EXHIBIT 10.61
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of March 24, 1998, between USCI, Inc., a Delaware
corporation (the "Company"), and JNC Opportunity Fund Ltd., a Cayman
Islands corporation (the "Purchaser").
This Agreement is made pursuant to the Convertible Preferred
Stock Purchase Agreement, dated as of the date hereof between the
Company and the Purchaser (the "Purchase Agreement").
The Company and the Purchaser hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used
in this Agreement, the following terms shall have the following
meanings:
"Advice" shall have meaning set forth in Section 3(o).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under
common control with such Person. For the purposes of this definition,
"control," when used with respect to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; and the terms of
"affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in the state of New York generally are authorized or
required by law or other government actions to close.
"Closing Date" shall have the meaning set forth in the
Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, $.0001 par
value.
"Effectiveness Date" means the 90th day following the Closing
Date, or, if such day is not a Business Day, the next succeeding
Business Day.
"Effectiveness Period" shall have the meaning set forth in
Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the earlier to occur of (a) the 30th day
after the filing by the Company of its Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 pursuant to Section 3.14 of the
Purchase Agreement and (b) April 30, 1998.
"Holder" or "Holders" means the holder or holders, as the
case may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in
Section 5(c).
"Indemnifying Party" shall have the meaning set forth in
Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency
or political subdivision thereof) or other entity of any kind.
"Preferred Stock" means the Company's shares of 6% Series A
Preferred Stock, $.01 par value, shares of 6% Series B Preferred Stock,
$.01 par value, and shares of 6% Series C Preferred Stock, $.01 par
value, to be issued to the Purchaser pursuant to the Purchase Agreement.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by
reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock
issuable upon (i) conversion in full of the Preferred Stock (ii)
exercise in full of the Warrants, and (iii) payment of dividends in
respect of the Preferred Stock, assuming all such dividends are paid in
shares of Common Stock, provided, however that in order to account for
the fact that the number of shares of Common Stock that is issuable upon
conversion of the Preferred Stock is determined in part upon the market
price of the Common Stock at the time of conversion, Registrable
Securities shall include (but not be limited to) a number of shares of
Common Stock equal to no less than the sum of (1) 200% times the maximum
number of shares of Common Stock into which the Preferred Stock are
convertible, assuming such conversion occurred on the Series A Closing
Date (as defined in the Purchase Agreement), (2) the number of shares of
Common Stock issuable upon exercise of the Warrants, and (3) the number
of shares of Common Stock issuable on payment of dividends on the
Preferred Stock assuming all dividends in respect of the Preferred Stock
are paid in shares of Common Stock. Notwithstanding anything herein
contained to the contrary, if the actual number of shares of Common
Stock into which the shares of Preferred Stock are convertible exceeds
twice the number of shares of Common Stock into which the shares of
Preferred Stock are convertible based upon a computation at a particular
Closing Date, the term "Registrable Securities" shall be deemed to
include such additional shares of Common Stock. The Company shall be
required to file additional Registration Statements to the extent the
actual number of shares of Common Stock into which the Preferred Stock
is convertible (together with dividends thereon) and Warrants are
exercisable exceeds the number of shares of Common Stock initially
registered in accordance with the immediately prior sentence. The
Company shall have fifteen (15) Business Days to file such additional
Registration Statement after notice of the requirement thereof, which
the Holders may give at such time when the number of shares of Common
Stock as are issuable upon conversion of Preferred Stock exceeds 185% of
the number of shares of Common Stock into which Preferred Stock are
convertible, assuming such conversion occurred on the Closing Date or
the Filing Date (whichever yields a lower Conversion Price).
"Registration Statement" means the registration statement and
any additional registration statements contemplated by Section 2(a),
including (in each case) the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series A Warrants" the common stock purchase warrant to be
issued to the Purchaser at the Series A Closing pursuant to the Purchase
Agreement and to Xxxxxxx Capital Partners, Ltd. in respect thereof.
"Series B Warrants" the common stock purchase warrant to be
issued to the Purchaser at the Series B Closing pursuant to the Purchase
Agreement and to Xxxxxxx Capital Partners, Ltd. in respect thereof.
