<PAGE> 1
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
August 23, 2000, by and among Level 8 Systems, Inc., a Delaware corporation
("Company"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware
corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Company and Purchaser have entered into that certain
Purchase Agreement, dated as of July 31, 2000 (the "Purchase Agreement"),
pursuant to which Company has agreed to issue and sell to Purchaser, and
Purchaser has agreed to purchase from Company, shares of common stock of the
Company, $0.001 par value per share ("Common Stock"); and
WHEREAS, in order to induce Purchaser to (i) enter into the
Purchase Agreement and purchase such shares of Common Stock and (ii) enter into
the other agreements contemplated under the Purchase Agreement in connection
with the issuance of the shares of Common Stock, Company has agreed to provide
registration rights with respect to the shares of Common Stock issued to
Purchaser pursuant to the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Purchase Agreement are used herein as therein defined, and the following
shall have (unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"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 from time to time.
<PAGE> 2
"Holder" shall mean each of Purchaser, any affiliates thereof
or other permitted assigns holding shares of Common Stock issued pursuant to the
Purchase Agreement.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Registrable Securities" shall mean the shares of Common Stock
acquired by Purchaser pursuant to the terms of the Purchase Agreement.
"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 from time to time.
2. Required Registration. (a) After receipt of a written
request from the Holders of Registrable Securities requesting that Company
effect a registration under the Securities Act covering at least thirty (30%)
percent of the Registrable Securities outstanding as of the date hereof, and
specifying the intended method or methods of disposition thereof, Company shall
promptly notify all Holders in writing of the receipt of such request and each
such Holder, in lieu of exercising its rights under Section 3 may elect (by
written notice sent to Company within ten (10) Business Days from the date of
such Holder's receipt of the aforementioned Company's notice) to have
Registrable Securities included in such registration thereof pursuant to this
Section 2. Thereupon Company shall, as expeditiously as is possible, use its
best efforts to effect the registration under the Securities Act of all shares
of Registrable Securities which Company has been so requested to register by
such Holders for sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Registrable Securities so registered; provided, however, that, subject to the
provisions of Section 2(b) hereof, Company shall not be required to effect more
than three (3) registrations of any Registrable Securities pursuant to this
Section 2. The rights of the Holders under this Section 2 shall not become
effective until ninety (90) days after the date hereof. Any such registration
effectuated pursuant to the terms of this Section 2 shall hereinafter be
referred to as a "Demand Registration."
(b) In the event a Demand Registration is (i) requested by the
Holders in accordance with the terms of this Section 2 and (ii) any security
holders of Company exercise any incidental registration rights to participate in
such Demand Registration, such that the number of Registrable Securities
included in such registration statement is reduced to less than seventy-five
percent (75%) of the total number of Registrable Securities contained in the
written request submitted by the Holders pursuant to a Demand Registration (the
"Minimum Level"), then the Holders shall receive one (1) additional Demand
Registration pursuant to Section 2(a), exercisable in the same manner as the
other Demand Registration rights granted to the Holders pursuant thereto;
provided, however, that the Holders shall only be entitled to one (1) additional
Demand Registration under this Section 2, notwithstanding that the number of
Registrable Securities of such Holders included in a registration statement
filed pursuant to a Demand
2
<PAGE> 3
Registration may be reduced below the Minimum Level in a subsequent Demand
Registration.
3. Incidental Registration. If Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders (the
"demanding security holders") a registration statement under the Securities Act
on any form (other than a registration statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities (a "Registration Statement"), it will give written
notice to all Holders at least twenty (20) Business Days prior to the initial
filing with the Commission of such Registration Statement, which notice shall
set forth the intended method of disposition of the securities proposed to be
registered by Company. The notice shall offer to include in such filing the
aggregate number of shares of Registrable Securities as such Holders may
request.
Each Holder desiring to have Registrable Securities registered
under this Section 3 shall advise Company in writing within ten (10) Business
Days after the date of receipt of such offer from Company, setting forth the
amount of such Registrable Securities for which registration is requested.
