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REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of this 14 day of January, 2004, among DISTINCTIVE
DEVICES INC., a Delaware corporation (the "Company"), and those holders of the
common stock of the Company listed on Schedule A attached hereto (individually,
a "Stockholder" and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Company acquired the outstanding capital stock of galaxis
technology ag from Media Hill Communication Beratungs-und Vertriebs GmbH (the
"Seller"), pursuant to a Share Purchase Agreement, dated the date hereof, in
exchange, in part, for shares of the Company's Common Stock;
WHEREAS, the Stockholders are shareholders of the Seller and upon
distribution from the Seller they received shares of the Company's Common Stock
listed on Schedule A; and
WHEREAS, the Company and the Stockholders agree that this Agreement shall
govern the rights of the Stockholders to cause the Company to register the
shares of the Company's Common Stock they received from the Seller.
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, $.001 par value, of the Company, or
any other class into which such Common Stock may be changed.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Person" means an individual, a corporation, a partnership, a trust, an
unincorporated organization, and a government or any department, agency, or
political subdivision thereof.
"Prospectus" means the prospectus included in the Registration Statement,
as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Shares covered by the
Registration Statement, and all other amendments or supplements to the
prospectus, including post-effective amendments.
"Registrable Shares" means (i) shares of Common Stock held by each
Stockholder, as set forth on Schedule A attached hereto, and (ii) any other
shares of Common Stock of the Company issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, however, that shares of Common Stock which are
Registrable Shares shall cease to be Registrable Shares upon any sale pursuant
to a Registration Statement, Section 4(1) of the Securities Act or Rule 144
under the Securities Act.
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"Registration Expenses" means the expenses described in Section 5 hereof.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of Common Stock of
the Company (other than a registration statement for an employee benefit plan on
Form S-8 or on any other form or in connection with a merger exchange or other
extraordinary transaction on Form S-4 or any other form).
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
"Selling Stockholder" means a Stockholder who has Registrable Shares
included in a Registration Statement by reason of this Agreement or any
permitted transferee of a Stockholder.
2. Demand Registration.
2.1 Demand. A Stockholder or Stockholders may request the Company in
writing to effect the registration of their Registrable Shares under the
Securities Act. Upon receipt of any such request, the Company shall promptly
give written notice of such proposed registration to all other Stockholders.
Such Stockholders shall have the right (the "Demand Registration Right"), by
giving written notice to the Company within thirty (30) days after the Company
provides its notice, to elect to have included in such registration such of
their Registrable Shares as such Stockholders may request in such notice of
election; provided that the registration cover at least fifty-one percent (51%)
of the aggregate number of shares of Common Stock initially received by the
Stockholders from the Seller (subject to any adjustments by reason of stock
splits, stock dividends, reclassification, recapitalization or similar events.)
Thereupon, the Company shall, as expeditiously as possible, use its best efforts
to effect the registration all Registrable Shares which the Company has been
requested to register in accordance with Section 4.
2.2 Demand Period Notice. A notice requesting registration pursuant to
Section 2.1 above may be given by the Stockholders at any time subsequent to
January 31, 2005 and prior to the second anniversary of the date thereof. Such
notice will describe the proposed plan of sale or distribution, including the
underwriters or brokers to be used (if any); provided, however, that if the
registration is to be underwritten, the Company will have the right to approve
the managing underwriter designated by the Stockholder or Stockholders
requesting such registration, which approval will not be unreasonably withheld.
2.3 Filing Obligation. The Company will not be required to file more
than one (1) Registration Statement pursuant to this Section 2 that is declared
effective by the Commission. In addition, the Company will not be required to
file any Registration Statement hereunder within six (6) months after the
effective date of any other Registration Statement for the offer and sale of
equity securities by the Company. The Company will use its best efforts to
maintain the effectiveness of a Registration Statement filed under this Section
2 for a period of not less than ninety (90) days from the effective date
thereof.
