REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ___________, 1998 (this
("Agreement"), by and between FAMILY GOLF CENTERS, INC., a Delaware
corporation (the "Company"), and XXXX XXXXXXX ("Xxxxxxx").
WHEREAS, Elk Grove Family Golf Centers, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company ("EGFGC"), and Xxxxxxx, are parties to
a Purchase and Sale Agreement dated as of ___________, 1998 (the "Purchase
Agreement"), pursuant to which, among other things, Xxxxxxx will receive, as
part of the consideration for the sale of EGFGC of the Property described
therein, an aggregate of ______ shares of Common Stock, par value of $1.00
per share, of the Company (the "Common Stock"); and
WHEREAS, the shares of Common Stock are "restricted securities" (as
defined in Rule 144 under the Securities Act of 1933, as amended), and the
Company has agreed to provide Xxxxxxx with the registration rights set forth
herein with respect to the shares of Common Stock issuable in EGFGC's
acquisition of the Property; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the obligations of the EGFGC and Xxxxxxx to consummate the sale
and acquisition of the Property and the other transactions contemplated by
the Purchase Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Certain Definitions.
Business Day: Any day other than a Saturday, Sunday or holiday on which
banking institutions located in New York, New York are authorized or
obligated by law, regulation or executive order to close.
Commission: The Securities and Exchange Commission, or any other federal
agency at the time administering the Securities Act and the Exchange Act.
Common Stock: As defined in the first recital above.
Company: As defined in the preamble of this Agreement.
Company Indemnified Parties: As defined in Section 6(b).
Stock Escrow Agreement: The Stock Escrow Agreement referred to in the
Purchase Agreement, as the same may be amended in accordance with its terms.
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Exchange Act: The Securities and Exchange Act of 1934, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Losses: As defined in Section 6(a) hereof.
Purchase Agreement: As defined in the first recital above.
Prospectus: The prospectus included in the Registration Statement as of
the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, as amended, and
each prospectus supplement relating to the offering and sale of any of the
Registrable Shares.
Registrable Shares: Shares of Common Stock issued to Xxxxxxx as part of
consideration for the purchase of the Property by EGFGC, and any other shares
of capital stock of the Company issued in respect of such Registrable Shares
as a result of stock splits, stock dividends, reclassification,
recapitalizations, mergers, consolidations or similar events. Any Registrable
Share will cease to be a Registrable Share when (x) a registration statement
covering such Registrable Share has been declared effective by the Commission
and such Registrable Share has been disposed of pursuant to such effective
registration statement, (y) such Registrable Share may be publicly resold
without registration pursuant to Rule 144 promulgated by the Commission under
the Securities Act or (z) such Registrable Share is no longer held by
Xxxxxxx.
Registration Statement: A "shelf" registration statement of the Company on
any form for which the Company then qualifies which permits the secondary
resale thereunder of the Registrable Shares on a delayed or continuous basis
under Rule 415 of the Commission under the Securities Act, or any successor
rule that may be promulgated by the Commission under the Securities Act, as
they each may, from time to time, be in effect. The term "Registration
Statement" shall also include all exhibits and financial statements and
schedules and documents incorporated by reference in such Registration
Statement when it becomes effective under the Securities Act, and in the case
of references to the Registration Statement as of a date subsequent to the
effective date, as amended as of such date.
Securities Act: The Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations of the Commission promulgated
thereunder, as they each may, from time to time, be in effect.
2. Shelf Registration.
(a) The Company shall:
(1) file, within the period commencing 180 days and ending 225 days,
inclusive, after the date hereof, the Registration Statement covering all
Registrable Shares. The section of the Registration Statement entitled
"Plan of Distribution" shall provide that Xxxxxxx may distribute
Registrable Shares pursuant to the Registration Statement only in the
manner set forth on Exhibit
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A hereto.
(ii) use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the Commission as promptly as
practicable after filing; and
(iii) use its commercially reasonable efforts to keep the Registration
Statement continuously effective under the Securities Act until the sooner
to occur of (x) the sale of all Registrable Shares under the Registration
Statement and (y) the first anniversary of the issuance of the Registrable
Shares pursuant to EGFGC's acquisition of the Property.
