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EXHIBIT 4.1
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REGISTRATION RIGHTS AGREEMENT
By and Among
PURCHASERS OF UNITS
and
XXXXXX INDUSTRIES, INC.
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Common Stock, par value $.01 per share
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Dated as of October 15, 1997
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TABLE OF CONTENTS
Page
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1. Registration Under Securities Act, etc . . . . . . . . . . . . . . . . 1
1.1 Registration on Request . . . . . . . . . . . . . . . . . . . 1
1.2 Piggy-Back Registration . . . . . . . . . . . . . . . . . . . 3
1.3 Registration Procedures . . . . . . . . . . . . . . . . . . . 4
1.4 Underwritten Offerings . . . . . . . . . . . . . . . . . . . 6
1.5 Preparation: Reasonable Investigation . . . . . . . . . . . . 7
1.6 Qualification to Obligations under Registration Covenants . . 8
1.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 8
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Rule 144 and Rule 144A . . . . . . . . . . . . . . . . . . . . . . . 12
4. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . 12
5. Nominees for Beneficial Owners . . . . . . . . . . . . . . . . . . . 13
6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. Calculation of Percentage Interests in Registrable Securities . . . 14
9. No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . 14
10. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . 14
14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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REGISTRATION RIGHTS AGREEMENT, dated as of October 15, 1997,
among Xxxxxx Industries, Inc., a Delaware corporation (the "Company") and each
of the undersigned Purchasers of Units identified on the signature page hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
This Agreement is being entered into in connection with a
Securities Purchase Agreement, of even date herewith between the Company and
the Purchasers (the "Purchase Agreement") providing for the issuance by the
Company to the Purchasers of Units consisting of Senior Convertible Notes
(collectively, the "Notes") of the Company and Warrants (collectively, the
"Warrants") entitling the holders thereof to purchase, upon conversion of the
Notes and exercise of the Warrants, up to 8,000,000 shares (subject to
adjustment) of Common Stock, par value $.01 per share, of the Company (the
"Common Stock"), upon the terms and subject to the conditions set forth
therein. It is a condition precedent to the obligations of the Company and the
Purchasers to consummate the transactions contemplated by the Purchase
Agreement that the Company and the Purchasers enter into this Agreement.
Capitalized terms used herein but not otherwise defined shall have the meanings
given them in the Purchase Agreement.
1. Registration Under Securities Act, etc.
1.1 Registration on Request.
(a) Request. At any time, or from time
to time, upon the written request of one or more holders (the "Initiating
Holders") of Registrable Securities representing not less than 50% (25% in the
case of a registration on Form S-3) of the Registrable Securities that the
Company effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities, the Company promptly will give
written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect, at the earliest possible date, the registration under the Securities
Act of (i) the Registrable Securities which the Company has been so requested
to register by such Initiating Holders, and (ii) all other Registrable
Securities which the Company has been requested to register by the holders
thereof (such holders together with the Initiating Holders hereinafter are
referred to as the "Selling Holders") by written request given to the Company
within 30 days after the giving of such written notice by the Company, all to
the extent requisite to permit the disposition of the Registrable Securities so
to be registered.
(b) Registration of Other Securities.
Whenever the Company shall effect a registration pursuant to this Section 1.1,
no securities other than Registrable Securities and other securities subject to
registration rights granted by the Company shall be included among the
securities covered by such registration unless Initiating Holders of greater
than 51% of the Registrable Securities to be included in such registration
shall have consented in writing to the inclusion of such other securities,
which consent shall not be unreasonably withheld or delayed.
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(c) Registration Statement Form.
Registrations under this Section 1.1 shall be on such appropriate registration
form of the Commission as shall be reasonably selected by the Company.
(d) Effective Registration Statement. A
registration requested pursuant to this Section 1.1 shall not be deemed to have
been effected unless a registration statement with respect thereto has become
effective and remained effective in compliance with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement for a period of at least 120 days, or
earlier if all Registrable Securities have been sold pursuant to such
registration statement.
(e) Selection of Underwriters. If the
Selling Holders of at least 50% of all Registrable Securities to be covered by
a registration so elect, the offering of such Registrable Securities pursuant
to this Section 1.1 shall be in the form of an underwritten offering. The
underwriter or underwriters of each underwritten offering of the Registrable
Securities so to be registered shall be selected by the Selling Holders of at
least 50% of the Registrable Securities to be included in such registration and
shall be reasonably acceptable to the Company.