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2.4 Delay. If at the time of any request to register Registrable
Shares pursuant to this Section 2 or a Registration Statement has been filed but
has not yet been declared effective, the Company is engaged or has fixed plans
to engage in any financing, acquisition or other material transaction which
would be adversely affected by the filing or the maintenance of a Registration
Statement otherwise required to be filed or maintained pursuant to this Section
2, or that the Company is in the possession of material nonpublic information
required to be disclosed in the Registration Statement, the disclosure of which
in such Registration Statement would be materially disadvantageous to the
Company (a "Disadvantageous Condition"), then the Company may at its option
direct that such request be delayed or, if such Registration Statement has
already been filed, may request the Registration Statement be withdrawn, for the
shortest period of time but not in excess of six (6) months from the date of
determination, and shall promptly give the Selling Stockholders notice of such
determination, containing a general statement of the reasons for such delay and
an approximation of the anticipated delay. If the Company shall so delay the
filing or effect the withdrawal of the Registration Statement, the Selling
Stockholders shall have the right to withdraw the request for registration by
giving notice to the Company within thirty (30) days after receipt of the notice
of delay.
3. Piggy-Back Registration.
3.1 Notice. Whenever the Company proposes to file a Registration
Statement (other than pursuant to Section 2 hereof) covering shares of Common
Stock at any time and from time to time commencing on October 1, 2004 and
terminating on the second anniversary of the date of this Agreement, it will,
prior to such filing, give written notice to the Stockholders of its intention
to do so and, upon the written request of a Stockholder or Stockholders given
within twenty (20) days after the Company provides such notice (which request
shall state the intended method of disposition of such Registrable Shares), the
Company shall use its best efforts to cause all Registrable Shares which the
Company has been requested by such Stockholder or Stockholders to register to be
registered under the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of distribution
specified in the request of the Stockholders (the "Piggy-Back Registration
Right"); provided that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 3 without obligation to the
Stockholders; and provided further, however, that the Company shall not be
required to include in a Registration Statement covering the offer and sale by
the Company of Common Stock in compliance with its obligations under Section
1.3(b) of the Share Purchase Agreement. A Stockholder shall have the right to
have his Registrable Shares included in two (2) Registration Statements that are
declared effective by the Commission.
3.2 Expiration. After the expiration of two (2) years from the date of
this Agreement, the Company shall have no obligation under this Section 3 to
effect any registration of the Registrable Shares of any Stockholder or to give
notice to any Stockholder of any registration by the Company.
3.3 Underwritten Offering. In connection with any offering under this
Section 3 involving an underwriting, the Company shall not be required to
include any Registrable Shares in such underwriting unless the Selling
Stockholders accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it, and then only in such quantity as
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will not, in the judgment of the underwriters, jeopardize the success of the
offering by the Company. If in the opinion of the managing underwriter the
registration of all, or part of, the Registrable Shares which the Selling
Stockholders have requested to be included would materially and adversely affect
such public offering, then (i) the Company shall be required to include in the
underwriting only that number of Registrable Shares, if any, which the managing
underwriter believes may be sold without causing such adverse effect, and the
number of Registrable Shares that may be included in such registration shall be
allocated among all Selling Stockholders requesting to participate in such
registration in proportion (as nearly as practicable) to the amount of
Registrable Shares owned by each Selling Stockholder, or (ii) the Company may
require the Selling Stockholders to delay any offering of the Registrable Shares
for a period of up to ninety (90) days.
4. Registration Procedures.
4.1 Filing. If and whenever the Company is required by the provisions
of this Agreement to use its best efforts to effect the registration of any of
the Registrable Shares under the Securities Act, the Company shall:
(i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
(ii) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration as may be necessary to keep the
Registration Statement effective for a period of not less than ninety (90) days
from the effective date thereof;
(iii) as expeditiously as possible furnish to each Selling
Stockholder such reasonable numbers of copies of the Prospectus, including a
preliminary Prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the Selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the Selling Stockholders;
(iv) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under applicable state securities or Blue Sky laws to the extent necessary to
permit the sale or other disposition of such Registrable Shares to the public in
such states as the Selling Stockholders may reasonably request, and do any and
all other acts and things that may be necessary or desirable to enable the
Selling Stockholders to consummate the public sale or other disposition in such
states of the Registrable Shares owned by the Selling Stockholders; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction;
(v) cause all Registrable Shares relating to such Registration
Statement to be listed on any natural securities exchange or automated quotation
system or to be quoted on the over-the-counter bulletin board where the Common
Stock is then listed or quoted; and
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(vi) notify each Selling Stockholder of Registrable Shares
covered by such Registration Statement, at any time when a Prospectus relating
thereto covered by such Registration Statement is required to be delivered under
the Act, of the happening of any event as a result of which the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein when necessary to make the statements therein contained not
misleading in the light of the circumstances then existing.
