Exhibit 10.14
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 12, 2001, between
the investor or investors signatory hereto (each an "Investor" and together the
"Investors"), and Data Race, Inc., a Texas corporation (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Investors are purchasing from the Company, pursuant to the
Convertible Debentures and Warrants Purchase Agreement dated the date hereof
(the "Purchase Agreement") (capitalized terms not defined herein shall have the
meanings ascribed to them in the Purchase Agreement), $1,000,000, in the
aggregate, principal amount of the Company's 6% Convertible Debentures and
Warrants; and
WHEREAS, the Company desires to grant to the Investors the
registration rights set forth herein with respect to the Conversion Shares of
Common Stock issuable upon conversion of, or as interest upon, the Convertible
Debentures, shares of Common Stock issuable upon exercise of the Warrants
purchased pursuant to the Purchase Agreement and shares issuable in the event of
a registration default pursuant to Section 3(f) (the "Securities").
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
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"Registrable Security" means 200% of the Securities until (i) the Registration
Statement has been declared effective by the Securities and Exchange Commission
(the "Commission"), and all Securities have been disposed of pursuant to the
Registration Statement, (ii) all Securities have been sold under circumstances
under which all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act ("Rule 144") are met, or (iii)
such time as, in the opinion of counsel to the Company reasonably satisfactory
to the Investors and upon delivery to the Investors of such executed opinion,
all Securities may be sold without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act. In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be deemed to be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
Section 2. Restrictions on Transfer. Each Investor acknowledges and
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understands that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Securities Act. Each Investor understands that no disposition or
transfer of the Securities may be made by Investor in the absence of (i) an
opinion of counsel to the Investor, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act or (ii) such registration.
With a view to making available to the Investors the benefits of Rule
144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required to be filed with the Commission pursuant to Section 13
or 15(d) under the Exchange Act by companies subject to either of such
sections, irrespective of whether the Company is then subject to such
reporting requirements; and
(c) Upon request by the Transfer Agent, the Company shall provide the
Transfer Agent an opinion of counsel, which opinion shall be reasonably
acceptable to the Transfer Agent, that the Investor has complied with the
applicable conditions of Rule 000 ( xx any similar provision then in force)
under the Securities Act.
Section 3. Registration Rights With Respect to the Securities.
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(a) The Company agrees that it will prepare and file with the
Commission, within 10 calendar days after the first Closing Date, a pre-
effective amendment to the recently filed registration statement on Form S-
3, File No. 333-57166 or another registration statement (on Form S-3, or
other appropriate registration statement form) under the Securities Act (as
applicable, the "Registration Statement"), at the sole expense of the
Company (except as provided in Section 3(c) hereof), in respect of the
Investors, so as to permit the resale of the Securities under the Act by
the Investors as selling stockholders and not as underwriters.
(b) The Company shall cause such Registration Statement to become
effective within 75 calendar days after the first Closing Date, or, if
earlier, within 5 days of SEC clearance to request acceleration of
effectiveness. The number of shares designated in the Registration
Statement to be registered shall include all the Warrant Shares, 100% of
the already converted Conversion Shares held by any Investor on the filing
date and at least 200% of the greater of the number of shares which would
be issuable upon the conversion of the principal amount of the Convertible
Debentures issued and to be issued at the Conversion Price in effect (i) on
the first Closing Date, or (ii) on the date of the filing of the
Registration Statement, and such number of shares as the Company deems
prudent for the purpose of issuing shares of Common Stock as interest on
the Convertible Debentures, and shall include appropriate language
regarding reliance upon Rule 416 to the extent permitted by the Commission.
