REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement ("Agreement") dated as of June 20, 2000 by
and among Frontline Communications Corporation, a Delaware corporation (the
"Company"), DelaNet, Inc., a Delaware corporation ("DelaNet") and the
stockholders of DelaNet listed on the signature pages.
RECITALS
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto do hereby agree as follows:
WHEREAS, pursuant to the Asset Purchase Agreement (the "Asset Purchase
Agreement") of even date herewith between the Company, DelaNet, Michael Brown
and Donald McIntire, the Company issued a Convertible Note (the "Note") to
DelaNet whereby DelaNet has the option to convert the entire amount of the debt
issued under the Note into unregistered shares of common stock of the Company
(the "Conversion Shares");
WHEREAS, in accordance with the terms of the Asset Purchase Agreement, the
Company shall grant "piggyback" registration rights with respect to the
Conversion Shares; and
WHEREAS, it is a condition to the performance of DelaNet's obligations
under the Asset Purchase Agreement that the Company enter into this Agreement
with the DelaNet with respect to the Conversion Shares held by the DelaNet.
NOW, THEREFORE, in consideration of the foregoing recitals and mutual
covenants herein contained, the parties hereto do hereby agree as follows:
1. Piggyback Registration.
(a) If, at any time during the period commencing ninety (90) days
after the Conversion Shares are issued pursuant to the terms of the
Note, the Company proposes to prepare and file with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-3 covering equity or debt securities of the Company, or any
such securities of the Company held by its shareholders, other than in
connection with a merger, acquisition or pursuant to a registration
statement on Form S-4 or Form S-8 or any successor form (for purposes
of this Article 1, a "Registration Statement"), the Company will give
written notice to DelaNet of its intention to do so by certified mail
("Notice"), at least fifteen (15) days prior to the filing of each
such Registration Statement. Upon the written request of DelaNet, made
within ten (10) days after receipt of the Notice, that the Company
include any of DelaNet's Conversion Shares in the proposed
Registration Statement, the Company shall, as to DelaNet, use
reasonable efforts to effect the registration under the Securities Act
of the Conversion Shares which it has been so requested to
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register ("Piggyback Registration"), at the Company's sole cost and
expense and at no cost or expense to DelaNet (other than any
commission, discounts or counsel fees payable by DelaNet, as further
provided in Section 23(c) hereof); provided, however, that if the
Piggyback Registration is in connection with an underwritten public
offering and in the written opinion of the Company's underwriter or
managing underwriter of the underwriting group, if any, for such
offering, the inclusion of all or a portion of the Conversion Shares
requested to be registered, when added to the securities being
registered by the Company or the selling shareholder(s), if any, will
exceed the maximum amount of the Company's securities which can be
marketed (i) at a price reasonably related to their then current
market value, or (ii) without otherwise having an adverse effect on
the offering, then the Company may exclude from such offering all or a
portion of the Conversion Shares which it has been requested to
register.
(b) Notwithstanding the preceding provisions of this Section, the
Company shall have the right at any time after it shall have given
written notice pursuant to this Section (irrespective of whether any
written request for inclusion of such securities shall have already
been made) to elect not to file any proposed Registration Statement,
or to withdraw the same after the filing but prior to the effective
date thereof.
(c) Notwithstanding anything contained herein to the contrary,
the Company shall have no obligation under this Section 1 to register
the Conversion Shares if the Company receives an opinion of counsel
that Rule 144 promulgated under the Securities Act permits DelaNet to
transfer the Conversion Shares to the public.
2. Demand Registration.
If the Company does not elect to file a Registration Statement within
ninety (90) days of issuance of the Conversion Shares, DelaNet may, at any time
on or after the ninety-first (91st) day following such issuance, exercise demand
registration rights ("Demand Rights") and demand that the Company file a
Registration Statement to register the DelaNets' shares. Upon receipt of such
demand, the Company shall prepare promptly (and in no event later than thirty
(30) days of receipt of DelaNet's demand) and file with the SEC a Registration
Statement with respect to not less than total the number of Conversion Shares.
3. Covenants of the Company With Respect to Registration. The Company
hereby covenants and agrees as follows:
(a) The Company shall use reasonable efforts to cause the
Registration Statement to become effective as promptly as possible
under the circumstances at the time prevailing and, if any stop order
shall be issued by the Commission in connection therewith, to use its
reasonable efforts to obtain the removal of such order.
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(b) Following the effective date of a Registration Statement, the
Company shall, upon the request of DelaNet, forthwith supply such
reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Securities
Act, and other documents necessary or incidental to the public
offering of the Conversion Shares as shall be reasonably requested by
DelaNet to permit DelaNet to make a public distribution of DelaNets'
Conversion Shares. The obligations of the Company hereunder with
respect to DelaNets' Conversion Shares are expressly conditioned on
DelaNet furnishing to the Company such appropriate information
concerning DelaNet, DelaNets' Conversion Shares and the terms of
DelaNets' offering of such shares as the Company may request.
