REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
entered into as of July 17th, 1997 by and between ______________
________________________________________________________________
(the "Buyer"), and THE XXXXX CORPORATION, a Delaware corporation
with offices at 00000 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000, U. S. A.
(the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to a Convertible Securities
Subscription Agreement, dated as of the date hereof (the
"Subscription Agreement"), by and between the Company and the
Buyer, the Company has agreed to sell and the Buyer has agreed to
purchase U.S. $__________ of the Company's 8% Convertible Notes due
July 17th, 2000 (the "Notes") convertible into shares of the
Company's common stock, $1.00 par value (the "Shares");
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Buyer's agreement to enter into the
Subscription Agreement, the Company has agreed to provide the Buyer
with certain registration rights with respect to the Shares as set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in
the Agreement and this Registration Rights Agreement, the Company
and the Buyer agree as follows:
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.
"Registrable Securities" shall mean the Shares issued to
Buyer or its designee upon conversion of the Notes or upon any
stock split, stock dividend, recapitalization or similar event with
respect to such Shares; provided, however, that Registrable
Securities shall cease to be Registrable Securities when they may
be sold pursuant to Rule 144 under the Securities Act. Registrable
Securities shall not include the Notes.
The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or
ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with Buyer's exercise of its
registration rights under this Agreement, including, without
limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, blue sky fees
and expenses, reasonable fees and disbursements of one counsel to
Holders participating in the registration for a review of the
Registration Statement and related documents, and 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).
"Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for Holder not
included with "Registration Expenses".
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"Holder" shall include the Buyer and any permitted
transferee of Notes, Shares or Registrable Securities which have
not been sold to the public to whom the registration rights
conferred by this Agreement have been transferred in compliance
with Section 11 herein.
"Registration Statement" shall have the meaning set forth
in Section 3(a) herein.
"Regulation S" shall mean Regulation S as promulgated
pursuant to the Securities Act, and as subsequently amended.
"Rule 144" shall mean Rule 144 under the Securities Act,
as such rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission.
"Securities Act" shall mean the United States Securities
Act of 1933, as amended.
2. Conditions to Registration Requirement. The
Company's obligation hereunder to register Registrable Securities
shall arise in the event that Company receives a written opinion of
counsel for the Holder (which counsel shall be of a law firm
experienced in United States securities matters) indicating that
there has been a material amendment or material change to the
Securities Act or Regulation S after the date hereof, or the
promulgation by the Commission of an interpretative release or
other statement after the date hereof, which prohibits or restricts
or otherwise materially affects the Holder from reselling
Registrable Securities without registration under the Securities
Act (a "Registration Trigger Event"). Notwithstanding the
foregoing, it will not be deemed a "Registration Trigger Event" to
the extent that Holder desires to engage in a distribution of the
Registrable Securities which otherwise requires registration under
the Securities Act or in activity which otherwise deems Holder to
be a statutory underwriter under Section 5 of the Securities Act.
In the event that a Registration Trigger Event has occurred, then
Holder shall be entitled to require the Company to register all of
Holder's Registrable Securities in accordance with this Agreement.
3. Request for Registration.
(a) Upon the occurrence of a Registration Trigger
Event, if the Company shall receive from a Holder (or, in the event
there is more than one Holder as a result of the issuance by the
Company of the Notes, the Company shall receive written notice from
such Holders acting with respect to their rights under this
Agreement according to a vote of a majority-in-interest of the
Holders) a written request that the Company effect any registration
with respect to any Registrable Securities, the Company shall use
its commercially reasonable efforts to effect such registration
(including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under
applicable state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act) as may be
so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities
as are specified in such request in the states specified in such
request. Notwithstanding the foregoing, the Company shall not be
obligated hereunder to effect such registration unless the proposed
public offering price of the securities to be included in such
registration shall be at least $250,000 (before deducting
underwriting discounts and commissions). If the registration
request pertains to any Registrable Securities not yet outstanding
because conversion rights have not been exercised, Company may
condition the registration of such securities on an irrevocable
undertaking to pay all expenses incident to such registration if
such conversion rights are not exercised prior to the effective
date of the registration statement.