(f) Priority in Requested Registration.
If the managing underwriter of an underwritten offering shall advise the
Company in writing (and the Company shall so advise each Selling Holder of
Registrable Securities requesting registration of such advice) that, in its
opinion, the number of securities requested to be included in such registration
is sufficiently large to materially adversely affect the success of the
offering, the Company, except as provided in the following sentence, will
include in such registration, to the extent of the number and type which the
Company is so advised can be sold in such offering, Registrable Securities
requested to be included in such registration, pro rata among the Selling
Holders requesting such registration on the basis of the estimated gross
proceeds from the sale thereof. To the extent Registrable Securities so
requested to be registered are excluded from the offering, the holders of such
Registrable Securities shall be deemed not to have used a demand registration
pursuant to this Section 1.1.
(g) Limitations on Registration on
Request. Notwithstanding anything in this Section 1.1 to the contrary, the
Company shall not be required to take any action to file a registration
statement pursuant to this Section 1.1:
(i) during the period starting with the sixty
days prior to the Company's good faith estimate of the date of
filing of, and ending 120 days following the effective date
of, any subsequent registered offering of the Company's
securities to the general public;
(ii) in any registration of less than 20% of the
Registrable Securities, unless the aggregate sales price
(before deduction of underwriting discounts and expenses of
sale) is at least $2,000,000 (or $1,000,000 in the case of a
registration on Form S-3); or
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(iii) after the Company has effected an aggregate
of two such registrations on Form S-3 and two such
registrations on any other form available to the Company
(including additional registrations on Form S-3).
(h) Expenses. The Company will pay all
Registration Expenses in connection with any registration requested pursuant to
this Section 1.1 and each Selling Holder shall pay all underwriting discounts
or commissions with respect to the Registrable Securities sold by such Selling
Holder in such registration.
1.2 Piggy-Back Registration.
(a) Right to Include Registrable Securities. If
the Company at any time proposes to file a registration statement to register
any of its equity securities (or any security convertible into or exchangeable
for any equity security of the Company) under the Securities Act (except for
registration on Form S-4 or S-8 or any successor or similar forms), whether or
not for sale for its own account, it will each such time give prompt written
notice to all registered holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section 1.2. Upon the written
request of any such holder (a "Requesting Holder") (which request shall specify
the amount of Registrable Securities intended to be disposed of by such
Requesting Holder) made as promptly as practicable and in any event within 30
days after the receipt of any such notice (20 days if the Company states in
such written notice or gives telephonic notice to all registered holders of
Registrable Securities, with written confirmation to follow promptly
thereafter, stating that (i) such registration will be on Form S-3 and (ii)
such shorter period of time is required because of a planned filing date), the
Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Requesting Holders thereof. No registration
effected under this Section 1.2 shall relieve the Company of its obligation to
effect any registration upon request under Section 1.1.
(b) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall deliver a written
opinion to the holders of Registrable Securities that the total amount of
Registrable Securities requested to be included in such registration would have
a material adverse effect on such offering, then the Company will include in
such registration, to the extent of the number which the Company is so advised
can be sold in (or during the time of) such offering, first, all securities
proposed by the Company to be sold for its own account, and second, such
Registrable Securities requested to be included in such registration pursuant
to this Agreement and the securities of all other holders who possess
registration rights (the "Other Holders"), pro rata among Requesting Holders
and Other Holders on the basis of the estimated gross proceeds from the sale
thereof; provided that the number of securities included in such registration
by the Requesting Holders and the Other Holders shall not be less than 20% of
the total number of shares included in such registration and, if securities are
being offered for the account of other persons or entities as well as the
Company, such reduction shall not represent a greater fraction of the number of
securities intended to be offered by holders of Registrable Securities than the
fraction of similar reductions imposed on such other persons or entities over
the amount of securities they intended to offer.
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(c) Expenses. The Company will pay all
Registration Expenses in connection with any registration effected pursuant to
this Section 1.2 and each Selling Holder shall pay all underwriting discounts
or commissions with respect to the Registrable Securities sold by such Selling
Holder in such registration.
