EXHIBIT 10.2
------------
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of the 5th day of November, 2004 (the "Effective Date") between
Xxxxxx, Inc., a Delaware corporation (the "Company"), and the parties set forth
on the signature page and Exhibit A hereto (each, a "Purchaser" and
collectively, the "Purchasers").
R E C I T A L S:
A. The Purchasers have purchased shares of the Company's 5% Senior
Convertible Notes due 2007 (each, a "Note" and collectively, the "Notes")
pursuant to a Note Agreement (the "Note Agreement") by and among the Company and
the Purchasers and Subscription Agreements (each, a "Subscription Agreement" and
collectively, the "Subscription Agreements") by and between the Company and each
Purchaser.
B. The Company and the Purchasers desire to set forth the registration
rights to be granted by the Company to the Purchasers.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth herein and in
the Subscription Agreements, the parties mutually agree as follows:
A G R E E M E N T:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"APPROVED MARKET" means the OTC Bulletin Board, the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, Inc., or the
American Stock Exchange, Inc.
"BUSINESS DAY" means any day of the year, other than a Saturday,
Sunday, or other day on which the Commission is required or authorized to close.
"CLOSING DATE" means November 5, 2004, or such other time as is
mutually agreed between the Company and the Purchasers for the closing of the
sale referred to in Recital A above.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON STOCK" means the common stock, par value $.01 per share, of
the Company and any and all shares of capital stock or other equity securities
of: (i) the Company which are added to or exchanged or substituted for the
1
Common Stock by reason of the declaration of any stock dividend or stock split,
the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"FAMILY MEMBER" means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such individuals or by
any of such individuals together with any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited
liability company all of the equity interests of which are owned by those above
described individuals, trusts or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
"FORM S-2" means such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act adopted by the
Commission, which permits inclusion or incorporation of substantial information
by reference to other documents filed by the Company with the Commission.
"HOLDER" means each Purchaser, SMH, or any of such Purchaser's
respective successors and Permitted Assigns who acquire rights in accordance
with this Agreement with respect to the Registrable Securities directly or
indirectly from a Purchaser or SMH, including from any Permitted Assignee.
"INSPECTOR" means any attorney, accountant, or other agent retained by
a Purchaser for the purposes provided in Section 4(j).
"MAJORITY HOLDERS" means at any time Holders of a majority of the
Registrable Securities.
"PERMITTED ASSIGNEE" means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests, (b)
with respect to a corporation, its shareholders in accordance with their
interest in the corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of
such party, (e) an entity that is controlled by, controls, or is under common
control with a transferor, or (f) a party to this Agreement.
2
"PRINCIPAL AMOUNT" means the original principal amount of the Notes.
The terms "REGISTER," "REGISTERED," and "REGISTRATION" refers 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.
"REGISTRABLE SECURITIES" means shares of Common Stock issued or
issuable upon conversion of the Notes, excluding (i) any Registrable Securities
that have been publicly sold or may be sold immediately without registration
under the Securities Act either pursuant to Rule 144 of the Securities Act or
otherwise; (ii) any Registrable Securities sold by a person in a transaction
pursuant to a registration statement filed under the Securities Act or (iii) any
Registrable Securities that are at the time subject to an effective registration
statement under the Securities Act.
"REGISTRATION DEFAULT DATE" means the date which is 90 days following
the Closing Date; provided, however, (i) if the Registration Statement is
subject to review by the SEC staff, the Registration Default Date shall be the
date which is 180 days following the Closing Date; (ii) if the Registration
Statement is not subject to review by the SEC staff and the 90th day following
the Closing Date falls during an S-2 Blackout Period, the Registration Default
Date shall be the date immediately following the last day of such S-2 Blackout
Period, (iii) if the Registration Statement is subject to review by the SEC
staff and the Company is unable to file necessary pre-effective amendments to
the Registration Statement with the SEC because of an S-2 Blackout Period, the
Registration Default Date shall be extended by the number of calendar days that
the Company is unable to file any such pre-effective amendment during any such
S-2 Blackout Period that occurs prior to the end of the 180-day period, and (iv)
if the Registration Statement is subject to review by the SEC staff and the
Company is unable in the ordinary course of business to comply with Rule 3-12(b)
of Regulation S-X, the Registration Default Date shall be the date ten Business
Days following the date the Company files its Annual Report on Form 10-K for the
year ending December 31, 2004, but no later than April 14, 2005.
