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EXHIBIT 10.36
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is dated as of October
19, 1995, between the undersigned purchasing shareholders (the "Investor(s)"),
and VASCO Corp., a corporation incorporated under the Laws of the State of
Delaware (the "Company"). Capitalized terms not otherwise defined herein have
the meanings set forth in Section 9.
W I T N E S S E T H:
WHEREAS, the Investors have on the date hereof agreed to purchase from the
Company units ("Units") in the amounts as set forth in Schedule A hereof, with
such agreement to purchase being represented by a subscription offer letter
from the Company to each Investor dated October 18, 1995 and the execution and
the return of said letters to the Company by the Investors on October 19, 1995.
WHEREAS, each Unit consists of two (2) shares of Common Stock, par value
$.001 of the Company ("The Shares") and one (1) warrant to purchase Common
Stock with each warrant giving the holder the right to purchase one (1) fully
paid and nonassessable Share of Common Stock, $.001 par value, of the Company
at any time through October 31, 2000 (the "exercise date") at an exercise price
of $6.00 per warrant ("The Warrants").
WHEREAS, in order to induce the Investors to purchase the Units, the
Company has agreed to deliver to the Investors as stated in the October 18,
1995 offer letter from the Company to the Investors, "freely tradable,
registered, non-restricted VASCO Common Stock."
WHEREAS, the Company cannot meet its obligation at this time to deliver
freely tradable, registered, non-restricted VASCO Common Stock, the Company has
agreed to furnish this Registration Rights Agreement as a means of fulfilling
its obligations to the Investors.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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1. Additional Shares. The Company agrees that if on the valuation date as
defined below the Company stock price as determined on the valuation date
according to the valuation method set forth below is less than $3.50 per share,
the Company will agree to deliver to each Investor an additional number of
shares ("The Additional Shares"), as determined below, to the Investors
promptly following the valuation date. The valuation date shall be the 16th
business day following the day on which the registration statement and
prospectus provided for in Section 2 hereof are declared effective by the
Securities and Exchange Commission, for this purpose counting the day that the
registration statement is declared effective as day number one (1). The
valuation method for determining the number of Additional Shares, if any, which
should be issued to the Investors shall be determined by taking the last
reported closing price on the National Association of Securities Dealers (NASD)
Automated Quotation System for each of the fifteen (15) business days prior to
the valuation date and dividing by fifteen (15). This fifteen day average for
purposes of the formula set forth below is "The Valuation Price". If The
Valuation Price is less than $3.50 per share, then the Company shall issue The
Additional number of Shares to the Investors based on the following formula:
the difference between $3.50 and The Valuation Price multiplied by the number
of Shares underlying the Units on Schedule A subscribed for by each Investor
divided by The Valuation Price. The Shares which may be issued pursuant to
this Paragraph shall be included as part of the Registrable Securities (the
"Registrable Securities") under this Agreement. If the Company Shares at the
time it is necessary to apply this Section do not trade on the National
Association of Securities Dealers Automated Quotation System, the parties will
mutually agree on the appropriate daily market pricing determination method.
2. Registration.
(a) Primary Registration. If at any time prior to July 1, 1996 the
Company proposes to file a registration statement (the "Registration
Statement") under the Securities Act with respect to its Common Stock or
securities convertible or exchangeable into its Common Stock (other than a
registration statement (i) on Form S-4 or Form S-8 or any successor forms to
such Forms, (ii) filed in connection with an exchange offer or an offering of
its common stock or of securities convertible or exchangeable into its common
stock made solely to its existing stockholders in connection with a rights
offering or solely to employees of the Company, or (iii) filed in connection
with an offering for any consideration other than cash), whether or not
for its own Account, then the Company shall give written notice of such
proposed filing to the Investors at least 10 days before the anticipated filing
date. The Company shall include in such registration all Registrable
Securities which consists of all The Shares represented by the Units listed on
Schedule A hereof and all The Additional Shares but not The Shares underlying
The Warrants unless the Investors make such an election to register
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The Warrant Shares. If the Company undertakes the registration of the
Shares to accommodate an underwritten offering then the Investors agree to be
bound by the terms of the underwriting agreement negotiated in good faith by
the Company and the underwriters; and if the Investors choose not to be
included in such underwritten offering then the Investors agree not to sell any
of their Shares for a period of 90 days from the date of such underwritten
offering.