1.3 Registration Procedures. If and whenever the Company
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 1.1 and 1.2, the Company will, as
expeditiously an possible use its best efforts to:
(i) prepare and (within 90 days after the end of
the period within which requests for registration may be given
to the Company or in any event as soon thereafter as
practicable) file with the Commission the requisite
registration statement to effect such registration and
thereafter use its best efforts to cause such registration
statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by
such registration statement for a period of at least 120 days
or until all such Registrable Securities have been sold,
whichever is earlier;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement such number
of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including
all exhibits), such number of copies of the prospectus
contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably
request;
(iv) register or qualify all Registrable
Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such
States of the United States of America where an exemption is
not available and as the sellers of Registrable Securities
covered by such registration statement shall reasonably
request; keep such registration or qualification in effect for
so long as such registration statement remains in effect; and
take any other action which may be reasonably necessary or
advisable to enable such sellers to consummate the disposition
in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such
purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subdivision (iv) be obligated
to be so qualified or to consent to general service of process
in any such jurisdiction;
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(v) cause all Registrable Securities covered by
such registration statement to be registered with or approved
by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to
the Company and counsel to the seller or sellers of
Registrable Securities to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
(vi) furnish at the effective date of such
registration statement and, if applicable, the date of the
closing under the underwriting agreement, to each seller of
Registrable Securities, and each such seller's underwriters,
if any, a signed counterpart of (x) an opinion of counsel for
the Company, dated the effective date of such registration
statement and (y) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included or incorporated by reference in such
registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent
to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants'
comfort letters delivered to the underwriters in underwritten
public offerings of securities and, in the case of the
accountants' comfort letter, such other financial matters,
and, in the case of the legal opinion, such other legal
matters, as the sellers of the Registrable Securities covered
by such registration statement, or the underwriters, may
reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon 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 any
material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of
the circumstances under which they were made, and at the
request of any such seller promptly prepare and furnish to it
a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities,
such prospectus shall not 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 not
misleading in the light of the circumstances under which they
were made;
(viii) otherwise comply with all applicable rules
and regulations of the Commission, and, if required, make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities
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Act and Rule 158 promulgated thereunder, and promptly furnish
to each such seller of Registrable Securities a copy of any
amendment or supplement to such registration statement or
prospectus;
(ix) keep each Selling Holder and each Requesting
Holder advised in writing as to the initiation and progress of
any registration under Section 1.1 or 1.2 hereunder, as the
case may be;
(x) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by such registration
statement from and after a date not later than the effective
date of such registration; and
(xi) list all Registrable Securities covered by
such registration statement on any national securities
exchange on which Registrable Securities of the same class
and, if applicable, series, covered by such registration
statement are then listed or on the National Association of
Securities Dealers Automated Quotations ("NASDAQ") if the
Registrable Securities are reported on NASDAQ.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities, as is required
by law or the Commission to be included within the registration statement or as
the company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company
of the happening of any event of the kind described in subdivision (vii) of
this Section 1.3 , such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(vii) of this Section 1.3 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.
1.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under Section 1.1,
the Company will use all reasonable efforts to enter into an underwriting
agreement with such underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to each such holder and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of that type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 1.7. The holders of the Registrable Securities proposed to
be sold by such underwriters will reasonably cooperate with the Company in the
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negotiation of the underwriting agreement. Such holders of Registrable
Securities to be sold by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or
agreements with the Company other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution or any other representations required
by applicable law.
(b) Incidental Underwritten Offerings. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 1.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange
for such underwriters to include all the Registrable Securities to be offered
and sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require
that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such Requesting Holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or
agreements regarding such Requesting Holder, such Requesting Holder's
Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.
1.5 Preparation: Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company (i) shall give the
holders of Registrable Securities registered under such registration statement,
their underwriters, if any, and their respective counsel and accountants the
reasonable opportunity to participate (at the expense of such holder or
holders) in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, (ii) shall give each of them such reasonable access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such holders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act and (iii) shall promptly notify the
registered holders of Registrable Securities and their counsel 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.
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1.6 Qualification to Obligations under Registration
Covenants. The Company shall be entitled to postpone for a reasonable period
of time (but not exceeding 90 days) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to Section 1.1 if
the Company determines, in its reasonable judgment, that such registration and
offering would interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Company or any of
its affiliates and promptly gives the holders of Registrable Securities
requesting registration thereof pursuant to Section 1.1 written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to Section 1.1
and representing not less than 50% of the Initiating Holders shall have the
right to withdraw the request for registration by giving written notice to the
Company within 30 days after receipt of the notice of postponement and, in the
event of such withdrawal, such request shall not be counted for purposes of the
requests for registration to which holders of Registrable Securities are
entitled pursuant to Section 1.1 hereof.