"Series C Warrants" the common stock purchase warrant to be
issued to the Purchaser at the Series C Closing pursuant to the Purchase
Agreement and to Xxxxxxx Capital Partners, Ltd. in respect thereof.
"Special Counsel" means one special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to
Section 4.
"Underwritten Registration or Underwritten Offering" means a
registration in connection with which securities of the Company are sold
to an underwriter for reoffering to the public pursuant to an effective
registration statement.
"Warrants" means the Series A Warrants, Series B Warrants and
Series C Warrants.
2. Shelf Registration
(a) On or prior to the Filing Date, the Company shall
prepare and file with the Commission a "Shelf" Registration Statement
covering all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall
be on Form S-3 (except if otherwise directed by the Holders of a
majority in interest of the applicable Registrable Securities in
accordance herewith or if the Company is not then eligible to register
for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance
herewith). The Registration Statement shall state, to the extent
permitted by Rule 416 under the Securities Act, that it also covers such
indeterminate number of shares of Common Stock as may be required to
effect (i) conversion of the Preferred Stock to prevent dilution
resulting from stock splits, stock dividends or similar events, or by
reason of changes in the Conversion Price in accordance with the terms
of the Certificates of Designation (as defined in the Purchase
Agreement), and (ii) exercise of the Warrants in full to prevent
dilution resulting from stock splits, stock dividends or similar events,
or by reason of changes in the Exercise Price (as defined in the
Warrants) in accordance with the terms of the Warrants. The Company
shall use its best efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event prior to the Effectiveness
Date, and shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is
three years after the date that such Registration Statement is declared
effective by the Commission or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold or may
be sold without volume restrictions pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion
letter, addressed and acceptable to the Company's transfer agent to such
effect (the "Effectiveness Period"), provided, however, that the Company
shall not be deemed to have used its best efforts to keep the
Registration Statement effective during the Effectiveness Period if it
voluntarily takes any action that would result in the Holders not being
able to sell the Registrable Securities covered by such Registration
Statement during the Effectiveness Period, unless such action is
required under applicable law or the Company has filed a post-effective
amendment to the Registration Statement and the Commission has not
declared it effective. If an additional Registration Statement is
required to be filed because the actual number of shares of Common Stock
into which the Preferred Stock is convertible plus shares issuable upon
payment of dividends and exercise of the Warrants exceeds the number of
shares of Common Stock initially registered, the Company shall, as
promptly as reasonably possible, but no later than 10 Business Days
thereafter, file such additional Registration Statement, and the Company
shall use its best efforts to cause such additional Registration
Statement to be declared effective by the Commission as soon as
possible.
(b) If the Holders of a majority of the Registrable
Securities so elect, an offering of Registrable Securities pursuant to
the Registration Statement may be effected on no more than two occasions
in the form of an Underwritten Offering. In such event, and, if the
managing underwriters advise the Company and such Holders in writing
that in their opinion the amount of Registrable Securities proposed to
be sold in such Underwritten Offering exceeds the amount of Registrable
Securities which can be sold in such Underwritten Offering, there shall
be included in such Underwritten Offering the amount of such Registrable
Securities which in the opinion of such managing underwriters can be
sold, and such amount shall be allocated pro rata among the Holders
proposing to sell Registrable Securities in such Underwritten Offering.
(c) If any of the Registrable Securities are to be sold in
an Underwritten Offering, the investment banker in interest that will
administer the offering will be selected by the Holders of a majority of
the Registrable Securities included in such offering
upon consultation with the Company. No Holder may participate in any
Underwritten Offering hereunder unless such Holder (i) agrees to sell
its Registrable Securities on the basis provided in any underwriting
agreements approved by the Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents
required under the terms of such arrangements.