"REGISTRATION DEFAULT PERIOD" means the period following the
Registration Default Date during which any Registration Event occurs and is
continuing.
"REGISTRATION EVENT" means the occurrence of any of the following
events:
(a) the Company fails to file with the SEC the Registration
Statement on or before the Registration Filing Date pursuant to
Section 3(a),
(b) the Registration Statement covering Registrable Securities is
not declared effective by the Commission on or before the Registration
Default Date,
(c) after the SEC Effective Date, sales cannot be made pursuant
to the Registration Statement for any reason (including without
limitation by reason of a stop order, or the Company's failure to
3
update the Registration Statement) except as excused pursuant to
Section 3(a) or for the reasons specified in clause (d), or
(d) the Common Stock generally or the Registrable Securities
specifically are not listed or included for quotation on an Approved
Market, or trading of the Common Stock is suspended or halted on the
Approved Market, which at the time constitutes the principal market
for the Common Stock, for more than two full, consecutive Trading
Days; provided, however, a Registration Event shall not be deemed to
occur if all or substantially all trading in equity securities
(including the Common Stock) is suspended or halted on the Approved
Market for any length of time.
"REGISTRATION STATEMENT" means the registration statement required to
be filed by the Company pursuant to Section 3(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SEC EFFECTIVE DATE" means the date the Registration Statement is
declared effective by the Commission.
"S-2 BLACKOUT PERIOD" means, with respect to a registration, a period
in each case commencing on the day immediately after the Company notifies the
Holders that they are required, pursuant to Section 4(f), to suspend offers and
sales of Registrable Securities during which the Company, in the good faith
judgment of its Board of Directors or on the reasonable advice of counsel,
determines (because of the existence of, or in anticipation of, any acquisition,
financing activity, or other transaction involving the Company, or the
unavailability for reasons beyond the Company's control of any required
financial statements, disclosure of information which is in its best interest
not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of the
Registrable Securities to be covered by such registration statement, if any,
would be seriously detrimental to the Company and its shareholders and ending on
the earlier of (1) the date upon which the material non-public information
commencing the S-2 Blackout Period is disclosed to the public or ceases to be
material and (2) such time as the Company notifies the selling Holders that the
Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided, however, that
(a) the Company shall limit its use of S-2 Blackout Periods, in the aggregate,
to 45 Trading Days in any 12-month period and (b) no S-2 Blackout Period may
commence sooner than 45 days after the end of a prior S-2 Blackout Period.
"TRADING DAY" means a day on whichever (a) the national securities
exchange, (b) the Nasdaq Stock Market or(c) such other securities market, in any
such case which at the time constitutes the principal securities market for the
Common Stock other than the OTC Bulletin Board, is open for general trading of
securities or, if the OTC Bulletin Board is the principal securities market for
the Common Stock, the Nasdaq Stock Market.
4
2. TERM. This Agreement shall continue in full force and effect for a
period of two (2) years from the Effective Date, unless terminated sooner
hereunder.
3. REGISTRATION.
(a) REGISTRATION ON FORM S-2. As promptly as reasonably
practicable after the date hereof, but in any event not later than 30
days after the Closing Date (the "Registration Filing Date"), the
Company shall file with the Commission a shelf registration statement
on Form S-2 relating to the resale by the Holders of all of the
Registrable Securities; provided, however, that the Company shall not
be obligated to effect any such registration, qualification, or
compliance pursuant to this Section 3(a), or keep such registration
effective pursuant to Section 4: (i) in any particular jurisdiction in
which the Company would be required to qualify to do business as a
foreign corporation or as a dealer in securities under the securities
or blue sky laws of such jurisdiction or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, in each case where it has not already done so; or (ii)
during any S-2 Blackout Period, in which case the Registration Filing
Date shall be extended to the date immediately following the last day
of such S-2 Blackout Period.