(b) Registration of The Additional Shares. The Company agrees to register
The Additional Shares contemporaneously with The Shares as required by this
Section 2 by mutually agreeing with the Investors at the time the Registration
Statement is filed as to the number of shares to be covered by the Registration
Statement taking into account the market price of the Company's stock at the
time the Registration Statement is filed and an estimate of what the stock
price might be at the time the Registration Statement is declared effective.
Notwithstanding the foregoing sentence, in no event shall the Company register
any amount less than 200% of The Shares underlying the Units on Schedule A even
though it may not be necessary for the Company to issue any of The Additional
Shares pursuant to this Agreement. In the event that the Securities and
Exchange Commission does not permit the registration of The Additional Shares
and The Additional Shares are owing to the Investors pursuant to this
Agreement, the Company will pay to each Investor in cash the difference between
$3.50 and The Valuation Price as determined in Paragraph 1 (provided The
Valuation Price is less than $3.50) multiplied by the number of Shares
underlying The Units indicated for each Investor on Schedule A. The cash
payment required in the previous sentence shall be made and determined on the
same time schedule that The Additional Shares would have been issued to the
Investors pursuant to Paragraph 1.
(c) Registration Expenses. The Company will pay all Registration Expenses
incurred in connection with any registration.
3. Failure to Register. In the event that a Registration Statement
covering The Shares is not declared effective by the Securities and Exchange
Commission by July 1, 1996, or if on July 1, 1996 the shareholders cannot sell
their Shares due to the 90-day lock-up provision of Section 2(a), then the
Company shall be required to either (i) at each Investor's option promptly
repurchase the Units listed on Schedule A hereof from the Investor for a price
of $7.00 per Unit, or (ii) if all Investors demand that all The Shares
underlying the Units listed on Schedule A be registered, promptly undertake to
register The Shares and The Additional Shares in accordance with Section 4 of
this Agreement assuming the Shares are not already registered at that time.
4. Registration Procedures. The Company will, as expeditiously as
possible:
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(a) prepare and file with the Commission the requisite Registration
Statement to effect the registration of the Registrable Securities and
use its best efforts to cause such Registration Statement to become
effective, provided that as far in advance as practicable before filing
such Registration Statement or any amendment thereto, the Company will
furnish to each Investor copies of reasonably complete drafts of all such
documents proposed to be filed (including exhibits), and any such
Investor shall have the opportunity to object to any information
pertaining solely to such Investor that is contained therein and the
Company will make the corrections reasonably requested by such Investor
with respect to such information prior to filing any such Registration
Statement or amendment. The Company shall use its best efforts to keep
the Registration Statement continuously effective under the Securities
Act, until (A) all Registrable Securities are salable pursuant to Rule
144 as promulgated by the Securities and Exchange Commission pursuant to
the Securities Act of 1933 or (B) if sooner, the date immediately
following the date that all Registrable Securities covered by the
Registration have been sold pursuant thereto (the "Effectiveness
Period"); provided that the Effectiveness Period shall be extended to the
extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174 and as otherwise provided
herein;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and any prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such Registration Statement and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement, in accordance with the
intended methods of disposition thereof, until the earlier of (i) such
time as all of such securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set
forth in such Registration Statement or (ii) such time as the Company
is no longer required to keep the Registration Statement effective;
(c) promptly notify the Investor and the underwriter or
underwriters, if any:
(i) when such Registration Statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has
been filed and, with respect to such Registration Statement or any
post effective amendment thereto, when the same has become
effective;
(ii) of any written request by the Commission or any other
federal or state governmental authority
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for amendments or supplements to such Registration Statement or
prospectus;
(iii) of the notification to the Company by the Commission of
its initiation of any proceeding with respect to the issuance by
the Commission of, or of the issuance by the Commission of, any
stop order suspending the effectiveness of such Registration
Statement;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the applicable securities or blue sky
laws of any jurisdiction;
(v) of the issuance by the Commission, any state securities
commission, any other governmental agency or any court of any stop
order, order or injunction suspending or enjoining the use or the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose;
(vi) of the receipt by the Company of any notification with
respect to the suspension 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
(d) If a registration is filed pursuant to Section 2 hereof, enter
into such agreements and take all such other reasonable actions in connection
therewith (including those reasonably requested by the managing underwriters, if
any, or the holders of a majority in aggregate principal amount of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities, and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the holders of such Registrable Securities and the underwriters,
if any, with respect to the business of the Company and its subsidiaries
(including with respect to businesses or assets acquired or to be acquired by
