the underwriters may require.
(e) SALES FOR COMPANY ACCOUNT. The Company shall be entitled
to register securities for sale for its own account in any registration
requested pursuant to this Section 2.1 unless the underwriter shall indicate in
writing to the Initiating Holders that the inclusion of the shares to be sold
for the account of the Company will adversely affect the registration, the price
of the shares to be sold or the number of shares to be sold for the account of
the Holders. The Company may not otherwise cause any other registration of
securities for sale for its own account (other than a registration effected
solely to implement a stock option plan or other employee benefit plan or a
transaction contemplated by Rule 145 of the Commission) to be initiated after a
registration requested and effective pursuant to Section 2.1 and to become
effective less than ninety (90) days after the effective date of any
registration requested pursuant to Section 2.1.
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2.2 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to
time the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) use all reasonable good faith efforts to include in such
registration (and any related qualification under blue sky laws or
other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made
within fifteen (15) days after receipt of such written notice from the
Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.2(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.2 shall be conditioned upon such Holder's
participation in such underwriting, and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company.
Notwithstanding anything herein to the contrary, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit some
or all of the Registrable Securities that may be included in the registration
and underwriting, and the number of Registrable Securities that may be included
in the registration and underwriting by the Holders shall be allocated among the
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by each Holder, at the time of filing the
registration statement; PROVIDED that the number of the Registrable Securities
requested to be included in such registration shall be reduced only after (i)
first, all securities held by holders of the Company's securities whose rights
to distribute such securities through such underwriting are junior to those of
the Holders and Additional Holders (defined below) have been eliminated from
such registration and (ii) second, all securities held by Additional Holders of
the Company's securities whose rights to distribute such securities through such
underwriting are pari passu to those of the Holders (as determined in accordance
with Section 2.3 below) have been proportionately reduced in such registration.
To facilitate the allocation of shares in accordance with the above provisions,
the Company may round the number of shares allocable to any Holder to the
nearest one hundred (100) shares.
If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter, delivered not less than seven days before
the effective date. Any securities excluded or withdrawn from such
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underwriting shall be withdrawn from such registration, and shall be withdrawn
from the market for a period of one hundred twenty (120) days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
2.3 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company
agrees and covenants that it will not grant or allow any persons any
registration rights with respect to any securities of the Company which rights
are superior to the rights granted herein to HEOF or would otherwise reduce the
amount of Registrable Securities that would be included in any registration
hereunder, without the prior written consent of HEOF, in which event the
additional holders (the "Additional Holders") may be added as parties to this
Agreement with regard to any or all securities of the Company held by them. Any
such Additional Holders shall be identified on Exhibit A, attached hereto, and
shall execute either a counterpart of this Agreement or a separate registration
rights agreement with terms not in conflict with this Agreement. Upon execution
of a counterpart of this Agreement by an Additional Holder and the Company, such
Additional Holder shall be considered a Holder for all purposes of this
Agreement. The Additional Holders and the additional Registrable Securities
shall be identified on Exhibit A, attached hereto, which shall specify that each
such Additional Holder is a holder of Common Stock or securities convertible
into, or exercisable for the purchase of Common Stock. In the event that the
Company authorizes registration rights which are superior in any way to those
granted herein to the Additional Holders without such prior written consent, the
Holders shall be entitled to the same rights.
2.4 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Sections 2.1 and 2.2 hereof shall be borne by the Company; PROVIDED,
HOWEVER, that the Holder shall bear the Registration Expenses for the second
registration pursuant to Section 2.1; PROVIDED FURTHER, HOWEVER, that if the
Holder bears the Registration Expenses for any registration proceeding begun
pursuant to Section 2.1 and subsequently withdrawn by the Holders registering
shares therein, such registration proceeding shall not be counted as a requested
registration pursuant to Section 2.1 hereof, except in the event that such
withdrawal is based upon material adverse information relating to the Company
that is different from the information known or available (upon request from the
Company or otherwise) to the Holders requesting registration at the time of
their request for registration under Section 2.1, in which event such
registration shall not be treated as a registration for purposes of Section 2.1
hereof, even though the Holders do not bear the Registration Expenses for such
registration. All Selling Expenses relating to securities so registered shall be
borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.
2.5 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense, the Company will:
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(a) Prepare and file with the Commission a registration
statement (including any amendments and supplements as may be necessary) with
respect to such securities and use its best lawful efforts to cause such
registration statement to become and remain effective for at least one hundred
twenty (120) days or, if a shorter period, until the distribution described in
the Registration Statement has been completed;
(b) Use all reasonable good faith efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(c) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(d) Furnish to each underwriter such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such underwriter
may reasonably request in order to facilitate the public sale of the shares by
such underwriter, and promptly furnish to each underwriter and Holder or
Preferred Holder, as applicable, notice of any stop-order or similar notice
issued by the Commission or any state agency charged with the regulation of
securities; and
(e) Use all reasonable good faith efforts to cause all
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and if not so listed, use all
reasonable good faith efforts to be listed on the NASDAQ NMS system.