Company shall thereupon include in such filing the number of shares of
Registrable Securities for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a proposed public
offering shall advise Company in writing that, in its opinion, the distribution
of the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by Company or such demanding
security holder would materially and adversely affect the distribution of such
securities by Company or such demanding security holder, then all selling
security holders (including the demanding security holder who initially
requested such registration, but not the Company) shall reduce the amount of
securities each intended to be distributed through such offering on a pro rata
basis (which reduced amount may be zero). Except as otherwise provided in
Section 5, all expenses of such registration shall be borne by Company.
4. Registration Procedures. If Company is required by the
provisions of Section 2 or 3 to use its best efforts to effect the registration
of any of its securities under the Securities Act, Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a
Registration Statement with respect to such securities and use its best efforts
to cause such Registration Statement to become and remain effective for a period
of time required for the disposition of such securities by the holders thereof,
but not to exceed one hundred and eighty (180) days;
(b) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and to
3
<PAGE> 4
comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of one hundred and eighty (180) days;
(c) furnish to such selling security holders such
number of copies of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents, as such selling security holders may reasonably
request;
(d) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions within the United States and Puerto Rico as
each holder of such securities shall reasonably request to the extent such
registration or qualification is required in such jurisdictions (provided,
however, that Company shall not be obligated to qualify as a foreign corporation
to do business under the laws of any jurisdiction in which it is not then
qualified or to file any general consent to service or process), and do such
other reasonable acts and things as may be required of it to enable such holder
to consummate the disposition in such jurisdiction of the securities covered by
such Registration Statement;
(e) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to Section 2, on the date that
such shares of Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date that the Registration Statement with
respect to such shares of Registrable Securities becomes effective, (1) an
opinion, dated such date, of the independent counsel representing Company for
the purposes of such registration, addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through underwriters, then to the
Holders making such request, in customary form and covering matters of the type
customarily covered in such legal opinions; and (2) a comfort letter dated such
date, from the independent certified public accountants of Company, addressed to
the underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holder making such request and, if such
accountants refuse to deliver such letter to such Holder, then to Company, in a
customary form and covering matters of the type customarily covered by such
comfort letters and as the underwriters or such Holder shall reasonably request;
(f) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities; and
(g) notify the Holders as promptly as practicable
upon the occurrence of any event as a result of which the prospectus included in
a Registration Statement, as then in effect, contains an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein
4
<PAGE> 5
not misleading in light of the circumstances then existing, and as promptly as
possible, prepare, file and furnish to each Holder a reasonable number of copies
of a supplement or an amendment to such prospectus as may be necessary so that
such prospectus does not contain an untrue statement of material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
provided, however, that the Company may delay preparing, filing and distributing
any such supplement or amendment if the Board of Directors of the Company
determines in good faith that such supplement or amendment could, in its
reasonable judgment, (i) interfere with or adversely affect the negotiation or
completion of a transaction that is being contemplated by the Company or (ii)
involve initial or continuing disclosure obligations that are not in the best
interests of the Company's stockholders at the time; provided, further, that (w)
the Company will give notice (a "Standstill Notice") of any such delay prior to
such delay, (x) such delay shall not extend for a period of more than thirty
(30) days without the written consent of the Holders, (y) the Company may
utilize such delay no more than two (2) times or for an aggregate of more than
sixty (60) days in any period of two hundred and seventy (270) consecutive days
and (z) the period of effectiveness of the Registration Statement provided for
herein shall be extended by the number of days from and including the date of
the giving of a Standstill Notice to and including the date when the Company
shall have delivered to the Holders copies of such supplement or amendment
pursuant to this Section 4(g).
(h) provide each Holder and its representatives the
opportunity to conduct reasonable inquiry of the Company's financial and other
records during normal business hours and make available its officers, directors
and employees for questions regarding information which such Holder may
reasonably request in order to conduct any due diligence.