3. Registration Procedures
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-3 (or if the Company is
not then eligible to register for resale the Registrable Securities on
Form S-3 such registration shall be on another appropriate form in
accordance herewith, or, in connection with an Underwritten Offering
hereunder, such other form agreed to by the Company and by the Holders
of Registrable Securities) in accordance with the method or methods of
distribution thereof as specified by the Holders (except if otherwise
directed by the Holders), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however,
that not less than five (5) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated
therein by reference), the Company shall, (i) furnish to the Holders,
their Special Counsel and any managing underwriters, copies of all such
documents proposed to be filed, which documents (other than those
incorporated by reference) will be subject to the review of such
Holders, their Special Counsel and such managing underwriters, and (ii)
cause its officers and directors, counsel and independent certified pub-
lic accountants to respond to such inquiries as shall be necessary, in
the reasonable opinion of respective counsel to such Holders and such
underwriters, to conduct a reasonable investigation within the meaning
of the Securities Act. The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable
Securities, their Special Counsel, or any managing underwriters, shall
reasonably object in writing within three (3) Business Days of their
receipt thereof.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration
Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for
the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Pro-
spectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with
the provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Holders thereof set forth in
the Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of Registrable Securities to be
sold, their Special Counsel and any managing underwriters as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than
five (5) days prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1) Business
Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and
whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof
and all written responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the
Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or
for additional information; (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) if at any time any
of the representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated hereby
ceases to be true and correct in all material respects; (v) of the
receipt by the Company of any notification with respect to the suspen-
sion of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and (vi) of the
occurrence of any event that makes any statement made in the
Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration
Statement or the Prospectus, as the case may be, it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(e) If requested by any managing underwriter or the Holders
of a majority in interest of the Registrable Securities to be sold in
connection with an Underwritten Offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after
the Company has received notification of the matters to be incorporated
in such Prospectus supplement or post-effective amendment; provided,
however, that the Company shall not be required to take any action
pursuant to this Section 3(e) that would, in the opinion of counsel for
the Company, violate applicable law or be materially detrimental to the
business prospects of the Company.
(f) Furnish to each Holder, their Special Counsel and any
managing underwriters, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including xxxxx-
cial statements and schedules, all documents incorporated or deemed to
be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents
with the Commission.
(g) Promptly deliver to each Holder, their Special Counsel,
and any underwriters, without charge, as many copies of the Prospectus
or Prospectuses (including each form of prospectus) and each amendment
or supplement thereto as such Persons may reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders and any
underwriters in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the
selling Holders, any underwriters and their Special Counsel in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder or underwriter
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered
by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where
it is not then so subject or subject the Company to any material tax in
any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders and any managing
underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates
shall be free, to the extent permitted by applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such managing
underwriters or Holders may request at least two Business Days prior to
any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by
Section 3(c)(vi), as promptly as reasonably possible, prepare a supple-
ment or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered,
neither the Registration Statement nor such Prospectus will 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.
(k) Use its best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on the
NASDAQ National Market System (the "NASDAQ") and any other securities
exchange, quotation system, market or over-the-counter bulletin board,
if any, on which similar securities issued by the Company are then
listed as and when required pursuant to the Purchase Agreement.
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith
(including those reasonably requested by any managing underwriters and
the Holders of a majority of the Registrable Securities being sold) in
order to expedite or facilitate the disposition of such Registrable
Securities, and whether or not an underwriting agreement is entered
into, (i) make such representations and warranties to such Holders and
such underwriters as are customarily made by issuers to underwriters in
underwritten public offerings, and confirm the same if and when
requested; (ii) in the case of an Underwritten Offering obtain and
deliver copies thereof to the managing underwriters, if any, of opinions
of counsel to the Company and updates thereof addressed to each such
underwriter, in form, scope and substance reasonably satisfactory to any
such managing underwriters and Special Counsel to the selling Holders
covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably
requested by such Special Counsel and underwriters; (iii) immediately
prior to the effectiveness of the Registration Statement, and, in the
case of an Underwritten Offering, at the time of delivery of any
Registrable Securities sold pursuant thereto, use its best reasonable
efforts to obtain and deliver copies to the Holders and the managing
underwriters, if any, of "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data is, or is required to be,
included in the Registration Statement), addressed to the Company in
form and substance as are customary in connection with Underwritten
Offerings; (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less
favorable to the selling Holders and the underwriters, if any, than
those set forth in Section 6 (or such other provisions and procedures
acceptable to the managing underwriters, if any, and holders of a
majority of Registrable Securities participating in such Underwritten
Offering); and (v) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority of the Registrable
Securities being sold, their Special Counsel and any managing
underwriters to evidence the continued validity of the representations
and warranties made pursuant to clause 3(l)(i) above and to evidence
compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
(m) Make available for inspection by the selling Holders,
any representative of such Holders, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holders or underwriters, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the officers, directors, agents and
employees of the Company and its subsidiaries to supply all information
in each case reasonably requested by any such Holder, representative,
underwriter, attorney or accountant in connection with the Registration
Statement; provided, however, that any information that is determined in
good faith by the Company in writing to be of a confidential nature at
the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries of
regulatory authorities; (ii) disclosure of such information, in the
opinion of counsel to such Person, is required by law; (iii) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such Person; or (iv)
such information becomes available to such Person from a source other
than the Company and such source is not known by such Person to be bound
by a confidentiality agreement with the Company.