Subject to the previous paragraph, the Company shall file
(i) a registration statement with the Commission pursuant to Rule
415 under the Securities Act on Form S-3 under the Securities Act
(or in the event that the Company in ineligible to use such form,
such other form as the Company is eligible to use under the
Securities Act) covering at lease 1,333,333 of the Registrable
Securities so requested to be registered ("Registration
Statement"); (ii) such state
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securities filings as shall have been requested by the Holder; and
(iii) any required filings with The Nasdaq Stock Market, Inc. or
exchange where the Shares are traded, as soon as practicable, after
receipt of the request of the Holder. Thereafter the Company shall
use its best efforts to have such Registration Statement and other
filings declared effective.
(b) (i) Subject to the conditions contained in
Section 3(a) above, if the Company fails to file a Registration
Statement complying with the requirements of this Agreement within
45 days from the date of receipt by the Company of the Holder's
written request (provided, however, that under the circumstances
described in 3(e)(i)(ii) or (iii) below the Company may have an
additional 45 days thereafter to file such Registration Statement
by providing written notice to the Holders requesting such
registration indicating that the Company is diligently pursuing the
filing of such Registration Statement) or if such Registration
Statement has not become effective within 90 days from the date of
filing thereof, the Holder shall have, in addition to and without
limiting any other rights it may have at law, in equity or under
the Notes, the Subscription Agreement, or this Agreement (including
the right to specific performance), the right to receive, as
liquidated damages, the payments as provided in subparagraph (ii)
of this section.
(ii) If after ninety (90) days from the date of
filing of the Registration Statement, the Registration Statement
has not been declared effective by the Commission, then the Company
shall pay to the Buyer an amount equal to 3% of the Initial
Principal Amount (as defined in the Note) in cash, for each 30-day
period after the ninety (90) day period that such Registration
Statement is not effective (which payment shall be pro rata for any
period of less than 30 days). In addition to the foregoing, if
after 180 days from the date hereof the Registration Statement has
not been declared effective by the Commission, then at the option
of such Holder, the Company shall be required to redeem all the
Notes held by such Holder at a redemption price equal to 140% of
the Initial Principal Amount of the Note plus accrued interest
thereon, together with all other payments due under this paragraph
and under the Note and the Agreement.
(iii) The Company acknowledges that its
failure to register the Registrable Securities in accordance with
this Agreement will cause the Holder to suffer damages in an amount
that will be difficult to ascertain. Accordingly, the parties
agree that it is appropriate to include in this Registration Rights
Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provisions set
forth above represent the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not constitute a
penalty.
(iv) In computing the time periods provided in
this paragraph 3(b), any delays arising from the failure or refusal
of any Holder to provide information which the Company's counsel or
the Commission states in writing is required for inclusion on the
Registration Statement within ten (10) days of a written request by
the Company to provide such information, shall increase the number
of days for the Company to act by a corresponding number.
(c) If there is more than one Holder, such Holders
shall act with respect to their rights under this Agreement
according to the vote of a majority-in-interest of the Holders.
(d) The Company shall make available for inspection
by a representative or representatives of the Holder, and any
attorney or accountant retained by such Holder, all financial and
other records customary for such purposes, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such representative, attorney or
accountant in connection with such Registration Statement. The
Holder will agree to keep all non-public information supplied to it
confidential until such information is included in a Registration
Statement which has been made publicly available.
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(e) The Company shall not be obligated to keep such
Registration Statement continuously effective for a period of more
than two years from the date it is declared effective by the
Commission; provided, however, that if so requested by the holders
of a majority-in-interest of the Registrable Securities the Company
shall agree to extend the period for which the Registration
Statement remains effective to the same extent that "suspension
periods" are imposed pursuant to the next paragraph, but only so
long as the then unsold Registrable Securities covered by such
Registration are too numerous to be sold under the volume
limitations of Rule 144 in any applicable three-month period by any
holder.
Following the effectiveness of the Registration
Statement pursuant to this Agreement, the Company may, at any time,
suspend the effectiveness of such Registration Statement and sales
thereunder for up to twenty (20) days, as appropriate (a
"Suspension Period"), by giving notice to each holder (or
underwriter, if any) selling thereunder, if the Board of Directors
shall have determined in good faith that the Company may be
required to disclose any material corporate development which
disclosure (i) may have a material adverse effect on the Company,
(ii) may have a material adverse affect on the transaction or
matter to be disclosed, or (iii) would be detrimental to the
Company or its stockholders. Notwithstanding the foregoing, no
more than two Suspension Periods (i.e., forty (40) days) may occur
in any twelve (12) month period, and the Company shall use its best
efforts to limit the duration and number of any suspension periods.