(b) The Company shall amend the Registration Statement or supplement the
related Prospectus from time to time as necessary to comply with applicable
rules and regulations promulgated by the Commission under the Securities Act
or the instructions applicable to the form used for the Registration
Statement.
3. Limitation on Registration Rights. Notwithstanding the provisions of
Section 2 hereof, the Company shall not be required to effect or maintain the
effectiveness or the Registration Statement if (i) Xxxxxxx shall have
breached any of its warranties, representations, covenants or agreements in
the Purchase Agreement in any material respect and shall have failed to cure
such breach within a reasonable time, or (ii) the Company shall have made a
valid claim for indemnification pursuant to Sections 11, 13, 15, 16 or 22 of
the Purchase Agreement and Xxxxxxx shall have refused to honor such claim.
4. Obligations with Respect to Registration.
(a) In connection with the obligations of the Company pursuant to
Section 2 hereof, and subject to Section 3 hereof, the Company shall:
(i) prepare and file with the Commission the Registration Statement;
provided, however, that before filing the Registration Statement and the
related Prospectus or any amendments thereto the Company shall afford
Xxxxxxx an opportunity to review copies thereof. The Company shall not
file the Registration Statement or any amendments thereto if Xxxxxxx shall
reasonably object on a timely basis;
(ii) notify Xxxxxxx (A) of the receipt of any comments from the Commission
on the Registration Statement prior to its becoming effective, and the
Company's responses thereto, (B) when the Registration Statement becomes
effective, (C) when the filing of a post-effective amendment to the
Registration Statement or a supplement to the Prospectus is required, when
the same is filed, and in the case of a post-effective amendment, when the
same becomes effective, (D) of any request by the Commission or any state
securities authority for any amendment of or supplement to the Registration
Statement or the Prospectus relating thereto or for additional information,
(E) of the entry of any stop order suspending the effectiveness of the
Registration Statement or of the initiation of any proceedings for that
purpose, (F) of the happening of any event or the failure of any event to
occur or the discover of any facts or otherwise that makes any statement made
in the Registration Statement or the Prospectus relating thereto untrue in
any material respect or that causes such Registration Statement or Prospectus
to omit to state a
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material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (G) of the
reasonable determination by the Company that a post-effective amendment to
the Registration Statement would be appropriate;
(iii) use commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement as soon as
reasonably practicable;
(iv) furnish to Xxxxxxx a conformed copy of the Registration Statement as
declared effective by the Commission and each post-effective amendment
thereto, and such number of copies of the final Prospectus and of each
supplement thereto as may reasonably be required to facilitate the
distribution of the Registrable Shares by Xxxxxxx in accordance with the
methods of distribution described in the Registration Statement;
(v) cooperate with Xxxxxxx to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold under the
Registration Statement and not bearing any restrictive legends and in such
denominations and registered in such names as Xxxxxxx may reasonably request
at least one Business Days prior to the closing of any sale of Registrable
Shares by Xxxxxxx pursuant to the Registration Statement;
(vi) prepare, as soon as reasonably practicable, an appropriate
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or file a Form 8-K or other report that will be
incorporated by reference into the Prospectus so that, following the
occurrence of any circumstance requiring such a filing, the Prospectus
included in the Registration Statement, as thereafter delivered to the
purchasers of Registrable Shares, will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(vii) make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of the 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year), commencing on
the first day of the first fiscal quarter of the company after the effective
date of the Registration Statement, which statements shall cover said
12-month period;
(viii) register or qualify the Registrable Shares covered by the
Registration Statement under the securities or blue sky laws of up to five
jurisdictions in the United States designated by Xxxxxxx, and do any and all
other acts and things which may be necessary to enable Xxxxxxx to consummate
the disposition in such jurisdictions of Registrable Shares in accordance
with a method of distribution described in such Registration Statement;
provided, however, that the Company shall in no event be required to qualify
to do business as a foreign corporation or as a dealer in any jurisdiction
where it is not so qualified, to conform its capitalization or the
composition of its assets at the time to the securities or blue sky laws of
such jurisdiction, to execute or file any general consent to service of
process under the laws of any jurisdiction, to take any action that would
subject it to service of process in suits other than those arising out of the
offer and sale of the Registrable Shares covered by such Registration
Statement, or to subject
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itself to taxation in any jurisdiction where it has not theretofore done so;
(ix) cause the Registrable Shares covered by the Registration Statement
to be listed on the principal exchange or exchanges or qualified for
trading on the principal over-the-counter market on which the shares of
Common Stock are then listed or traded upon the sale of Registrable Shares
pursuant to the Registration Statement; and
(x) otherwise comply with applicable rules and regulations of the
Commission and use its commercially reasonable efforts to take such other
actions as may be required to permit unrestricted sales of Registrable
Shares under the Registration Statement in accordance with the methods of
distribution described therein.