(n) Comply with all applicable rules and regulations of the
Commission.
(o) The Company may require each selling Holder to furnish
to the Company information regarding such Holder and the distribution of
such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such
registration the Registrable Securities of any such Holder who
unreasonably fails to furnish such information within a reasonable time
after receiving such request.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require (if such reference to such Holder
by name or otherwise is not required by the Securities Act or any
similar Federal statute then in force) the deletion of the reference to
such Holder in any amendment or supplement to the Registration Statement
filed or prepared subsequent to the time that such reference ceases to
be required.
Each Holder covenants and agrees that (i) it will not sell
any Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c) and (ii) it and its
officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(ii),
3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may
be resumed, and, in either case, has received copies of any additional
or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
4. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the
extent specified in Section 4(b), shall be borne by the Company whether
or not pursuant to an Underwritten Offering and whether or not the
Registration Statement is filed or becomes effective and whether or not
any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to
filings required to be made with the NASDAQ or each other securities
exchange or market on which Registrable Securities are required
hereunder to be listed and (B) in compliance with state securities or
Blue Sky laws (including, without limitation, fees and disbursements of
counsel for the Holders in connection with Blue Sky qualifications or
exemptions of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or the
Holders of a majority of Registrable Securities may designate)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriters,
if any, or by the holders of a majority of the Registrable Securities
included in the Registration Statement), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the
Company and Special Counsel for the Holders, in the case of the Special
Counsel, (v) Securities Act liability insurance, if the Company so
desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in
connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
(b) If the Holders require an Underwritten Offering
pursuant to the terms hereof, the Company shall be responsible for all
costs, fees and expenses in connection therewith, except for the fees
and disbursements of the Underwriters (including any underwriting
commissions and discounts) and their legal counsel and accountants
(which shall be borne by the Holders). Therefore, in such
circumstances, the Holder shall bear the expenses of the fees and
disbursements of any legal counsel or accounting firm retained by the
underwriters in connection with such Underwritten Offering and the costs
of any determination (but not filing) by the underwriters of the
eligibility of the Registrable Securities for investment under the
applicable state securities laws. By way of illustration which is not
intended to diminish from the provisions of Section 4(a), the Holders
shall not be responsible for, and the Company shall be required to pay
the fees or disbursements incurred by the Company (including by its
legal counsel and accountants) in connection with, the preparation and
filing of a Registration Statement and related Prospectus for such
offering, the maintenance of such Registration Statement in accordance
with the terms hereof, the listing of the Registrable Securities in
accordance with the requirements hereof, and printing expenses incurred
to comply with the requirements hereof.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents (including any
underwriters retained by such Holder in connection with the offer and
sale of Registrable Securities), brokers (including brokers who offer
and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus
or supplement thereto, in light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, which information was reasonably
relied on by the Company for use therein or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses (as determined by a court
of competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of or based solely upon any untrue statement
of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent,
that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company specifically for
inclusion in the Registration Statement or such Prospectus and that such
information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for
use in the Registration Statement, such Prospectus or such form of
Prospectus, or in any amendment or supplement thereto. In no event
shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party
shall notify the Person from whom indemnity is sought (the "Indemnifying
Party") in writing within 10 calendar days, and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses;
or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory
to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (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 have the right to assume the
defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within 10 Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder;
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).