The Company will notify the Investors and its transfer agent of the
effectiveness of the Registration Statement within 1 Trading Day of such
event. After the Effective Date, within 15 days after the day on which the
number of Securities registered for resale by the Investors,
notwithstanding the limitation o conversion herein and in the Purchase
Agreement, is less than 125% of the number of Securities (calculated at the
Conversion Price on such date) held by the Investors on such
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date (the "Further Registration Date"), the Company shall file a further
registration statement registering a number of shares of Common Stock to
the extent that at least 200% of the shares which would be required to be
issued upon the conversion of the remaining Convertible Debentures at the
Conversion Price on the date of the filing of such further registration
statement are registered and shall prosecute such additional registration
statement to effectiveness within 60 calendar days of the date of the
Further Registration Date. Each Investor shall have the right to convert
all or any of its Convertible Debenture into up to a number of registered
shares of Common Stock equal to such Investor's fraction of the aggregate
Purchase Price multiplied by the initially registered and, if applicable,
subsequently registered Securities; provided, however, in no event shall
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this provision limit each Investor's right to convert its Convertible
Debenture into unregistered Common Stock.
(c) The Company will maintain the Registration Statement or post-
effective amendment filed under this Section 3 effective under the
Securities Act until the earlier of (i) the date that none of the
Securities covered by such Registration Statement are or may become issued
and outstanding, (ii) the date that all of the Securities have been sold
pursuant to such Registration Statement, (iii) the date the Investors
receive an opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Investors, that the Securities may be sold
under the provisions of Rule 144 without limitation as to volume, (iv) all
Securities have been otherwise transferred to persons who may trade such
shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, or (v) three (3) years from
the Effective Date.
(d) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of
the Registration Statement hereunder and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees of the Company) shall be borne by the Company. The Investors shall
bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered and the
fees and expenses of their counsel. The Investors and their counsel shall
have a reasonable period, not to exceed 5 Trading Days, to review the
proposed Registration Statement or any amendment thereto, prior to filing
with the Commission, and the Company shall provide each Investor with
copies of any comment letters received from the Commission with respect
thereto within 2 Trading Days of receipt thereof. The Company shall qualify
any of the securities for sale in such states as any Investor reasonably
designates and shall furnish indemnification in the manner provided in
Section 6 hereof. However, the Company shall not be required to qualify in
any state which will require an escrow or other restriction relating to the
Company and/or the sellers, or which will require the Company to qualify to
do business in such state or require the Company to file therein any
general consent to service of process. The Company at its expense will
supply the Investors with copies of the applicable Registration Statement
and the prospectus included therein and other related documents in such
quantities as may be reasonably requested by the Investors.
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(e) The Company shall not be required by this Section 3 to include an
Investor's Registrable Securities in any Registration Statement which is to
be filed if, in the opinion of counsel for both the Investor and the
Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the
Investor and the Company) the proposed offering or other transfer as to
which such registration is requested is exempt from applicable federal and
state securities laws and would result in all purchasers or transferees
obtaining securities which are not "restricted securities", as defined in
Rule 144 under the Securities Act.
(f) In the event that (i) the Registration Statement is not filed by
the Company in a timely manner as set forth in Section 3(a), (ii) the
Registration Statement is not declared effective by the Commission within
the period of time set forth in Section 3(b) herein, or within five (5)
days of clearance by the Commission to request effectiveness, (iii) such
Registration Statement is not maintained as effective by the Company for
the period set forth in Section 3(c) above, or (iv) the additional
registration statement referred to in Section 3(b) is not filed within 15
calendar days or declared effective within 60 calendar days as set forth
therein (each a "Registration Default") then the Company will pay each
Investor (pro-rata on a monthly basis), for each Registration Default then
in effect, as liquidated damages and not as a penalty, during any period in
which a Registration Default is occurring, two percent (2%) per month of
(i) the then outstanding principal amount of the Convertible Debentures,
and (ii) the value of any outstanding Warrants (valued at the difference
between the average closing bid price during the applicable month and the
Exercise Price multiplied by the number of Warrant Shares the Warrants are
exercisable into), held by such Investor until such corresponding
Registration Default no longer exists ("Liquidated Damages"). Such payment
of the Liquidated Damages shall be made to the Investors in cash, or, at
the option of the Company, in registered shares of Common Stock (based on
the Conversion Price (as defined in the Convertible Debenture)) on the
Trading Day prior to the date of payment) on the last day of each month
during which a Registration Default occurred or was continuing, without
demand therefor by the Investor; provided, however, that the payment of
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the Liquidated Damages shall not relieve the Company from its obligations
to register the Securities pursuant to this Section.