(b) Notwithstanding anything to the contrary contained herein, if at any
time after the filing of the Registration Statement or after it is declared
effective by the Commission, the Company determines, in its reasonable business
judgment, that such registration and the offering of Registrable Shares
thereunder would require the Company to disclose matters that otherwise would
not be required to be disclosed at such time, and such disclosure would
interfere with or otherwise adversely affect any financing, acquisition,
corporate reorganization, or other material transaction or development involving
the Company, then the obligation of the Company under Section 2(a)(ii) or
2(a)(iii), as the case may be, shall be suspended upon the giving of notice to
Xxxxxxx of such suspension; provided, however, that any such suspension shall
not last more than 90 days, or past the date on which any Quarterly Report on
Form 10-Q or Annual Report on Form 10-K is filed by the Company, following the
giving of such notice. Any such notice need not specify the reasons for such
suspension if the Company determines, in its reasonable business judgment, that
doing so would interfere with or adversely affect such transaction or
development or would result in the disclosure of material non-public
information. In the event of a suspension pursuant to this Section 4(b), the
one-year period referred to in Section 2(a)(iii)(y) will be extended by a
number of days equal to the total number of days for which the suspension of
the Company's obligations under Section 2(a)(ii) or 2(a)(iii), as the case may
be, was in effect.
(c) The Company's obligations under this Agreement to Xxxxxxx shall be
conditioned upon the compliance by Xxxxxxx with the following:
(1) Xxxxxxx shall cooperate with the Company in connection with the
preparation of the Registration Statement and related Prospectus and, for
so long as the Company is obligated to keep the Registration Statement
effective, Xxxxxxx shall provide to the Company, in writing, for use in
the Registration Statement and the Prospectus, all information regarding
Xxxxxxx and such other information as may be reasonably required to enable
the Company to prepare the Registration Statement and Prospectus covering
the Registrable Shares and to maintain the currency and effectiveness
thereof;
(2) during such time as Xxxxxxx may be engaged in a distribution of the
Registrable Shares, Xxxxxxx shall comply with all applicable laws,
including, but not limited to, Regulation M promulgated by the Commission
under the Exchange Act and pursuant thereto will, among other things: (A)
not engage in any stabilization activity in connection with the securities
of the Company in contravention of such rules;
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(B) distribute the Registrable Shares solely in the manner described in
the Registration Statement; and (C) not bid for or purchase any
securities of the Company or attempt to induce any person to purchase
any securities of the Company other than as permitted under the Exchange
Act;
(3) at least one Business Day prior to any distribution by Xxxxxxx of
Registrable Shares, Xxxxxxx shall advise the Company in writing of the
dates on which the distribution will commence and, to the best knowledge
of Xxxxxxx at that time, the date on which the distribution will
terminate, the number of Registrable Shares to be sold, the terms and the
manner of sale (including, to the extent applicable, the purchase price,
the name of any broker-dealer to or through whom such distribution is
being made, and the amount of any selling commissions or other items
constituting compensation to such broker-dealer) and the number of shares
of Common Stock that will be owned beneficially by Xxxxxxx after giving
effect to such sale;
(4) on notice from the Company of the happening of any of the events
specified in clauses (C), (D), (E), (F) or (G) of Section 4(a)(ii),
Xxxxxxx shall cease offering or distributing the Registrable Shares until
such time as the Company notifies Xxxxxxx that offering and distribution
of the Registrable Shares may recommence; and
(5) on notice from the Company that (x) it is about to effect a primary
public offering of shares of Common Stock and (y) the managing
underwriter(s) for such offering have so requested in writing, then
Xxxxxxx shall cease offering or distributing any of such shares (including
Registrable Shares owned by Xxxxxxx) during the 7 days prior to, and
during the 30-day period beginning on, the effective date of the
registration statement for such primary public offering.