(i) permit counsel for each Holder to review a registration
Statement covering Registrable Securities and all amendments and supplements
thereto a reasonable period of time prior to the filing thereof with the
Commission.
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than eighteen
(18) months after the effective date of the Registration Statement, an earnings
statement covering the period of at least twelve (12) months beginning with the
first full month after the effective date of such Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
It shall be a condition precedent to the obligation of Company to take
any action pursuant to this Agreement in respect of the securities which are to
be registered at the request of any Holder that such Holder shall furnish to
Company such information regarding the securities held by such Holder and the
intended method of disposition thereof as Company shall reasonably request and
as shall be required in connection with the action taken by Company.
5
<PAGE> 6
5. Expenses. All expenses incident to the Company's compliance
with the terms of this Agreement, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
NASD), printing expenses, fees and disbursements of counsel for Company, the
reasonable fees and expenses of one counsel for the selling security holders
(selected by those holding a majority of the shares being registered), expenses
of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdiction
pursuant to Section 4(d), shall be paid by Company, except that:
(a) all such expenses in connection with any
amendment or supplement to the Registration Statement or prospectus filed more
than one hundred and eighty (180) days after the effective date of such
Registration Statement because any Holder has not effected the disposition of
the securities requested to be registered shall be paid by such Holder; and
(b) Company shall not be liable for any fees,
discounts or commissions to any underwriter or any fees or disbursements of
counsel for any underwriter in respect of the securities sold by such Holder.
(c) any incremental expenses incurred by Company as a
result of the inclusion of a Holder's Registrable Securities in an underwritten
offering where the Holder or any of its Affiliates is an underwriter of the
Registrable Securities which, inclusion of such Holder's Registrable Securities,
requires a "qualified independent underwriter" under the applicable rules of the
National Association of Securities Dealers, Inc. shall be paid by Holder.
6. Indemnification and Contribution.
(a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, Company shall
indemnify and hold harmless the holder of such Registrable Securities, such
holder's directors and officers, and each other person (including each
underwriter) who participated in the offering of such Registrable Securities and
each other person, if any, who controls such holder or such participating person
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such director or
officer or participating person or controlling person may become subject under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse such holder or such director, officer or participating
person or controlling person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating person or
controlling person in
6
<PAGE> 7
connection with investigating or defending any such loss, claim, damage,
liability or action. Notwithstanding anything to the contrary set forth in this
Section 6(a), Company shall not be liable to indemnify any person in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon (1) any actual or alleged untrue statement or actual or alleged
omission either (x) made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such holder specifically for use
therein or (in the case of any registration pursuant to Section 2) so furnished
for such purposes by any underwriter or (y) that had been corrected in a
preliminary prospectus, prospectus supplement or amendment which had been
furnished to such Holder prior to any distribution of the document alleged to
contain the untrue statement or omission to offerees or purchasers, (2) any
offer or sale of Registrable Securities after receipt by such Holder of a
Standstill Notice under Section 4(g) and prior to the delivery of the prospectus
supplement or amendment contemplated by Section 4(g), or (3) Holder's failure to
comply with the prospectus delivery requirements under the Securities Act or
failure to distribute its Registrable Securities in a manner consistent with the
its intended plan of distribution as provided to Company and disclosed in the
Registration Statement. Notwithstanding the foregoing, Company shall not be
required to indemnify any person for amounts paid in settlement of any claim
without the prior written consent of Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder or such
director, officer or participating person or controlling person, and shall
survive the transfer of such securities by such holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify and
hold harmless Company, its directors and officers and each person who
participated in such offering and each other person, if any, who controls
Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which Company or any such director
or officer or any such person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
information in writing provided to Company by such Holder specifically for use
in the following documents and contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto, (ii)
such Holder's offer or sale of Registrable Securities after receipt by such
Holder of a Standstill Notice under Section 4(g) and prior to the delivery of
the prospectus supplement or amendment contemplated by Section 4(g), (iii) such
Holder's failure to comply with the prospectus delivery requirements under the
Securities Act or failure to distribute its Registrable Securities in a manner
consistent with the its intended plan of distribution as provided to Company and
disclosed in the registration statement, (iv) such Holder's failure to comply
with Regulation M under the Exchange Act, or (v) such Holder's failure to comply
with any rules and regulations applicable because such Holder is, or is an
Affiliate of, a registered broker-dealer. Notwithstanding the provisions of this
paragraph (b) or paragraph (c)
7
<PAGE> 8
below, no Holder shall be required to indemnify any person pursuant to this
Section 6 or to contribute pursuant to paragraph (c) below in an amount in
excess of the amount of the aggregate net proceeds received by such Holder in
connection with any such registration under the Securities Act.