1.7 Indemnification.
(a) Indemnification by the Company. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 1.1 or 1.2, each seller of any
Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, and their respective
directors, officers, partners, employees and affiliates against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or any such director, officer, partner, employee, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, 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 of any
material fact contained in any registration statement under which such
securities 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 will reimburse such seller or underwriter and each
such director, officer, partner, employee, affiliate and controlling Person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable in any such case 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 or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such seller or underwriter, as the
case may be, specifically stating that it is for use in the
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preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, employee, affiliate, partner or controlling Person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. As a
condition to including any Registrable Securities in any registration
statement, the Company shall have received an undertaking satisfactory to it
from the prospective seller of such Registrable Securities, to indemnify and
hold harmless (in the same manner and to the same extent as set forth in
subdivision (a) of this Section 1.7) the Company, and each director of the
Company, each officer of the Company and each other Person, if any, who
participates as an underwriter in the offering or sale of such securities and
each other Person who controls the Company or any such underwriter within the
meaning of the Securities Act, with respect to any statement or alleged
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 furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement; provided,
however, that the liability of such indemnifying party under this Section
1.7(b) shall be limited to the amount of proceeds received by such indemnifying
party in the offering giving rise to such liability. 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 of such securities by such seller.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of this
Section 1.7, such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 1.7, 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 party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, 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 other than reasonable costs of
investigation, provided, however, that if the indemnified party reasonably
believes it is advisable for it to be represented by separate counsel because
there exists a conflict of interest between its interests and those of the
indemnifying party with respect to such claim, or there exist defenses
available to such indemnified party which may not be available to the
indemnifying party, or if the indemnifying party shall fail to assume
responsibility for such
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defense, the indemnified party may retain counsel satisfactory to it and the
indemnifying party shall pay all reasonable fees and expenses of such counsel.
No indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written 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 to such claim or litigation or which
requires action other than the payment of money by the indemnifying party.
(d) Contribution. If the indemnification
provided for in this Section 1.7 shall for any reason be held by a court to be
unavailable to an indemnified party under subparagraph (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subparagraph (a) or
(b) hereof, the indemnified party and the indemnifying party under subparagraph
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the prospective
sellers of Registrable Securities covered by the registration statement which
resulted in such loss, claim, damage or liability, or action in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
shall be appropriate to reflect the relative benefits received by the Company
and such prospective sellers from the offering of the securities covered by
such registration statement. 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. Such prospective sellers' obligations to contribute as
provided in this subparagraph (d) are several in proportion to the relative
value of their respective Registrable Securities covered by such registration
statement and not joint. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any action or
claim effected without such Person's consent, which consent shall not be
unreasonably withheld or delayed.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
section 1.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The
indemnification and contribution required by this Section 1.7 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective meanings:
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"Affiliate" means any person that directly or indirectly
controls or is controlled by or is under common control with any Purchaser.
For purposes of this definition, an Affiliate of any Purchaser shall be deemed
to include any corporation, partnership, limited liability company or other
entity in which such Purchaser (whether directly, or indirectly through any
other Person that is an Affiliate) is an officer or director, general partner,
managing member or otherwise holds a significant equity interest.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Common Stock" is defined in the second introductory paragraph
on page 1.
"Company" is defined in the first introductory paragraph on
page 1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934, as
amended, shall include a reference to the comparable section, if any, of any
such similar Federal statute.
"Initiating Holder" is defined in Section 1.1.
"Person" means any individual, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Purchaser" and "Purchasers" are defined in the first
introductory paragraph on page 1.
"Purchase Agreement" is defined in the second introductory
paragraph on page 1.
"Registrable Securities" means (i) any shares of Common Stock
issued from time to time upon conversion of the Notes or exercise of the
Warrants and (ii) any Related Registrable Securities. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (b) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration of them under the Securities Act, or (d) they shall have ceased to
be outstanding. All references to percentages of Registrable Securities shall
be calculated pursuant to Section 8.
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"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 1, including, without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating
and printing expenses, messenger and delivery expenses, the reasonable fees and
disbursements of counsel for the Company (and one special counsel to the
Selling Holders) and of its independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such performance
and compliance, any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities (excluding any underwriting discounts or
commissions with respect to the Registrable Securities) with respect to an
underwritten offering.