5. Expenses of Registration.
All expenses in connection with any Registration Statement, any
qualification or compliance with federal or state laws required in connection
therewith, and the distribution of the Registrable Shares shall, as between
Xxxxxxx and the Company, be borne as follows:
(a) The Company shall pay and be responsible for the registration fee
payable under the Securities Act, blue sky fees and expenses, if applicable
(subject to the limitations set forth in Section 4(a)(x)), printing fees and
all fees and disbursements of the Company's counsel and accountants. Solely
at its discretion, the Company may, in lieu of engaging the services of a
financial printing company with respect to the Registration Statement or the
Prospectus, arrange for the photocopying thereof, in which event the Company
will bear the applicable photocopying costs.
(b) Xxxxxxx shall pay all fees and disbursements of his own counsel and
advisers, all stock transfer fees (including the cost of all transfer tax
stamps) or expenses, if any, and all other expenses (including brokerage
discounts, commissions and fees) related to the distribution of the
Registrable Shares that have not expressly been assumed by the Company as set
forth above.
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6. Indemnification.
(a) The Company agrees to indemnify and hold harmless Xxxxxxx from and
against any losses, claims, damages or liabilities (collectively "Losses"),
joint or several, to which Xxxxxxx may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus, 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 under which they were made, not misleading; and, subject to
Section6(c), the Company will reimburse Xxxxxxx for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Losses; provided, however, that the Company will not
indemnify or hold harmless Xxxxxxx from or against any such Losses (i) that
arise out of or are based upon any violation of any federal or state
securities laws, rules or regulations committed by Xxxxxxx, or any failure by
Xxxxxxx to give any purchaser of Registrable Shares, at or prior to the
written confirmation of sale, a copy of the most recent Prospectus or (ii) if
the untrue statement, omission or allegation thereof upon which Losses or
expenses are based (x) was made in reliance upon and in conformity with the
information provided by or on behalf of any Stockholder Indemnified Party for
use or inclusion in the Registration Statement or any Prospectus, or (y) was
made in any Prospectus used after such time as the Company advised Xxxxxxx
that the filing of a post-effective amendment or supplement thereto was
required, except the Prospectus as so amended or supplemented, or (z) was
made in any Prospectus used after such time as the Registration Statement
ceases to be effective or current or has been withdrawn or abandoned or the
use of any such Registration Statement or Prospectus or any offering or
distribution pursuant thereto shall have been suspended or delayed hereunder.