(c) The Company will pay all costs, fees and expenses in
connection with all Registration Statements filed pursuant to Section
1 hereof, including, without limitation, the Company's legal and
accounting fees, printing expenses and blue sky fees and expenses;
provided, however, that DelaNet shall be solely responsible for the
fees of any counsel retained by DelaNet in connection with such
registration and any transfer taxes or underwriting discounts, selling
commissions or selling fees applicable to the Conversion Shares sold
by DelaNet pursuant thereto.
(d) The Company will use reasonable efforts to qualify or
register the Conversion Shares included in a Registration Statement
for offering and sale under the securities or blue sky laws of such
states as are requested by DelaNet, provided that the Company shall
not be obligated to execute or file any general consent to service of
process (unless the Company is already then subject to service in such
jurisdiction) or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction, except as may be required by
the Securities Act and its rules and regulations.
4. Covenant of DelaNet.
DelaNet, upon receipt of notice from the Company that an event has occurred
which requires a post-effective amendment to the Registration Statement or a
supplement to the prospectus included therein, shall promptly discontinue the
sale of Conversion Shares until DelaNet receives a copy of a supplemented or
amended prospectus from the Company, which the Company shall provide as soon as
practicable after such notice.
5. Indemnification.
(a) The Company, its successors and assigns, shall indemnify,
defend and hold harmless Michael Brown, Donald McIntire and Delanet
and such person who controls DelaNet within the meaning of Section 15
of the Securities Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended, from and against any and all losses, claims,
damages and liabilities caused by or arising out of any untrue
statement of a material fact contained in the Registration Statement,
or caused by or arising out of any omission to state therein a
material fact required to be stated
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therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission based upon information
furnished or required to be furnished in writing to the Company by
DelaNet or the trustees thereof expressly for use therein; provided,
however, that the indemnification in this Section shall not inure to
the benefit of DelaNet on account of any such loss, claim, damage or
liability arising from the sale of Conversion Shares by DelaNet, if a
copy of a subsequent prospectus or amendment thereto correcting the
untrue statement or omission in such earlier prospectus was provided
to DelaNet by the Company prior to the subject sale and the subsequent
prospectus or amendment thereto was not delivered or sent by DelaNet
to the purchaser prior to such sale. DelaNet and its successors and
assigns shall at the same time, severally and jointly, indemnify the
Company, its directors, each officer signing the Registration
Statement and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any and all losses,
claims, damages and liabilities caused by any untrue statement of a
material fact made by DelaNet in the information furnished or required
to be furnished in writing to the Company by DelaNet expressly for use
in the Registration Statement contained in the Registration Statement,
or any prospectus included therein, or caused by any omission by
DelaNet to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided,
however, that DelaNet shall be liable under this Section 4 only to the
extent of the amount of the Purchase Price, as such term is defined in
the Asset Purchase Agreement.
6. Governing Law.
(a) This Agreement shall be governed as to validity,
interpretation, construction, effect and in all other respects by the
internal substantive laws of the State of Delaware without giving
effect to the choice of law rules thereof.
(b) Each of the Company and DelaNet hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of
the courts of the State of New York and of the United States located
in the County of New York, State of New York (the "New York Courts")
for any litigation arising out of or relating to this Agreement and
the transactions contemplated hereby (and agrees not to commence any
litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim that such litigation
brought in any New York Courts has been brought in an inconvenient
forum.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand or mailed by express, registered or certified mail, postage prepaid, return
receipt requested, as follows:
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If to the Company, at:
Frontline Communications Corp.
One Blue Hill Plaza, Suite 1548
Pearl River, New York 10965
Attn: Legal Department
with a copy of the same to:
Tenzer Greenblatt L.L.P.
405 Lexington Avenue
23rd Floor
New York, NY 10174
Attn: Ethan Seer, Esq.
If to the DelaNet:
DelaNet, Inc.
262 Quigley Boulevard
New Castle, Delaware 19720
Attn: Mike Brown
with a copy of the same to:
Richards, Layton & Finger, P.A.
One Rodney Square
10th and King Street
Wilmington, Delaware 19801
Gregory V. Varallo, Esq.
Or such other address as has been indicated by either party in accordance
with a notice duly given in accordance with the provisions of this Section.
8. Amendment. This Agreement may only be amended by a written instrument
executed by the parties hereto.
9. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
10. Assignment; Binding Effect; Benefits. DelaNet may not assign its rights
hereunder except to the stockholders of DelaNet without the prior written
consent
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of the Company, which consent may be given or withheld for any reason and any
attempted assignment without having obtained such prior written notice shall be
void and of no force and effect. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and the permitted assigns, heirs and
legal representatives of DelaNet and the Company and its successors. Nothing
herein contained, express or implied, is intended to confer upon any person
other than the parties hereto and their respective heirs, legal representatives
and successors, any rights or remedies under or by reason of this Agreement.
11. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
12. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
13. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
Company: FRONTLINE COMMUNICATIONS CORP.
By:
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Name Stephen J. Cole-Hatchard
Title: Chief Executive Officer & President
DELANET, INC.
By:
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Name: Mike Brown
Title: President
By:
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Name: Donald McIntire
Title: Vice President
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