If the Company does not remit the payment to the Investors as set
forth above, the Company will pay the Investors reasonable costs of
collection, including attorneys' fees, in addition to the Liquidated
Damages and interest of 15% per annum on any liquidated damage payments not
made in a timely manner as set forth above. The registration of the
Securities pursuant to this provision shall not affect or limit the
Investors' other rights or remedies as set forth in this Agreement.
(g) The Company shall be precluded from including in any registration
statement which it is required to file pursuant to this Section 3 any other
securities apart from the Registrable Securities, without the prior written
consent of a majority in interest of the Investors.
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(h) If at any time or from time to time after the effective date of
any Registration Statement, the Company notifies the Investors in writing
of the existence of a Potential Material Event (as defined in Section 3(i)
below), the Investors shall not offer or sell any Securities or engage in
any other transaction involving or relating to Securities, from the time of
the giving of notice with respect to a Potential Material Event until the
Investors receive written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer
constitutes a Potential Material Event; provided, however, that the Company
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may not so suspend the right to such holders of Securities for more than
twenty (20) calendar days in the aggregate during any twelve month period,
during the period the Registration Statement is required to be in effect,
and if such period is exceeded, such event shall be a Registration Default
and subject to liquidated damages as set forth in Section 3(f) hereof. The
Company must give the Investors notice in writing prior to the first day of
the blackout period immediately upon knowledge that such a blackout period
will occur and such notice must be acknowledged in writing by the
Investors. Failure to provide the Investors with such notice shall
constitute a Registration Default during the entire applicable period that
the Registration Statement is suspended. Compliance by the Company with
this Section 3(h) will not result in or be deemed a breach of any of the
Company's obligations set forth in the Purchase Agreement not to disclose
non-public information to the Investors.
(i) "Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for disclosure
in a registration statement, as determined in good faith by the Chief
Executive Officer or the Board of Directors of the Company that disclosure
of such information in a Registration Statement would be detrimental to the
business and affairs of the Company; or (b) any material engagement or
activity by the Company which would, in the good faith determination of the
Chief Executive Officer or the Board of Directors of the Company, be
adversely affected by disclosure in a registration statement at such time,
which determination shall be accompanied by a good faith determination by
the Chief Executive Officer or the Board of Directors of the Company that
the applicable Registration Statement would be materially misleading absent
the inclusion of such information.
Section 4. Cooperation with Company. The Investors will cooperate
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with the Company in all respects in connection with this Agreement, including
timely supplying all information reasonably requested by the Company (which
shall include all information regarding the Investors and proposed manner of
sale of the Registrable Securities required to be disclosed in any Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing their obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. Nothing
in this Agreement shall obligate any Investor to consent to be named as an
underwriter in any Registration Statement. The obligation of the Company to
register the Registrable Securities shall be absolute and unconditional as to
those Securities which the Commission will permit to be registered without
naming the Investors as underwriters.
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Any delay or delays caused by the Investors by failure to cooperate as required
hereunder shall not constitute a Registration Default.