"Related Registrable Securities" means any securities of the
Company issued or issuable with respect to the Registrable Securities by way of
a dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
"Requesting Holder" is defined in Section 1.2.
"Securities Act" means the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such similar statute.
"Selling Holder" is defined in Section 1.1.
"Warrants" is defined in the second introductory paragraph on
page 1.
3. Rule 144 and Rule 144A. The Company shall take all
actions reasonably necessary to enable holders of Registrable Securities to
sell such securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, (b) Rule 144A under the
Securities Act, as such Rule may be amended from time to time, or (c) any
similar rules or regulations hereafter adopted by the Commission, including,
without limiting the generality of the foregoing, filing on a timely basis all
reports required to be filed by the Exchange Act. Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether the Company has complied with such
requirements.
4. Amendments and Waivers. This Agreement may be
amended (including to add as parties hereto future purchasers of securities of
the Company) and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act of the holder or holders of at least two thirds of the Registrable
Securities affected by such amendment, action or omission to act. Each holder
of any Registrable Securities at the time or thereafter outstanding shall be
bound by any consent authorized by this Section 4, whether or not such
Registrable Securities shall have been marked to indicate such consent.
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5. Nominees for Beneficial Owners. In the event that
any Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election in writing delivered
to the Company, be treated as the holder of such Registrable Securities for
purposes of any request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities hold by any holder or holders of
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
6. Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first-class mail, return receipt requested,
telex, telegram, telecopier, reputable courier service or personal delivery:
(a) if to the Purchasers, addressed to them in
the manner set forth in the Purchase Agreement, or at such
other address as it shall have furnished to the Company in
writing;
(b) if to any other holder of Registrable
Securities, at the address that such holder shall have
furnished to the Company in writing, or, until any such other
holder so furnishes to the Company an address, then to and at
the address of the last holder of such Registrable Securities
who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the
manner set forth in the Purchase Agreement, or at such other
address as the Company shall have furnished to each holder of
Registrable Securities at the time outstanding.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being sent by reputable courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
7. Assignment. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and, with
respect to the Company, its respective successors and assigns and, with respect
to each Purchaser, any holder who is an affiliate or successor entity to such
Purchaser or a transferee therefrom of any Registrable Securities, subject to
the provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Notwithstanding the foregoing, a
Purchaser may not assign its rights hereunder to a competitor of the Company or
to a transferee that is acquiring beneficial ownership of fewer than 50,000
shares of Common Stock, with appropriate adjustments for recapitalizations and
the like. The Company must be given notice of any such assignment by a
Purchaser and the transferee must agree to be bound by the terms of this
Agreement. The Purchasers named on the
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signature page of this Agreement (and not any other holder of Registrable
Securities or any other Person) shall be permitted, in connection with a
transfer or disposition of Registrable Securities, to eliminate or impose
conditions or constraints on the ability of the transferee, as a holder of
Registrable Securities, to request a registration pursuant to Sections 1.1 and
1.2 and shall provide the Company with copies of such conditions or constraints
and the identity of such transferees.
8. Calculation of Percentage Interests in Registrable
Securities. For purposes of this Agreement, all references to a percentage of
the Registrable Securities shall be calculated based upon the number of shares
of Registrable Securities outstanding at the time such calculation is made.
9. No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement. The grant of registration rights to other securities
holders of the Company shall not, by itself, be deemed to be inconsistent with
this Agreement.
10. Remedies. Each holder of Registrable Securities, is
entitled to exercise all rights granted by law, including recovery of damages;
such rights not to extend to incidental or consequential damages.
11. Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way impaired thereby, it being intended that all of the rights and
privileges of the Purchaser shall be enforceable to the fullest extent
permitted by law.
12. Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
13. Descriptive Headings. The descriptive headings of
the several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning hereof.
14. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of New York applicable to agreements made and to be
performed entirely within such State.
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15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
XXXXXX INDUSTRIES, INC.
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
PURCHASERS:
WHITE OWL CAPITAL PARTNERS
By:
-----------------------------------
Xxxxxxx X. Xxxxxxx, General Partner
--------------------------------------
Xxxxxx Xxxxxx
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Antony X. X. Xxxxx
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Xxxx Xxxxxxx
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