any of them), and the Registration Statement, prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) 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 hereof (or such other
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provisions and procedures acceptable to holders of a majority in aggregate
principal amount of Registrable Securities covered by such Registration
Statement and the managing underwriters, if any); and (iii) deliver such
documents and certificates as may be reasonably requested by the holders
of a majority in aggregate principal amount of the Registrable Securities
being sold, their holders Counsel and the managing underwriters, if any,
to evidence the continued validity of the representations and warranties
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company;
(e) furnish to each seller of Registrable Securities covered by such
Registration Statement such number of conformed copies of such
Registration Statement and of each amendment and supplement thereto (in
each case including all exhibits and documents incorporated by
reference), 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 pursuant to the
Securities Act relating to such Investor's Registrable Securities, and
such other documents, as such seller may reasonably request to facilitate
the disposition of its Registrable Securities;
(f) use its best efforts to register or qualify all Registrable
Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as each Investor thereof
shall reasonably request, to 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 Investor to consummate the disposition in such jurisdictions
of the Registrable Securities owned by such Investor, except that the
Company shall not for any such purpose be required (i) to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this paragraph (g) be
obligated to be so qualified, (ii) to subject itself to taxation in any
such jurisdiction or (iii) to consent to general service of process in any
jurisdiction;
(g) use its best efforts to cause all Registrable Securities covered
by such Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
each Investor thereof to consummate the disposition of such Registrable
Securities;
(h) furnish to the Investor a signed counterpart, addressed to such
Investor (and the underwriters, if any), of
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(I) an opinion of counsel for the Company, dated the effective
date of such Registration Statement (or, if such registration
includes an underwritten Public Offering, dated the date of any
closing under the underwriting agreement), reasonably satisfactory
in form and substance to such Investor, and
(ii) a "comfort" letter, dated the effective date of such
Registration Statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under
the underwriting agreement) and updates thereof, signed by the
independent public accountants who have certified the Company's
financial statements included in such Registration Statement,
in each case covering substantially the same matters with respect to such
Registration Statement (and the prospectus included therein) and, in the
case of the accountants' 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' letters delivered to the
underwriters in underwritten Public Offerings of securities and, in the
case of the accountants' letter, such other financial matters, as such
Investor (or the underwriters, if any) may reasonably request;
(i) notify each holder 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, of the happening of
any event as a result of which any 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, in the light
of the circumstances under which they were made, not misleading, and at
the request of any such Investor promptly prepare and furnish to such
Investor 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, in the light of the circumstances under which they were made,
not misleading;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but not
more than eighteen (18) months, beginning with the first full calendar
month after the effective date of such Registration Statement, which
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earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(k) make available for inspection by the Investor to any underwriter
participating in any disposition pursuant to such Registration Statement
and any attorney, accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the
Company's officers, directors, employees and accountants to supply all
information reasonably requested by any such Inspector in connection with
such Registration Statement. Records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or administrative agency or is necessary to respond
to inquiries of regulatory authorities, (iii) disclosure of such
information is required by law (including any disclosure requirements
pursuant to Federal securities laws in connection with the filing of any
Registration Statement or the use of any prospectus referred to in this
Agreement), (iv) the information in such Records has been made generally
available to the public, or (v) such information becomes available from a
source other than the Company and such source is not bound by a
confidentiality agreement. The seller of Registrable Securities agrees by
acquisition of such Registrable Securities that it will, upon learning
that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential;
(l) provide a transfer agent and registrar for all Registrable
Securities covered by such Registration Statement not later than the
effective date of such Registration Statement; and
(m) use its best efforts to cause all Registrable Securities covered
by such Registration Statement to be listed, upon official notice of
issuance, on any securities exchange on which any of the securities of
the same class as the Registrable Securities are then listed.
The Company may require each holder of Registrable Securities as to
which any registration is being effected to, and each such Investor, as a
condition to including Registrable
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Securities in such registration, shall, furnish the Company with such
information and affidavits regarding such Investor and the distribution of such
securities as the Company may from time to time reasonably request in writing in
connection with such registration.