2.6 INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify
each Holder participating in a registration pursuant to this Agreement, its
affiliates and partners and each of their officers, directors, and employees,
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, to the extent such
expenses, claims, losses, damages or liabilities arise out of or are based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other document,
or any amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the
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circumstances in which they were made, not misleading, or any violation by the
Company of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, its affiliates and partners, and each of their officers, directors
and employees, and each person controlling such Holder, each such underwriter
and each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, PROVIDED, HOWEVER,
that the indemnity contained herein shall not apply to amounts paid in
settlement of any claim, loss, damage, liability or expense if settlement is
effected without the consent of the Company (which consent shall not
unreasonably be withheld), and PROVIDED FURTHER, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by such Holder,
controlling person or underwriter specifically for use therein. Notwithstanding
the foregoing, insofar as the foregoing indemnity relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in the preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
becomes effective or in the final prospectus filed with the Commission pursuant
to Rule 424 of the Commission, the indemnity agreement herein shall not inure to
the benefit of any underwriter or (if there is no underwriter) any Holder if a
copy of the final prospectus filed pursuant to Rule 424 was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement by such
Holder (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission by such Holder (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by such Holder of any rule or regulation
promulgated under the Securities Act applicable to such Holder and relating to
action or inaction required of such Holder in connection with any such
registration, qualification or compliance, and will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control persons for
any legal or other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of such Holder specifically for use therein; PROVIDED, HOWEVER, that the
indemnity contained herein shall not apply to amounts paid in settlement of any
claim, loss, damage, liability or expense if settlement is effected without the
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consent of the Holder (which consent shall not be unreasonably withheld).
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the net proceeds from the
sale of the shares sold by such Holder, unless such liability arises out of or
is based on willful conduct by such Holder. In addition, insofar as the
foregoing indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the Commission
at the time the registration statement becomes effective or in the final
prospectus filed pursuant to Rule 424 of the Commission, the indemnity agreement
herein shall not inure to the benefit of the Company, any underwriter or (if
there is no underwriter) any Holder if a copy of the final prospectus filed
pursuant to Rule 424 was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act.
(c) Each party entitled to indemnification under this Section
2.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate or different
defenses. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnified Party shall consent to entry of any judgment or enter
into any settlement without the consent of each Indemnifying Party.
(d) If the indemnification provided for in this Section 2.6 is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to therein, 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, claims, damages or
liabilities, in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and all shareholders offering securities in the
offering (the "Selling Shareholders") on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Selling Shareholders on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Selling Shareholders and the parties' relevant intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Selling
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Shareholders agree that it would not be just and equitable if contribution
pursuant to this Section 2.6(d) were based solely upon the number of entities
from whom contribution was requested or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 2.6(d). The amount paid or payable by an Indemnified Party as a result
of the losses, claims, damages and liabilities referred to above in this Section
2.6(d) shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim, subject to the provisions of Section 2.6(c) hereof.
Notwithstanding the provisions of this Section 2.6(d), no Selling Shareholder
shall be required to contribute any amount or make any other payments under this
Agreement which in the aggregate exceed the proceeds received by such Selling
Shareholder. No person guilty of fraudulent misrepresentation (within the
meaning of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) Notwithstanding the foregoing provisions of this Section
2.6, if pursuant to an underwritten public offering of capital stock of the
Company, the Company, the Selling Shareholders and the underwriters enter into
an underwriting or purchase agreement relating to such offering which contains
provisions covering indemnification among the parties thereto in connection with
such offering, the indemnification provisions of this Section 2.6, to the extent
they are in conflict therewith, shall be deemed inoperative for the purpose of
such offering, except as to any parties to this Agreement who are not parties to
such subsequent underwriting or purchase agreement.
2.7 CERTAIN INFORMATION.
(a) As a condition to exercising the registration rights
provided for herein, each Holder, with respect to any Registrable Securities
included in any registration, shall furnish the Company such information
regarding such Holder, the Registrable Securities and the distribution proposed
by such Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
Section 2.
(b) The failure of any Holder to furnish the information
requested pursuant to Section 2.7(a) shall not affect the obligation of the
Company under Section 2 to the remaining Holder(s) who furnish such information
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the legality of the Registration Statement or
the underlying offering.
(c) Each Holder, with respect to any Registrable Securities
included in any registration, shall cooperate in good faith with the Company and
its underwriters, if any, in connection with such registration, including
placing such shares in escrow or custody to facilitate the sale and distribution
thereof.