(b) PIGGYBACK REGISTRATION. If the Company shall determine to
register for sale for cash any of its Common Stock, for its own
account or for the account of others (other than the Holders), other
than (i) a registration relating solely to employee benefit plans or
securities issued or issuable to employees, officers, directors,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family
Members (including a registration on Form S-8) or (ii) a registration
relating solely to a Commission Rule 145 transaction, a registration
on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, or similar event, the Company may, or in the event
that the Registration Statement has not been declared effective by the
Commission and the Registration Default Date has occurred, the Company
shall, promptly give to the Holders written notice thereof (and in no
event shall such notice be given less than 20 calendar days prior to
the filing of such registration statement), and, subject to Section
3(c), include in such registration (and any related qualification
under blue sky laws or other compliance) (a "Piggyback Registration"),
all of the Registrable Securities specified in a written request or
requests, made within 10 calendar days after receipt of such written
notice from the Company, by any Holder or Holders. However, the
Company may, without the consent of the Holders, withdraw such
registration statement prior to its becoming effective if the Company
or such other shareholders have elected to abandon the proposal to
register the securities proposed to be registered thereby.
(c) UNDERWRITING. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise
the Holders in writing or as a part of the written notice given
pursuant to Section 3(b). In such event the right of any Holder to
registration pursuant to Section 3(b) shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
5
Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any
other shareholders of the Company distributing their securities
through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company or selling shareholders, as applicable.
Notwithstanding any other provision of this Section 3(c), if the
underwriter or the Company determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities from such registration
and underwriting. The Company shall so advise all Holders (except
those Holders who failed to timely elect to distribute their
Registrable Securities through such underwriting or have indicated to
the Company their decision not to do so), and the number of shares of
Registrable Securities that may be included in the registration and
underwriting, if any, shall be allocated among such Holders as
follows:
(i) In the event of a Piggyback Registration that is
initiated by the Company, the number of shares that may be
included in the registration and underwriting shall be allocated
first to the Company and then, subject to obligations and
commitments existing as of the date hereof, to all selling
shareholders, including the Holders, who have requested to sell
in the registration on a pro rata basis according to the number
of shares requested to be included; and
(ii) In the event of a Piggyback Registration that is
initiated by the exercise of demand registration rights by a
shareholder or shareholders of the Company (other than the
Holders), then the number of shares that may be included in the
registration and underwriting shall be allocated first to such
selling shareholders who exercised such demand and then, subject
to obligations and commitments existing as of the date hereof, to
all other selling shareholders, including the Holders, who have
requested to sell in the registration, on a pro rata basis
according to the number of shares requested to be included.
No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided,
however, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the same
proportion used above in determining the underwriter limitation.
(e) OTHER REGISTRATIONS. Prior to the SEC Effective Date the
Company will not, without the prior written consent of the Majority
Holders, file or request the acceleration of any other registration
statement filed with the Commission, and during any time subsequent to
6
the SEC Effective Date when the Registration Statement for any reason
is not available for use by any Holder for the resale of any
Registrable Securities, the Company shall not, without the prior
written consent of the Majority Holders, file any other registration
statement or any amendment thereto with the Commission under the
Securities Act or request the acceleration of the effectiveness of any
other registration statement previously filed with the Commission,
other than (A) any registration statement on Form S-8 or Form S-4, (B)
any registration statement or amendment which the Company is required
to file or as to which the Company is required to request acceleration
pursuant to any obligation in effect on the date of execution and
delivery of this Agreement and (C) any registration statement or
amendment which the Company is required to file, in the reasonable
judgment of counsel to the Company, to make the Registration Statement
available for use by Holders for the resale of Registrable Securities.