(b) Xxxxxxx agrees to indemnify and hold harmless the Company, its
directors and officers and each person, if any, who controls the Company
within the meaning of either the Securities Act or the Exchange Act (the
"Company Indemnified Parties"), from and against any Losses, joint or
several, to which the Company Indemnified Parties may become subject, insofar
as such Losses (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, 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 under which they were made, not misleading, if the statement or
omission was made in reliance upon and in conformity with the information
provided in writing specifically by or on behalf of Xxxxxxx for use in the
Registration Statement or any Prospectus, (ii) the use of any Prospectus
after such time as the Company has advised Xxxxxxx that the filing of a
post-effective amendment or supplement thereto is required, except the
Prospectus as so amended or supplemented, (iii) the use of any Prospectus
after such time as the Registration Statement ceases to be effective or
current or has been withdrawn or abandoned or the use of any such
Registration Statement or Prospectus or any offering or distribution pursuant
thereto shall have been suspended or delayed hereunder or (iv) any violation
by Xxxxxxx of any federal or state securities law or rule or regulation
thereunder or any failure by Xxxxxxx to give any purchaser of Registrable
Shares, at or prior to the written confirmation of sale, a copy of the most
recent Prospectus; and, subject to Section 6(c), Xxxxxxx will reimburse such
Company Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
Losses. For purposes of clause (i) of the preceding sentence and clause (ii)
of the last sentence of Section 6(a), but without limiting the
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generality thereof, any information concerning Xxxxxxx or plan of distribution
included in any Registration Statement or Prospectus which is provided to
Xxxxxxx for review within a reasonable period before filing or use thereof and
to which information Xxxxxxx has not promptly provided written notice of
objection to the Company shall be deemed to have been provided by Xxxxxxx
specifically for use in such Registration Statement or Prospectus.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and the Indemnifying Party may participate at its own expense in the defense,
or if it so elects, to assume the defense of any such claim and any action or
proceeding resulting therefrom, including the employment of counsel and the
payment of all expenses. The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party from its obligations
to indemnify such Indemnified Party, except to the extent the Indemnified
Party's failure to so notify actually prejudices the Indemnifying Party's
ability to defend against such claim, action or proceeding. In the event that
the Indemnifying Party elects to assume the defense in any action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel in any such action or proceeding and to participate in the defense
thereof, but the fees and expenses of such separate counsel shall be such
Indemnified Party's expense unless (i) the Indemnifying Party has agreed to pay
such fees and expenses or (ii) the named parties to any such action or
proceeding (including any impleaded parties) include an Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised by
counsel in writing that there may be a conflict of interest between such
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such action (in which case, if such Indemnified Party notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense of
the Indemnifying Party, the Indemnifying Party shall not assume the defense of
such action or proceeding on such Indemnified Party's behalf, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties, which firm
shall be designated in writing by Xxxxxxx or the Company, as the case may be).
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with 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. The Indemnifying Party shall not be liable for any settlement of
any such action or proceeding effected without its written consent, but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Indemnifying Party shall
indemnify and hold harmless the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment.
7. Notices. All notices, requests, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed, certified or registered mail
with postage prepaid, or sent by telecopier, as follows:
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(a) if to the Company:
Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
(b) if to Xxxxxxx:
00000 Xxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
or to such other person or address as any party shall specify by notice in
writing to the other party. All notices and other communications given to a
party in accordance with the provisions of this Agreement shall be deemed to
have been given (i) three Business Days after the same are sent by certified
or registered mail, postage prepaid, return receipt requested, and (ii) when
delivered by hand or transmitted by telecopy (answer back received);
provided, however, if any notice sent by telecopy is received by the
recipient after 4:00 p.m. local time, or on a day other than a business day,
then the notice shall be deemed received on the next following business day.
Notwithstanding the preceding sentence, notice of change of address shall be
effective only upon actual receipt thereof.
8. Amendment. Any provision of this Agreement may be amended or modified
in whole or in part at any time by an agreement in writing between the
Company and Xxxxxxx. No consent, waiver or similar act shall be effective
unless in writing.
9. Entire Agreement. This Agreement constitutes the entire agreement among
the parties hereto and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of laws.
12. Assignment. Xxxxxxx may not assign its rights under this Agreement
without the prior written consent of the Company. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Company:
FAMILY GOLF CENTERS, INC.
By:
----------------------------------------
Name:
Title:
Xxxxxxx:
--------------------------------------------
XXXX XXXXXXX
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EXHIBIT "A"
PLAN OF DISTRIBUTION
The Registrable Shares may be sold by Xxxxxxx directly or through agents
designated from time to time or to or through broker-dealers designated from
time to time. To the extent required, any such agent or broker-dealer
involved in the offer and sale of the Registrable Shares and any applicable
commissions, discounts or other items constituting compensation to such
agents or broker-dealers will be set forth in a Prospectus Supplement.
The distribution of the Registrable Shares may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at prices determined on a negotiated or
competitive bid basis. Registrable Shares may be sold through a broker-dealer
acting as agent or broker for Xxxxxxx, or to a broker-dealer acting as
principal. In the latter case, the broker-dealer may then resell such
Registrable Shares to the public at varying prices to be determined by such
broker-dealer at the time of resale.
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