(d) Each Holder, with respect to any Registrable Securities
included in any registration, shall make no further sales or other dispositions,
or offers therefor, of such shares under such registration statement if, during
the effectiveness of such registration statement, an intervening event should
occur which, in the opinion of counsel to the Company, makes the prospectus
included
11
in such registration statement no longer comply with the Securities Act until
such time as such holder has received from the Company copies of a new, amended
or supplemented prospectus complying with the Securities Act.
2.8 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use all reasonable good faith efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such
reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, to
furnish to such Holder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after ninety (90) days after the effective
date of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission allowing
such Holder to sell any such securities without registration. In
addition, if at any time following the effective date of the first
registration of any of the Company's securities under the Securities
Act the Company shall cease to be subject to the requirements of
Section 15(d) of the Exchange Act, the Company will make available to
any of the Holders the information required by Rule 15c2-11(a)(4) of
the Exchange Act (or any corresponding rule hereafter in effect).
2.9 TRANSFER OF REGISTRATION RIGHTS. The rights granted to a
Holder hereunder may be assigned to a transferee or assignee in connection with
any transfer or assignment of Registrable Securities by a Holder provided that:
(i) such transfer may otherwise be effected in accordance with applicable
securities laws, (ii) the Holder notifies the Company in writing prior to the
transfer or assignment and the assignee or transferee agrees in writing to be
bound by the provisions of this Agreement, (iii) the transferee or assignee is
acquiring no less than 100,000 shares of Registrable Securities (as presently
constituted and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits, and the like) and (iv) such transfer is not
pursuant to a registration statement under the Securities Act or Rule 144
promulgated under the Securities Act.
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3. MISCELLANEOUS.
3.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS BY THE INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
3.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
3.3 EFFECTIVE DATE; TERMINATION; ENTIRE AGREEMENT; AMENDMENT.
Notwithstanding anything in this Agreement, this Agreement shall not be
effective or binding on the Company or the Holders until it has been executed by
the Company and HEOF. This Agreement and the Company's obligations under this
Agreement shall terminate on the third anniversary of the effective date of this
Agreement; provided that this Agreement may terminate earlier than the third
anniversary of the effective date of this Agreement if all of the Registrable
Securities are eligible for resale pursuant to Rule 144(k) of the Securities
Act. Upon its effectiveness as provided herein, this Agreement shall constitute
the full and entire understanding and agreement between the parties with regard
to the subject hereof. Except as expressly provided herein, this Agreement, or
any provision hereof, may be amended, waived, discharged or terminated upon the
written consent of the Company and the Holder or Holders holding at least fifty
percent (50%) of the then outstanding Registrable Securities owned by the
Holders; PROVIDED, HOWEVER, that if any of the rights of a Holder are adversely
affected by such amendment separately from the rights of the other Holders of
the same class of Registrable Securities, then in such instance the written
consent of the Holder adversely affected shall be required.
3.4 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
including Federal Express or similar courier service, addressed (a) if to a
Holder, at such Holder's address set forth on Schedule A hereto, or at such
other address as such party shall have furnished to the Company in writing, or
(b) if to the Company, at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
ATTN: President, or at such other address as the Company shall have furnished to
the other parties hereto.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective upon receipt, if delivered personally
or by courier, or, if sent by mail, at the earlier of its receipt or 48 hours
after same has been deposited in a regularly maintained receptacle for the
deposit of the United States mail, addressed and mailed as aforesaid.
3.5 DELAYS OR OMISSIONS. Except as expressly provided herein,
no delay or omission to exercise any right, power or remedy accruing to any
party to this Agreement shall impair any such right, power or remedy of such
party nor shall it be construed to be a waiver of any such breach or default, or
an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other
13
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.
3.6 NO INTENT TO SELL OR DISTRIBUTE. HEOF acquired the
Registrable Securities pursuant to the Purchase Agreement and the Series C
Exchange Agreement and all related documents and instruments for its own account
for investment and not with a view to the sale or distribution thereof.
3.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
3.8 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
3.9 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereby effective as of the date first set forth above.
"COMPANY"
CYNET, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
"HEOF"
HOUSTON ECONOMIC OPPORTUNITY FUND, L. P.
BY: HEOF Management Corp.,
Its corporate general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
15
SCHEDULE A
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
ADDRESSES FOR NOTICE
(a) if to Houston Economic Opportunity Fund, L.P., addressed to it at:
Houston Economic Opportunity Fund, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with copies to: Houston Economic Opportunity Fund, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
and Warner & Washington, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: T. ▇▇▇▇ ▇▇▇▇▇▇
(b) if to the Company, addressed to:
CyNet, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with copies to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and General Counsel
CyNet, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇ ▇. Spring, III
Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Any party may change its address for the purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
16