(f) FAILURE TO FILE REGISTRATION STATEMENT. If a Registration
Event occurs, then the Company will make payments to each Purchaser,
as liquidated damages to the Purchaser by reason thereof, and not as a
penalty, at a rate equal to one percent (1%) of the Principal Amount
of Notes held by such Purchaser per month, for each calendar month of
the Registration Default Period (pro rated for any period less than 30
days) up to a maximum amount of liquidated damages of 5% of Principal
Amount of Notes held by such Purchaser; provided, however, if a
Registration Event occurs (or is continuing) on a date more than
one-year after the Purchaser acquired the Registrable Securities (and
thus the one-year holding period under Rule 144(d) has elapsed),
liquidated damages shall be paid only with respect to that portion of
a Purchaser's Registrable Securities that cannot then be immediately
resold in reliance on Rule 144. Each such payment shall be due and
payable within five days after the end of each calendar month of the
Registration Default Period until the termination of the Registration
Default Period and within five days after such termination. Such
payments shall constitute the Purchaser's exclusive remedy at law, but
not in equity, for such events. The Registration Default Period shall
terminate upon (i) the filing of the Registration Statement in the
case of clause (a) of the definition of "Registration Event," (ii) the
SEC Effective Date in the case of clause (b) of the definition of
"Registration Event," (iii) the ability of the Purchaser to effect
sales pursuant to the Registration Statement in the case of clause (c)
of the definition of "Registration Event," (iv) the listing or
inclusion and/or trading of the Common Stock on an Approved Market, as
the case may be, in the case of clause (d) of the definition of
"Registration Event," and (v) in the case of the events described in
clauses (b) and (c) of the definition of "Registration Event," the
earlier termination of the Registration Default Period. The amounts
payable as partial liquidated damages pursuant to this paragraph shall
be payable in lawful money of the United States. Amounts payable as
partial liquidated damages to each Purchaser hereunder with respect to
each share of Registrable Securities shall cease when the Purchaser no
longer holds such share of Registrable Securities or such share of
Registrable Securities can be immediately sold by the Purchaser in
reliance on Rule 144.
4. Registration Procedures. In the case of each registration,
qualification, or compliance effected by the Company pursuant to Section 3
hereof, the Company will keep each Holder including securities therein
reasonably advised in writing (which may include e-mail) as to the initiation of
each registration, qualification, and compliance and as to the completion
thereof. At its expense with respect to any registration statement filed
pursuant to Section 3, the Company will:
7
(a) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form S-2 or any
other form for which the Company then qualifies or which counsel for
the Company shall deem appropriate, and which form shall be available
for the sale of the Registrable Securities in accordance with the
intended method(s) of distribution thereof, and use its commercially
reasonable efforts to cause such registration statement to become and
remain effective at least for a period ending with the first to occur
of (i) the sale of all Registrable Securities covered by the
registration statement, (ii) the availability under Rule 144 for the
Holder to immediately, freely resell without restriction all
Registrable Securities covered by the registration statement, and
(iii) one year after a registration statement filed pursuant to
Section 3(a) is declared effective by the Commission (in either case,
the "Effectiveness Period"); provided, however, if at the end of such
one-year period, any Holder is not able to immediately, freely resell
all Registrable Securities that it owns, the Effectiveness Period
shall continue until terminated pursuant to clause (i) or (ii); and
not later than two business days before filing with the Commission a
registration statement or prospectus or any amendments or supplements
thereto, the Company shall (i) furnish to each Holder a copy of the
"Plan of Distribution" and "Selling Shareholder" portions of the
registration statement and the other portions of such documents
proposed to be filed that the Company considers not to contain
material, non-public information (excluding any exhibits other than
applicable underwriting documents), in substantially the form proposed
to be filed and (ii) notify each Holder of Registrable Securities
covered by such registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(b) if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue
resolution of any comments to the satisfaction of the Commission;
(c) 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 during the Effectiveness Period (but in any event
at least until expiration of the 90-day period referred to in Section
4(3) of the Securities Act and Rule 174, or any successor thereto,
thereunder, if applicable), and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended method(s) of disposition by the sellers
thereof set forth in such registration statement;
(d) furnish, without charge, to each Holder of Registrable
Securities covered by such registration statement (i) a reasonable
number of copies of such registration statement (including any
exhibits thereto other than exhibits incorporated by reference), each
amendment and supplement thereto as such Holder may request, (ii) such
number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such
Holders may request, in conformity with the requirements of the
8
Securities Act, and (iii) such other documents as such Holder may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder, but only during the
Effectiveness Period;
(e) use its commercially reasonable best efforts to register or
qualify such Registrable Securities under such other applicable
securities or blue sky laws of such jurisdictions as any Holder of
Registrable Securities covered by such registration statement
reasonably requests as may be necessary for the marketability of the