(c) If the indemnification provided for in this Section 6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the 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, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties 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 to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(c) were determined by pro
rata allocation or by any other method of allocation which does not take account
of 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.
7. Certain Limitations on Registration Rights. Notwithstanding
the other provisions of this Agreement:
(a) Company shall not be obligated to register the
Registrable Securities of any Holder if, in the opinion of counsel to Company
reasonably satisfactory to the Holder and its counsel (or, if the Holder has
engaged an investment banking firm, to such investment banking firm and its
counsel), the sale or other disposition of such Holder's Registrable Securities,
in the manner proposed by such Holder (or by such investment banking firm), may
be effected without registering such Registrable Securities under the Securities
Act; and
(b) Company shall not be obligated to register the
Registrable Securities of any Holder pursuant to Section 2 if Company has had a
registration statement, under which such Holder had a right to have its
Registrable Securities included
8
<PAGE> 9
pursuant to Section 2 or 3, declared effective within one hundred and eighty
(180) days prior to the date of the request pursuant to Section 2; provided,
however, that if any Holder elected to have shares of its Registrable Securities
included under such registration statement but some or all of such shares were
excluded pursuant to the penultimate sentence of Section 3, then such one
hundred and eighty (180) day period shall be reduced to ninety (90) days.
(c) Company shall have the right to delay the filing
or effectiveness of a registration statement required pursuant to Section 2
hereof during one or more periods aggregating not more than forty five (45) days
in any twelve-month period in the event that (i) Company would, in accordance
with the advice of its counsel, be required to disclose in the prospectus
information not otherwise then required by law to be publicly disclosed and (ii)
in the judgment of Company's Board of Directors, there is a reasonable
likelihood that such disclosure, or any other action to be taken in connection
with the prospectus, would materially and adversely affect any existing or
prospective material business situation, transaction or negotiation or otherwise
materially and adversely affect Company.
8. Selection of Managing Underwriters. The managing
underwriter or underwriters for any offering of Registrable Securities to be
registered pursuant to Section 2 shall be selected by the Holders of a majority
of the shares being so registered and shall be reasonably acceptable to Company.
9. Holder Agreements
(a) No Holder may participate in an underwritten
offering provided for hereunder unless such Holder (i) agrees to sell such
Holder's Registrable Securities on the basis provided in the underwriting
arrangements contemplated for such offering as reasonably requested by the
managing underwriter, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements as reasonably
requested by the managing underwriter, and (c) agrees to bear such Holder's pro
rata portion of all underwriting discounts and commissions.
(b) Each Holder of Registrable Securities eligible
for inclusion in a Registration Statement that is notified in writing pursuant
to Section 3 hereof of a proposed registration of an underwritten public
offering shall not effect any public sale or distribution (including sales under
Rule 144) of any Registrable Securities that are similar to (or exchangeable or
exercisable for or convertible into securities that are similar to) the
securities proposed to be offered in such underwritten public offering, during
the 10-day period prior to, and during the 90-day beginning on, the effective
date of the applicable registration statement, except for offers and sales
pursuant to such registration statement, and hereby agrees to execute a
"lock-up" letter covering such 90-day period in form and substance customary for
such transactions if so requested by the managing underwriter for such
underwritten offering.