Holder agrees (and shall require that any underwriter agree) that,
upon receipt of any notice from the Company of any Suspension
Period, Holder shall forthwith discontinue disposition of shares
covered by the Registration Statement and related prospectus or
other offering materials (the "Prospectus") until such Holder (i)
is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, (ii) has received copies of a
supplemental or omitted Prospectus, if applicable, and (iii) has
received copies of any additional or supplemental filings which are
incorporated or deemed to be incorporated by reference in such
Prospectus.
4. Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or
compliance with registration pursuant to this Agreement shall be
borne by the Company, and all Selling Expenses shall be borne by
the Holder, except for a legal fee not to exceed $3,500 of Counsel
to the Holder for review of the Registration Statement.
5. Registration on Form S-3. Although the Company
shall use its commercially reasonable efforts to qualify for
registration on Form S-3 or any comparable or successor form or
forms, or in the event that the Company is ineligible to use such
form, such form as the Company is eligible to use under the
Securities Act, nothing in the Subscription Agreement or this
Agreement is intended to require the Company to pay dividends in
order to use Form S-3.
6. Registration Procedures. In the case of each
registration effected by the Company pursuant to this Agreement,
the Company will keep the Holder advised in writing as to the
initiation of each registration and as to the completion thereof.
At its expense, the Company will use its best efforts to:
(a) Keep such Registration Statement effective for
the period ending twenty-four (24) months after the registration
has been declared effective by the Commission or until the Holder
has completed the distribution described in the Registration
Statement relating thereto, whichever first occurs.
(b) Furnish such number of Prospectuses and other
documents incident thereto as the Holder from time to time may
reasonably request.
7. Indemnification.
(a) Company Indemnity. The Company will indemnify
the Holder,
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each of its officers, directors and partners, and each person
controlling Holder, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with
respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any Prospectus, (including any
related Registration Statement, notification or the like) 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 not misleading, or any violation by the Company of the
Securities Act or any state securities law or in either case, any
rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance,
and will reimburse the Holder, each of its officers, directors and
partners, and each person controlling such Holder, for any legal
and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability
or action, provided 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 based upon written information furnished to the Company by
Holder and stated to be specifically for use therein. The
indemnity agreement contained in this Section 7(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably
withheld).
(b) Holder Indemnity. The Holder will, if
Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors, officers,
partners, and 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 the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and
partners, and each person controlling such other Holder against all
claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make
the statement therein not misleading, and will reimburse the
Company and such other holders and their directors, officers and
partners, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating
and 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
Holder and stated to be specifically for use therein, and provided
that the maximum amount for which the Holder shall be liable under
this indemnity shall not exceed the net proceeds received by the
Holder from the sale of the Registrable Securities. The indemnity
agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any such claims, losses, damages or
liabilities if such settlement is effected without the consent of
Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to
indemnification under this Section 7 (the "Indemnified Party")
shall give notice to the party required to provide indemnification
(the "Indemnifying Party") promptly after the 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 in any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not be
unreasonably 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 Section 7 except to the extent that the Indemnifying
Party is materially and adversely affected by such failure to
provide
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notice. 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. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and
litigation resulting therefrom.
8. Contribution. If the indemnification provided for
in Section 7 herein is unavailable to the Indemnified Parties in
respect of any losses, claims, damages or liabilities referred to
herein (other than by reason of the exceptions provided therein),
then each such Indemnifying Party, in lieu of indemnifying the
Indemnified Party, shall contribute to the amount paid or payable
by the Indemnified Party as a result of such losses, claims,
damages or liabilities (i) as between the Company and the Holder on
the one hand and the underwriters on the other, in such proportion
as is appropriate to reflect the relative benefits received by the
Company and the Holder on the one hand or underwriters, as the case
may be, on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the
one hand and of the Holder or underwriters, as the case may be, 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 and (ii) as between the
Company on the one hand and the Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the
Company and of the Holder 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 benefits received by the Company on the one
hand and the Holder or the underwriters, as the case may be, on the
other shall be deemed to be in the same proportion as the proceeds
from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company from the
initial sale of the Notes which can be converted into Registrable
Securities by the Company to the Holder pursuant to the
Subscription Agreement which corresponds to this Agreement bear to
the gain realized by such Holder or the total underwriting
discounts and commissions received by the underwriters as set forth
in the table on the cover page of the prospectus, as the case may
be. The relative fault of the Company on the one hand and of the
Holder or underwriters, as the case may be, on the other shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by the Company, by the Holder or by the underwriters.