Registrable Securities (such request to be made by the time the
applicable registration statement is deemed effective by the
Commission) and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such Holder; provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (e),
(ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such jurisdiction;
(f) as promptly as practicable after becoming aware of such
event, notify each Holder of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event which comes to the
Company's attention if as a result of such event the prospectus
included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading and the Company shall promptly prepare and furnish to such
Holder a supplement or amendment to such prospectus (or prepare and
file appropriate reports under the Exchange Act) so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless
suspension of the use of such prospectus otherwise is authorized
herein or in the event of an S-2 Blackout Period, in which case no
supplement or amendment need be furnished (or Exchange Act filing
made) until the termination of such suspension or S-2 Blackout Period;
(g) comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all
material respects with the Securities Act and the Exchange Act and
with all applicable rules and regulations of the Commission with
respect to the disposition of all securities covered by such
registration statement;
(h) as promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities being offered or
sold pursuant to the Registration Statement of the issuance by the
Commission of any stop order or other suspension of effectiveness of
the Registration Statement at the earliest possible time;
(i) permit the Holders of Registrable Securities being included
in the Registration Statement and their legal counsel, at such
Holders' sole cost and expense (except as otherwise specifically
provided in Section 6) to review and have a reasonable opportunity to
comment on the Registration Statement and all amendments and
9
supplements thereto at least two Business Days prior to their filing
with the Commission and shall not file any such document to which the
Majority Holders reasonably object;
(j) make available for inspection by any Holder and any Inspector
retained by such Holder, at such Holder's sole expense, all Records as
shall be reasonably necessary to enable such Holder to exercise its
due diligence responsibility, and cause the Company's officers,
directors, and employees to supply all information which such Holder
or any Inspector may reasonably request for purposes of such due
diligence; provided, however, that such Holder shall hold in
confidence and shall not make any disclosure of any record or other
information which the Company determines in good faith to be
confidential, and of which determination such Holder is so notified at
the time such Holder receives such information, unless (i) the
disclosure of such record is necessary to avoid or correct a
misstatement or omission in the Registration Statement and a
reasonable time prior to such disclosure the Holder shall have
informed the Company of the need to so correct such misstatement or
omission and the Company shall have failed to correct such
misstatement of omission, (ii) the release of such record is ordered
pursuant to a subpoena or other order from a court or governmental
body of competent jurisdiction or (iii) the information in such record
has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company
shall not be required to disclose any confidential information in such
records to any Inspector until and unless such Inspector shall have
entered into a confidentiality agreement with the Company with respect
thereto, substantially in the form of this Section 4(j), which
agreement shall permit such Inspector to disclose records to the
Holder who has retained such Inspector. Each Holder agrees that it
shall, upon learning that disclosure of such Records is sought in or
by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the records deemed
confidential. The Company shall hold in confidence and shall not make
any disclosure of information concerning a Holder provided to the
Company pursuant to this Agreement unless (i) disclosure of such
information is necessary to comply with federal or state securities
laws, (ii) disclosure of such information to the Staff of the Division
of Corporation Finance is necessary to respond to comments raised by
the Staff in its review of the Registration Statement, (iii)
disclosure of such information is necessary to avoid or correct a
misstatement or omission in the Registration Statement, (iv) release
of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (v)
such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such
information concerning a Holder is sought in or by a court or
governmental body of competent jurisdiction or through other means,
give prompt notice to such Holder and allow such Holder, at such
Holder's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information;
(k) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the OTC Bulletin
Board or such other principal securities market on which securities of
the same class or series issued by the Company are then listed or
traded;
10
(l) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(m) cooperate with the Holders of Registrable Securities being
offered pursuant to the Registration Statement to issue and deliver
certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration
Statement within five Trading Days after delivery of certificates to
the Company and enable such certificates to be in such denominations
or amounts as the Holders may reasonably request and registered in
such names as the Holders may request;
(n) during the Effectiveness Period, refrain from bidding for or
purchasing any Common Stock or any right to purchase Common Stock or
attempting to induce any Person to purchase any such security or right
if such bid, purchase or attempt would in any way limit the right of
the Holders to sell Registrable Securities by reason of the
limitations set forth in Regulation M under the 1934 Act; and
(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.