9
<PAGE> 10
(c) Each Holder agrees to comply with Regulation M
under the Exchange Act in connection with its offer and sale of Registrable
Securities.
(d) Each Holder agrees that it will not sell any
Registrable Securities registered under the Securities Act pursuant to the terms
of this Agreement until it has been notified in accordance with the terms hereof
that a Registration Statement (and any associated post-effective amendment)
relating thereto has been declared effective and such Holder has been provided
copies of the related prospectus, as amended or supplemented to date.
(e) Each Holder agrees to comply with the prospectus
delivery requirements of the Securities Act as applicable in connection with the
sale of Registrable Securities registered under the Securities Act pursuant to a
Registration Statement.
(f) Each Holder agrees that upon receipt of a
Standstill Notice pursuant to Section 4(g), such Holder shall immediately
discontinue offers and sales of Registrable Securities registered under the
Securities Act pursuant to any Registration Statements covering such Registrable
Securities until such Holder receives copies of the supplemented or amended
prospectus contemplated by Section 4(g) or notice from the Company that no such
supplement or amendment is required.
10. Miscellaneous.
(a) No Inconsistent Agreements. Company will not
hereafter enter into any agreement with respect to its securities which
conflicts with the rights granted to the Holders in this Agreement. Except as
set forth on Schedule A hereto, Company has not previously entered into any
agreement with respect to any of its securities granting any registration rights
to any person.
(b) Remedies. The Purchaser, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate. In any action or proceeding brought to
enforce any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(c) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departure from the provisions hereof
may not be given unless Company has obtained the written consent of the
Purchaser.
(d) Notice Generally. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to
10
<PAGE> 11
the provisions of this Agreement shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as follows:
(i) If to the Purchaser, at the last known address
appearing on the books of Company maintained for such purpose.
(ii) If to Company, at
Level 8 Systems, Inc.
8000 Regency Parkway
Cary, North Carolina 27511
Attention: Dennis McKinnie
Telecopy Number: (919) 461-2690
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three (3) Business Days after the same shall have been deposited
in the United States mail.
(e) Rule 144. With a view to making available to the
Purchaser the benefits of Rule 144 under the Securities Act ("Rule 144") and any
other rule or regulation of the Commission that may at any time permit the
Purchaser to sell securities of the Company to the public without registration,
the Company agrees that it will:
(i) make and keep public information
available, as those terms are understood and defined in Rule 144;
(ii) file with the Commission in a
timely manner all reports and other documents required of the Company under the
Exchange Act; and
(iii) furnish to each Holder, so long as
such Holder owns any Registrable Securities, forthwith upon request (i) a
written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing the Holder of any rule or
regulation of the Commission which permits the selling of any such securities
without registration.
11
<PAGE> 12
(f) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto including any person to whom Registrable Securities are
transferred.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law; Jurisdiction. This Agreement shall
be governed by, construed and enforced in accordance with the laws of the State
of New York without giving effect to the conflict of laws provisions thereof.
Each of the parties hereby submits to personal jurisdiction and waives any
objection as to venue in the County of New York, State of New York. Service of
process on the parties in any action arising out of or relating to this
Agreement shall be effective if mailed to the parties in accordance with Section
10(d) hereof. The parties hereto waive all right to trial by jury in any action
or proceeding to enforce or defend any rights hereunder.
(i) Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(j) Entire Agreement. This Agreement, together with
the Purchase Agreement and the other Transaction Documents, represents the
complete agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof.
12
<PAGE> 13
[REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
LEVEL 8 SYSTEMS, INC.
By: /s/ Dennis McKinnie
-------------------------------
Name: Dennis McKinnie
Title: Senior Vice President,
Chief Legal and
Administrative Officer and
Corporate Secretary
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ E. Stanley O'Neal
-------------------------------
Name: E. Stanley O'Neal
Title: Executive Vice President
13