(d) Contribution. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party because of a
failure or refusal of a governmental authority to enforce such
indemnification in accordance with its terms (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information sup-
plied by, such Indemnifying Party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid
or payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 5(d), no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages
that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. 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.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6. Miscellaneous
(a) Remedies. In the event of a breach by the Company or
by a Holder, of any of their obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled
to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. The Company and each Holder agree
that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor
any of its subsidiaries has, as of the date hereof, nor shall the
Company or any of its subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. Except as and to the
extent specified in Schedule 6(b) hereto, neither the Company nor any of
its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person.
Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects
to the prior rights in full of the Holders set forth herein, and are not
otherwise in conflict or inconsistent with the provisions of this
Agreement.
(c) No Piggyback on Registrations. Except as and to the
extent specified in Schedule 6(b) hereto, neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration
Statement other than the Registrable Securities, and the Company shall
not after the date hereof enter into any agreement providing any such
right to any of its security holders.
(d) Piggy-Back Registrations. If at any time when there is
not an effective Registration Statement covering Underlying Shares, the
Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with
stock option or other employee benefit plans, the Company shall send to
each holder of Registrable Securities written notice of such
determination and, if within twenty (20) days after receipt of such
notice, any such holder shall so request in writing, the Company shall
include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered; provided,
however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(d) that are eligible
for sale pursuant to Rule 144(k) of the Commission.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of at least two-thirds
of the then outstanding Registrable Securities; provided, however, that,
for the purposes of this sentence, Registrable Securities that are
owned, directly or indirectly, by the Company, or an Affiliate of the
Company are not deemed outstanding. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders and that does
not directly or indirectly affect the rights of other Holders may be
given by Holders of at least a majority of the Registrable Securities to
which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (New York City time) on a Business Day, (ii)
the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone
number specified in the Purchase Agreement later than 5:00 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to
be given to each Holder at its address set forth under its name on
Schedule 1 attached hereto or such other address as may be designated in
writing hereafter, in the same manner, by such Person. Copies of
notices to any Holder shall be sent to Xxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000,
Attn: Xxxx X. Xxxxx, Esq., fax: (000) 000-0000 and copies of all
notices to the Company shall be sent to the Law Firm of Xxxxxxx X.
Xxxxx, P.A., 00 Xxxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxx, XX 00000, Attn:
Xxxxxxx X. Xxxxx, Esq., fax: (000) 000-0000.
(g) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder.
The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Purchaser may assign its
rights hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.
(h) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by each Holder to any
Affiliate of such Holder, any other Holder or Affiliate of any other
Holder and up to four other assignees of all or a portion of the shares
of Preferred Stock, the Warrants or the Registrable Securities if: (i)
the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished
with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration
rights are being transferred or assigned, (iii) following such transfer
or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section,
the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions of this Agreement, and (v) such transfer
shall have been made in accordance with the applicable requirements of
the Purchase Agreement. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns.
(i) Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed
to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to principles of conflicts of
law. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of any New York state court sitting in the Borough of
Manhattan, the state and federal courts sitting in the City of New York
or any federal court sitting in the Borough of Manhattan in the City of
New York (collectively, the "New York Courts") in respect of any
Proceeding arising out of or relating to this Agreement, and irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, jurisdiction of the New York Courts. The Company
irrevocably waives to the fullest extent it may effectively do so under
applicable law any objection that it may now or hereafter have to the
laying of the venue of any such proceeding brought in any New York Court
and any claim that any such Proceeding brought in any New York Court has
been brought in an inconvenient forum. Nothing herein shall affect the
right of any Holder. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such
suit, action or proceeding by receiving a copy thereof sent to such
party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner
permitted by law.
(k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) Severability. 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 reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(n) Shares Held by The Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities
held by the Company or its Affiliates (other than any Holder or
transferees or successors or assigns thereof if such Holder is deemed to
be an Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
USCI, INC.
By:_____________________________________
Name:
Title:
JNC OPPORTUNITY FUND LTD.
By:_____________________________________
Name:
Title:
Schedule 1
Company:
USCI, Inc.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
Purchaser:
JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile: (000) 000-0000
Attn: Director
With copies to:
Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxx
Schedule 6(b)
See Schedule 2.1(u) to the Purchase Agreement.