5. SUSPENSION OF OFFERS AND SALES. Each Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(f) hereof or of the
commencement of an S-2 Blackout Period, such Holder shall discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4(f) hereof or
notice of the end of the S-2 Blackout Period, and, if so directed by the
Company, such Holder shall deliver to the Company (at the Company's expense) all
copies (including, without limitation, any and all drafts), other than permanent
file copies, then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in Section
4(a)(iii) hereof shall be extended by the greater of (i) ten Business Days or
(ii) the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4(f) hereof to and including the date
when each Holder of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 4(f) hereof.
6. REGISTRATION EXPENSES. The Company shall pay all expenses in
connection with any registration, including, without limitation, all
registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with securities or blue sky laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided that, in any underwritten registration, each party shall pay for its
own underwriting discounts and commissions and transfer taxes. Except as
provided in Section 9, the Company shall not be responsible for the expenses of
any attorney or other advisor employed by a Holder of Registrable Securities.
11
7. ASSIGNMENT OF RIGHTS. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected prior to the SEC Effective Date and in accordance with
applicable securities laws; (b) such transferee or assignee agrees in writing to
become subject to the terms of this Agreement; and (c) the Company is given
written notice by such Holder of such transfer or assignment, stating the name
and address of the transferee or assignee and identifying the Registrable
Securities with respect to which such rights are being transferred or assigned.
8. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing.
9. INDEMNIFICATION.
(a) In the event of the offer and sale of Registrable Securities
held by Holders under the Securities Act, the Company shall, and
hereby does, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder, its directors, officers, partners, each
other person who participates as an underwriter in the offering or
sale of such securities, and each other person, if any, who controls
or is under common control with such Holder or any such underwriter
within the meaning of Section 15 of the Securities Act, or Section 20
of the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, and expenses to which the Holder or any
such director, officer, partner or underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such shares were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or 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 circumstances in which they were made not misleading, and
the Company shall reimburse the Holder, and each such director,
officer, partner, underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with
investigating, defending or settling any such loss, claim, damage,
liability, action or proceeding; provided that the Company shall not
be liable in any such case (i) to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance
12
upon and in conformity with written information furnished to the
Company through an instrument duly executed by or on behalf of such
Holder specifically stating that it is for use in the preparation
thereof or (ii) if the person asserting any such loss, claim, damage,
liability (or action or proceeding in respect thereof) who purchased
the Registrable Securities that are the subject thereof did not
receive a copy of an amended preliminary prospectus or the final
prospectus (or the final prospectus as amended or supplemented) at or
prior to the written confirmation of the sale of such Registrable
Securities to such person because of the failure of such Holder or
underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final
prospectus (or the final prospectus as amended or supplemented). Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holders, or any such
director, officer, partner, underwriter or controlling person and
shall survive the transfer of such shares by the Holder.