Section 5. Registration Procedures. If and whenever the Company is
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required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible, subject to
the Investors' assistance and cooperation as reasonably required with respect to
each Registration Statement:
(a) (i) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of all Registrable Securities
covered by such Registration Statement whenever the Investors shall desire
to sell or otherwise dispose of the same (including prospectus supplements
with respect to the sales of Registrable Securities from time to time in
connection with a registration statement pursuant to Rule 415 promulgated
under the Act) and (ii) take all lawful action such that each of (A) the
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading and (B) the prospectus forming part of the
Registration Statement, and any amendment or supplement thereto, does not
at any time during the Registration Period include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(b) (i) prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or
delivery of any prospectus (including any supplements thereto), provide
draft copies thereof to the Investors as required by Section 3(d) and
reflect in such documents all such comments as the Investors (and their
counsel) reasonably may propose respecting the Selling Shareholders and
Plan of Distribution sections (or equivalents); (ii) furnish to each
Investor such numbers of copies of a prospectus including a preliminary
prospectus or any amendment or supplement to any prospectus, as applicable,
in conformity with the requirements of the Act, and such other documents,
as such Investor may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Securities owned by such
Investor; and (iii) provide to each Investor copies of any comments and
communications from the Commission relating to the Registration Statement,
if lawful to do so;
(c) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Investors shall reasonably request (subject to the
limitations set forth in Section 3(d) above), and do any and all other acts
and things which may be necessary or advisable to enable each Investor to
consummate the public sale or other disposition in such jurisdiction of the
Registrable Securities owned by such Investor;
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(d) list such Registrable Securities on the Principal Market, if the
listing of such Registrable Securities is then permitted under the rules of
such Principal Market;
(e) notify each Investor at any time when a prospectus relating
thereto covered by the Registration Statement is required to be delivered
under the Act, of the happening of any event of which it has knowledge as a
result of which the prospectus included in the 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 or necessary to make
the statements therein not misleading in the light of the circumstances
then existing, subject to Section 3(h), and the Company shall prepare and
file a curative amendment under Section 5(a) as quickly as commercially
possible and during such period, the Investors shall not make any sales of
Registrable Securities pursuant to the Registration Statement and during
such period; provided, however, any period during which the Investors are
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precluded from making sales of the Registrable Securities shall be included
in the 20 calendar day period in Section 3(h) and any such days herein
which exceed, or cause the Company to exceed, such 20 calendar day period
shall be deemed a Registration Default and the Company shall be subject to
Liquidated Damages as set forth in Section 3(f).
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time
and take all lawful action to effect the withdrawal, recession or removal
of such stop order or other suspension;
(g) cooperate with the Investors to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case
may be, as the Investors reasonably may request and registered in such
names as the Investors may request; and, within 3 Trading Days after a
Registration Statement which includes Registrable Securities is declared
effective by the Commission, deliver and cause legal counsel selected by
the Company to deliver to the transfer agent for the Registrable Securities
(with copies to the Investors) an appropriate instruction and, to the
extent necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods therefor
provided in the prospectus which are customary for issuers to perform under
the circumstances;
(i) in the event of an underwritten offering, promptly include or
incorporate in a prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably
object and make all required filings of such
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prospectus supplement or post-effective amendment as soon as practicable
after it is notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment; and
(j) maintain a transfer agent and registrar for its Common Stock.
Section 6. Indemnification.
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(a) To the maximum extent permitted by law, the Company agrees to
indemnify and hold harmless the Investors and each person, if any, who
controls an Investor within the meaning of the Securities Act (each a
"Distributing Investor") against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense
and investigation and all reasonable attorneys' fees and expenses), to
which the Distributing Investor may become subject, under the Securities
Act 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, or any related final prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to
the extent, and only to the extent, that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, preliminary prospectus, final prospectus or amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by the Distributing Investor, its
counsel, affiliates or any underwriter, specifically for use in the
preparation thereof or (ii) by such Investor's failure to deliver to the
purchaser a copy of the most recent prospectus (including any amendments or
supplements thereto. This indemnity agreement will be in addition to any
liability, which the Company may otherwise have.
(b) To the maximum extent permitted by law, each Distributing Investor
agrees that it will indemnify and hold harmless the Company, and each
officer and director of the Company or person, if any, who controls the
Company within the meaning of the Securities Act, against any losses,
claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense
and investigation and all reasonable attorneys' fees and expenses) to which
the Company or any such officer, director or controlling person may become
subject under the Securities Act 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, or any related final
prospectus or amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission
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or alleged omission was made in such Registration Statement, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Distributing Investor, its counsel, affiliates or any underwriter,
specifically for use in the preparation thereof. This indemnity agreement
will be in addition to any liability, which the Distributing Investor may
otherwise have. Notwithstanding anything to the contrary herein, the
Distributing Investor shall be liable under this Section 6(b) for only that
amount as does not exceed the net proceeds to such Distributing Investor as
a result of the sale of Registrable Securities pursuant to the Registration
Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action against such indemnified
party, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 6, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve the indemnifying party
from any liability which it may have to any indemnified party except to the
extent the failure of the indemnified party to provide such written
notification actually prejudices the ability of the indemnifying party to
defend such action. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, assume the defense thereof, subject
to the provisions herein stated and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation, unless the indemnifying party
shall not pursue the action to its final conclusion. The indemnified
parties as a group shall have the right to employ one separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall not be at the expense of the indemnifying
party if the indemnifying party has assumed the defense of the action with
counsel reasonably satisfactory to the indemnified party unless (i) the
employment of such counsel has been specifically authorized in writing by
the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and
the indemnifying party and the indemnified party shall have been advised by
its counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses
which may be available to the indemnified party or any other indemnified
party (in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable only for the reasonable fees and
expenses of one separate firm of attorneys for the indemnified party, which
firm shall be designated in writing by the indemnified party). No
settlement of any action against an indemnified party shall be made without
the prior written consent of the indemnified party, which consent shall not
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be unreasonably withheld so long as such settlement includes a full release
of claims against the indemnified party.