In no event shall the obligation of any Indemnifying
Party to contribute under this Section 8 exceed the amount that the
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section
7(a) or 7(b) hereof had been available under the circumstances.
The Company and the Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Holder or the
underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as
a result of the losses, claims, damages and liabilities referred to
in the immediately preceding paragraphs shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by the Indemnified Party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, no Holder or
underwriter shall be required to contribute any amount in excess of
the amount by which (i) in the case of the Holder, the net proceeds
received by the Holder from the sale of Registrable Securities or
(ii) in the case of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed to the
public were offered to the public exceeds, in any such case, the
amount of
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any damages that the Holder or underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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.
9. Survival. The indemnity and contribution agreements
contained in Sections 7 and 8 shall remain operative and in full
force and effect regardless of (i) any termination of the
Subscription Agreement or any underwriting agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by
or on behalf of the Company and (iii) the consummation of the sale
or successive resales of the Registrable Securities.
10. Information by Holder. The Holder shall furnish to
the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance
referred to in this Agreement.
11. Transfer or Assignment of Registration Rights. The
rights, granted to Buyer by the Company under this Registration
Rights Agreement, to cause the Company to register Registrable
Securities, may be transferred or assigned to a transferee or
assignee of not less than $250,000 in principal amount of Notes,
provided that the Company is given written notice by Holder at the
time of or within a reasonable time after said transfer or
assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and provided
further that the transferee or assignee of such rights is not
deemed by the board of directors of the Company, in its reasonable
judgment, to be a competitor of the Company; and provided further
that the transferee or assignee of such rights agrees to be bound
by this Agreement.
Buyer is one of a group of holders of Registrable
Securities issued or issuable pursuant to a total aggregate amount
of up to $3,000,000 of Notes purchased by Buyer and others in a
transaction designed to qualify as an offering pursuant to
Regulation S. Any action to be taken under this Agreement or any
term of this Agreement may be amended or waived only with written
action by the Company and the holders of at least a majority-in-
interest of the total of the Registrable Securities. Any action,
amendment or waiver effected in accordance with this paragraph
shall be binding upon each of the other holders of Registrable
Securities at the time then outstanding.
12. Miscellaneous.
(a) Entire Agreement. This Agreement contains the
entire understanding and agreement of the parties, and may not be
modified or terminated except by a written agreement signed by both
parties.
(b) Notices. Any notice or other communication
given or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or
sent by registered or certified mail, return receipt requested,
postage prepaid or by air courier, (a) if to Buyer, at its address
hereinabove set forth, (b) if to the Company, at its address
hereinabove set forth, and (c) if to a holder other than Buyer, at
the address thereof furnished by like notice to the Company, or (d)
to any such addresses at such other address or addresses as shall
be so furnished to the other parties by like notice.
(c) Gender of Terms. All terms used herein shall
be deemed to include the feminine and the neuter, and the singular
and the plural, as the context requires.
(d) Governing Law; Consent of Jurisdiction. This
Agreement and the validity and performance of the terms hereof
shall be governed by and construed in accordance with the laws of
the State of Delaware. The parties hereto hereby consent to, and
waive any
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objection to the exercise of, personal jurisdiction in the State of
Delaware with respect to any action or proceeding arising out of
this Agreement.
(e) Titles. The titles used in this Agreement are
used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) Prospectus Delivery Requirements. Holder
agrees, on Holder's behalf, and shall require any transferee or
assignee pursuant to Section 11 above to agree, to comply with all
prospectus delivery requirements applicable to resales of the
securities pursuant to the Registration Statement.
(g) Termination. The rights of Holder to require
the Company to request a registration pursuant to this Agreement
shall terminate on the date which is five (5) years from the date
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
____________________________ THE XXXXX CORPORATION
a Delaware Corporation
By: By: /s/ Xxxxx X. Xxxxxxx
Name: Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory Title: Chairman & Chief Executive
Officer
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