(b) As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to
this Agreement, each such Holder agrees to be bound by the terms of
this Section 9 and to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors and officers, and
each other person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director or officer or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement in or omission or alleged
omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon
and in conformity with written information about such Holder as a
Holder of the Company furnished to the Company, and such Holder shall
reimburse the Company, and each such director, officer, and
controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating, defending, or settling and
such loss, claim, damage, liability, action, or proceeding; provided,
however, that such indemnity agreement found in this Section 9(b)
shall in no event exceed the gross proceeds from the offering received
by such Holder. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the
transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a claim
referred to in Section 9(a) or (b) hereof (including any governmental
action), such indemnified party shall, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to
the indemnifying party of the commencement of such action; provided
that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations
under Section 9(a) or (b) hereof, except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified
13
party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have
defenses not available to the indemnifying party in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, unless
in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in respect of
such claim after the assumption of the defenses thereof or the
indemnifying party fails to defend such claim in a diligent manner,
other than reasonable costs of investigation. Neither an indemnified
nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying
party shall, without the consent of the 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 of such claim or litigation. Notwithstanding anything to the
contrary set forth herein, and without limiting any of the rights set
forth above, in any event any party shall have the right to retain, at
its own expense, counsel with respect to the defense of a claim.
(d) In the event that an indemnifying party does or is not
permitted to assume the defense of an action pursuant to Section 9(c)
or in the case of the expense reimbursement obligation set forth in
Section 9(a) and (b), the indemnification required by Section 9(a) and
(b) hereof shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills
received or expenses, losses, damages, or liabilities are incurred.
(e) If the indemnification provided for in this Section 9 is held
by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage
or expense referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall (i) contribute to
the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on
the one hand and the indemnified party on the other (determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission relates to information
supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission),
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the
other, as well as any other relevant equitable considerations. No
14
indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation.
(f) Other Indemnification. Indemnification similar to that
specified in the preceding subsections of this Section 9 (with
appropriate modifications) shall be given by the Company and each
Holder of Registrable Securities with respect to any required
registration or other qualification of securities under any federal or
state law or regulation or governmental authority other than the
Securities Act.
10. Rule 144. For a period of at least 24 months following the Closing
Date, the Company will use its commercially reasonable best efforts (a) to
timely file all reports required to be filed by the Company after the date
hereof under the Securities Act and the Exchange Act (including the reports
pursuant to Section 13(a) or 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144) and the rules and regulations adopted by the
Commission thereunder), (b) if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Holders and make
publicly available in accordance with Rule 144(c) such information as is
required for the Holders to sell shares of Common Stock under Rule 144, and (c)
to take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable the Holders to sell shares of Common
Stock without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144, including causing its attorneys to issue and
deliver any appropriate legal opinion required to permit a Holder to sell shares
of Common Stock under Rule 144 upon receipt of appropriate documentation
relating to such sale.
11. Independent Nature of Each Purchaser's Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to purchase the
Notes and enter into this Agreement has been made by each Purchaser
independently of any other Purchaser. Nothing contained herein and no action
taken by any Purchaser pursuant hereto, shall be deemed to constitute such
Purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser acknowledges that no other
Purchaser has acted as agent for the Purchaser in connection with making its
investment in the Note (or the Common Stock issuable upon conversion of the
Notes) and that no other Purchaser will be acting as agent of the Purchaser in
connection with monitoring its investment in the Notes (or the Common Stock
issuable upon conversion of the Notes) or enforcing its rights under this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
15
12. MISCELLANEOUS
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and the
United States of America, both substantive and remedial. Any judicial
proceeding brought against either of the parties to this agreement or
any dispute arising out of this Agreement or any matter related hereto
shall be brought in the courts of the State of Rhode Island,
Providence County, or in the United States District Court for the
District of Rhode Island and, by its execution and delivery of this
agreement, each party to this Agreement accepts the jurisdiction of
such courts. The foregoing consent to jurisdiction shall not be deemed
to confer rights on any person other than the parties to this
Agreement.