All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to
the indemnified party, as incurred, within ten (10) Trading Days of written
notice thereof to the indemnifying party; provided, that the indemnifying
party may require such indemnified party to undertake to reimburse all such
fees and expenses to the extent it is finally judicially determined that
such indemnified party is not entitled to indemnification hereunder.
Section 7. Contribution. In order to provide for just and equitable
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contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Investor shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees and
expenses), in either such case (after contribution from others) on the basis of
relative fault as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the applicable Distributing Investor on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Distributing Investor agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. 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.
Notwithstanding any other provision of this Section 7, in no event
shall any (i) Investor be required to undertake liability to any person under
this Section 7 for any amounts in excess of the dollar amount of the proceeds
received by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act and (ii) underwriter be
required to undertake liability to any person hereunder for any amounts in
excess of the aggregate discount, commission or other
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compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to such Registration
Statement.
Section 8. Notices. All notices, demands, requests, consents,
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approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) hand delivered,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by facsimile, addressed as set forth in the
Purchase Agreement or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the first business day following the date of sending
by reputable courier service, fully prepaid, addressed to such address, or (c)
upon actual receipt of such mailing, if mailed. Either party hereto may from
time to time change its address or facsimile number for notices under this
Section 8 by giving at least ten (10) days' prior written notice of such changed
address or facsimile number to the other party hereto.
Section 9. Assignment. This Agreement is binding upon and inures to
----------
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The rights granted the Investors under this Agreement may be
assigned to any purchaser of substantially all of the Registrable Securities (or
the rights thereto) from an Investor, as otherwise permitted by the Purchase
Agreement.
Section 10. Additional Covenants of the Company. The Company agrees
-----------------------------------
that, for so long as it shall be required to maintain the effectiveness of the
Registration Statement, it shall file all reports and information required to be
filed by it with the Commission in a timely manner and take all such other
action so as to maintain such eligibility for the use of such form.
Section 11. Counterparts/Facsimile. This Agreement may be executed
----------------------
in two or more counterparts, each of which shall constitute an original, but all
of which, when together shall constitute but one and the same instrument, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties. In lieu of the original, a
facsimile transmission or copy of the original shall be as effective and
enforceable as the original.
Section 12. Remedies. The remedies provided in this Agreement are
--------
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative
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means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction.
Section 13. Conflicting Agreements. The Company shall not enter into
----------------------
any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement or
otherwise prevents the Company from complying with all of its obligations
hereunder.
Section 14. Headings. The headings in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 15. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. The Company and each of the
Investors agree to submit themselves to the in personam jurisdiction of the
state and federal courts situated within the Southern District of the State of
New York with regard to any controversy arising out of or relating to this
Agreement. The non-prevailing party to any dispute hereunder shall pay the
expenses of the prevailing party, including reasonable attorneys' fees, in
connection with any such dispute.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed, on this __ day of June, 2001.
DATA RACE, INC.
By:______________________________________
Xxxxxxx XxXxxxxxx, President & CEO
INVESTORS:
ALPHA CAPITAL AG
By:_____________________________________
Xxxxxx Xxxxxxxxx, Authorized Signatory
XXXXXXXXXXX X.X.
By:______________________________________
Xxxxxxx Xxxxxxxxxxx, Authorized Signatory
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