4.2 Updating. If the Company has delivered preliminary or final
Prospectuses to the Selling Stockholders and after having done so the Prospectus
is amended to comply with the requirements of the Securities Act, the Company
shall promptly notify the Selling Stockholders and, if requested, the Selling
Stockholders shall immediately cease making offers of Registrable Shares and
return all Prospectuses to the Company. The Company shall promptly provide the
Selling Stockholders with revised Prospectuses and, following receipt of the
revised Prospectuses, the Selling Stockholders shall be free to resume making
offers of the Registrable Shares.
5. Allocation of Expenses. The Company will pay all Registration Expenses
of all registrations under this Agreement; provided, however, that if a
registration is withdrawn at the request of the Selling Stockholders requesting
such registration (other than as a result of information concerning the business
or financial condition of the Company which is made known to the Selling
Stockholders after the date on which such registration was requested) and if the
requesting Selling Stockholders elect not to have such registration counted as a
registration requested under Section 2 hereof, then the requesting Selling
Stockholders shall pay the Registration Expenses of such registration pro rata
in accordance with the number of their Registrable Shares included in such
registration. For purposes of this Section 5, the term "Registration Expenses"
shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
the Company, state Blue Sky fees and expenses, and the expense of any special
accounting services incident to or required by any such registration, but
excluding underwriting discounts, selling commissions and the fees and expenses
of each Selling Stockholders' own counsel.
6. Indemnification.
6.1 By the Company. In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, to the
extent permitted by law, the Company will indemnify and hold harmless each
Selling Stockholder who participates in such Registration Statement, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Stockholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions 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 Registrable Shares
were registered under the Securities Act, any preliminary Prospectus or xxxxx
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Prospectus contained in such Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such Selling Stockholder, underwriter and each such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 6.1 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 nor shall the Company
be liable for any loss, claim, damage, liability or action to the extent that
(i) it arises out of or is based upon a violation which occurs in reliance upon
any conformity with written information furnished expressly for use in
connection with such registration by any such Selling Stockholder, underwriter,
or controlling person, or (ii) it arises out of or is based upon any material
misstatement or material omission in any such registration statement,
preliminary Prospectus or final Prospectus if (X) such misstatement or omission
is corrected by the Company in an amendment or supplement thereto provided to
the Selling Stockholders by the Company in sufficient time prior to the sale of
such securities to permit the dissemination thereof to the purchases of
securities and (Y) such amendment or supplement (containing such correction)
shall not have been given or sent by the Selling Stockholders to the purchaser
of the securities.
6.2 By the Selling Stockholders. In the event of any registration of
any of the Registrable Shares under the Securities Act pursuant to this
Agreement, each Selling Stockholder participating in such registration,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any) and each Person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary Prospectus or final Prospectus contained in such Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such Selling Stockholder, specifically for use in connection with the
preparation of such Registration Statement, prospectus, amendment or supplement;
and each such Selling Stockholder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter and Person in connection with, investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 6.2 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 Selling Stockholder nor shall
such Selling Stockholder be liable for any loss, claim, damage, liability or
action to the extent that it arises out of or is based upon information not
furnished expressly for use in connection with such registration by such Selling
Stockholder.
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6.3 Procedure. Promptly after receipt by the party entitled to
indemnification under this Section 6 (the "Indemnified Party") of notice of the
commencement of any action (including any governmental action), such Indemnified
Party will, if a claim in respect thereof is to be made against any party
required to provide indemnification under this Section 6 (the "Indemnifying
Party"), deliver to the Indemnifying Party a written notice of the commencement
thereof and the Indemnifying Party shall have the right to participate in, and,
to the extent the Indemnifying Party so desires, jointly with any other
Indemnifying Party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an Indemnified
Party shall have the right to retain its own counsel (limited to one counsel for
all Indemnified Parties), with the fees and expenses of such counsel to be paid
by the Indemnifying Party, if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the Indemnifying Party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such Indemnifying Party of any liability to the
Indemnified Party under this Section 6, but the omission so to deliver written
notice to the Indemnifying Party will not relieve it of any liability that it
may have to any Indemnified Party otherwise under this Section 6.