(b) Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, Permitted Assigns, executors and administrators
of the parties hereto. In the event the Company merges with, or is
otherwise acquired by, a direct or indirect subsidiary of a publicly
traded company, the Company shall condition the merger or acquisition
on the assumption by such parent company of the Company's obligations
under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to
the subjects hereof.
(d) Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and
sufficient if delivered by hand, by facsimile transmission, by
registered or certified mail, postage pre-paid, by electronic mail, or
by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder),
and shall be deemed to have been delivered as of the date so
delivered:
If to the Company: Xxxxxx, Inc.
400 Massasoit Avenue, Suite 200
East Providence, Rhode Island 02914-2020
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
e-mail: xxxxxx@xxxxxx.xxx
with a copy to: Xxxxxxxxx Xxxx & Xxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
e-mail: xxx@xxx.xxx
16
If to the Purchasers: To each Purchaser at the address
set forth on Exhibit A
with a copy to: Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director
Facsimile: ( 000) 000-0000
e-mail: xxxxxxx.xxxxxxxxxx@xxxxxxxx.xxx
or at such other address as any party shall have furnished to the other
parties in writing.
(e) DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any Holder of any Registrable
Securities, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such Holder
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 thereunder occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Holder of any
breach or default under this Agreement, or any waiver on the part of
any Holder 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 holder, shall be cumulative and
not alternative.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(g) SEVERABILITY. In the case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(h) AMENDMENTS. The provisions of this Agreement may be amended
at any time and from time to time, and particular provisions of this
Agreement may be waived, with and only with an agreement or consent in
writing signed by the Company and by the Holders of an 80% majority of
the number of shares of Registrable Securities outstanding as of the
date of such amendment or waiver. The Purchasers acknowledge that by
the operation of this Section 12(h), the Holders of an 80% majority of
the outstanding Registrable Securities may have the right and power to
diminish or eliminate all rights of the Purchasers under this
Agreement. For purposes of this Section 12(h) and Section 12(i) below,
the term "outstanding" shall mean and include Registrable Securities
issued or issuable upon conversion of the Notes.
(i) LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date
of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the Registrable
17
Securities then outstanding, enter into any agreement with any holder
or prospective holder of any securities of the Company that would
grant such holder registration rights senior to those granted to the
Holders hereunder.
[Signatures on following page]
18
This Registration Rights Agreement is hereby executed as of the date
first above written.
COMPANY:
XXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------------------
Its: Chief Operating Officer
---------------------------------------------
PURCHASERS:
The Purchasers listed on Exhibit A attached hereto
BY: Xxxxxxx Xxxxxx Xxxxxx Inc.
----------------------------------------------,
AGENT AND ATTORNEY-IN-FACT
By: /s/ V. Xxxxxxx Xxxxxxxxxx
-----------------------------------------------
Name: V. Xxxxxxx Xxxxxxxxxx
---------------------------------------------
Its: Managing Director
---------------------------------------------
19
Exhibit A
Purchaser Information
Number
of
Name Address Shares
---- ------- ------
Nautica Holdings 802 Grand Pavilion 60,137
1st Floor #30543
Grand Cayman, Cayman Islands BW1
Connecticut Capital Associates, L.P. 000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 85,911
Gibralt Capital Corporation 0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx Xxxxxxxxx, XX, Xxxxxx X0X0X0 42,955
Xxxxxxx Partners, L.P. c/o DG Capital Management, Inc. 257,732
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Xxxxxxx Partners, L.P. c/o DG Capital Management, Inc. 171,821
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Dolphin Offshore c/o Dolphin Asset Management Corp. 51,546
Partners, L.P. 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Meadowbrook Opportunity Fund LLC 000 Xxxx Xxxx Xxxx, Xxxxx 000 34,364
Xxxxxxxxx, XX 00000
Kuekenhof Equity Fund, L.P. 00 Xxxxxx Xxxxxx, Xxxxx 0 85,911
Fund, L.P. Xxxxxx, XX 00000
Xxx Xxxx and Xxxxx Xxxx Living Trust 000 Xxxxx Xxxxxxx 000,000
Xxx Xxxxxxx, XX 00000
20