7. Indemnification with Respect to Underwritten Offering. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2 or 3 hereof, the Company agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including, without limitation, customary provisions
with respect to indemnification by the Company of the underwriters of such
offering.
8. Information by the Stockholder. If Registrable Shares are included in
any Registration Statement pursuant to this Agreement, each Selling Stockholder
shall furnish to the Company such information regarding the Selling Stockholder
and the distribution proposed by the Selling Stockholder and such other
information as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
9. Transfers of Certain Rights.
9.1 Permitted Transfers The rights granted to each Stockholder
pursuant to the terms of this Agreement may be transferred by such Stockholder
to another Stockholder, to any affiliate of such Stockholder; provided, however,
that the Company is given written notice by the transferee at the time of such
transfer stating the name and address of the transferee and identifying the
securities with respect to which such rights are being assigned.
9.2 Transferees. Any transferee (other than a Stockholder) to whom
rights hereunder are transferred shall, as a condition to such transfer, deliver
to the Company a written instrument by which such transferee agrees to be bound
by the obligations imposed upon the Stockholders to the same extent as if such
transferee were a Stockholder hereunder.
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9.3 Subsequent Transferees. A transferee to whom rights are
transferred pursuant to this Section 9 may not again transfer such rights to any
other person or entity other than as provided in Section 9.1 or 9.2 above.
10. No Assignment. Except as provided in Section 9 hereof, the
registration rights granted pursuant to this Agreement may not be transferred
or assigned by any Selling Stockholder except to Lloyds TSB Bank plc with
respect to any registerable shares as to which Lloyds Bank has the right to sell
or to acquire under a pledge agreement with either galaxis technology AG or
Media Hill Communication Beratungs- und Vertriebs GmbH. This Agreement is
intended for the benefit of the parties hereto and their permitted transferees
pursuant to Section 9, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.
11. Entire Agreement; Amendments. This Agreement embodies the entire
agreement and understanding between the parties, and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
provisions of this Agreement may be modified or amended at any time and from
time to time only by an agreement or consent in writing executed by the Company
and the holders of a majority of the Registrable Shares then outstanding;
provided, however, that the rights granted under this Agreement may be amended
only in a manner which affects all Registrable Shares in the same fashion.
12. Notices. All notices, requests, consents and other communications
required to be given pursuant to this Agreement shall be in writing and shall be
given by personal delivery, recognized overnight courier or by certified or
registered mail, return receipt requested. Notices shall be deemed given when
delivered personally or by courier or three (3) days after being so mailed, as
the case may be, to the address set forth herein, or to such other address as
any party hereto may duly give to the other parties. Notice to the Stockholders
shall be to the addresses set forth opposite each Stockholder's name on Schedule
A attached hereto, and notice to the Company shall be to:
Distinctive Devices Inc.
Xxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxx, Xxx Xxxxxx 00000
XXX
Attn: Xxxxxx Xxxx, President & Chief Executive Officer
13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law. Each party herein irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the City of Wilmington, State of Delaware, (the "Delaware Courts"),
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such Delaware
Court, or that such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
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party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
14. Headings. The headings of the sections, subsections, and paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part hereof.
15. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
DISTINCTIVE DEVICES, INC.
By: /s/ Xxxxxx Xxxx
-----------------------------------
Name: Xxxxxx Xxxx
Title: President & Chief Executive Officer
STOCKHOLDERS LISTED ON SCHEDULE A
ATTACHED HERETO:
By: /s/ Hans Xxxxxx Xxxxxx
-----------------------------------
Name:
Title:
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SCHEDULE A
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Name and Address Number of Shares
---------------- ----------------
MEDIA HILL COMMUNICATION BERATUNGS-UND 6,400,000
VERTRIEBS GMBH
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