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 Paragraph (i), such Investor
will forthwith discontinue such Investor's disposition of Registrable Securities
pursuant to the Registration Statement relating to such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Paragraph (i) 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 Investor's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
referred to in paragraph (b) shall be extended by a number of days equal to the
number of days during the period from and including the giving of notice
pursuant to Paragraph (i) and to and including the date when each holder of any
Registrable Securities covered by such Registration Statement shall receive the
copies of the supplemented or amended prospectus contemplated by Paragraph (i).
5. Indemnification.
(a) Indemnification by the Company. The Company shall, to the full
extent permitted by law, indemnify and hold harmless each seller of Registrable
Securities included in any Registration Statement filed pursuant to this
Agreement, its directors and officers, and each other Person, if any, who
controls any such seller within the meaning of the Securities Act, against any
losses, claims, damages, expenses or liabilities, joint or several (together,
"Losses"), to which such seller or any such director or officer or controlling
Person may become subject under the Securities Act or otherwise, insofar as such
Losses (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 such Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any state (or "blue sky")
securities filing, 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 the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, and the Company will reimburse such seller
and each such director, officer and controlling Person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such Loss (or action or proceeding in respect thereof); provided
that the
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Company shall not be liable in any such case to the extent that any such Loss
(or action or proceeding in respect thereof) arises out of or is based upon (x)
an untrue statement or alleged untrue statement or omission or alleged omission
made in any such Registration Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement or state securities
filing 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 thereof or (y) such seller's
failure to send or give a copy of the final prospectus to the Persons asserting
an untrue statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such final
prospectus. 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 or controlling Person, and shall survive the transfer of such securities
by such seller. The Company shall also indemnify each other Person who
participates (including as an underwriter) in the offering or sale of
Registrable Securities, their officers and directors and each other Person, if
any, who controls any such participating Person within the meaning of the
Securities Act to the same extent as provided above with respect to holders of
Registrable Securities.
(b) Indemnification by the Sellers. Each holder of Registrable
Securities which are included or are to be included in any Registration
Statement filed pursuant to this Agreement, as a condition to including
Registrable Securities in such Registration Statement, shall, to the full extent
permitted by law, indemnify and hold harmless the Company, its directors and
officers, and each other Person, if any, who controls the Company within the
meaning of the Securities Act, against any Losses to which the Company or any
such director or officer or controlling Person may become subject under the
Securities Act or otherwise, insofar as such Losses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any such Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any state (or "blue sky") securities filing, 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 the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, if such untrue statement or alleged untrue 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 or state securities filing; (provided that
the maximum aggregate amount which may be
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recovered from any holder of Registrable Securities pursuant to the
indemnification provided for in this Section 6(b) in connection with any
registration and sale of Registrable Securities shall be limited to the total
proceeds received by such Investor from the sale of such Registrable
Securities), or (ii) the seller's failure to send or give a copy of the final
prospectus to the Persons asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such person if such
statement or omission was corrected in the final prospectus. 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 participating or
controlling Person and shall survive the transfer of such securities by such
seller. Such Investors shall also indemnify each other Person who participates
(including as an underwriter) in the offering or sale of Registrable Securities,
their officers and directors and each other Person, if any, who controls any
such participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to the Company. The Investor shall not be
required to indemnify any underwriter who participates in the offering or sale
of Registrable Securities.
(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 paragraph (a) or (b) of this Section 5, such
Indemnified Party will, if a claim in respect thereof is to be made against an
Indemnifying Party pursuant to such paragraphs, give written notice to the
latter of the commencement of such action, provided 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 paragraphs of this
Section 5, 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 that the Indemnified Party may participate in such
defense at the Indemnified Party's expense; and provided, further that the
Indemnified Party or Indemnified Parties shall have the right to employ one
counsel to represent it or them if, in the reasonable judgment of the
Indemnified Party or Indemnified Parties, it is advisable for it or them to be
represented by separate counsel by reason of having legal defenses which are
different from or in addition to those available to the
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Indemnifying Party, and in that event the reasonable fees and expenses of such
one counsel shall be paid by the Indemnifying Party. If the Indemnifying Party
is not entitled to, or elects not to, assume the defense of a claim, it will not
be obligated to pay the fees and expenses of more than one counsel for the
Indemnified Parties with respect to such claim, unless in the reasonable
judgment of any Indemnified Party a conflict of interest may exist between such
Indemnified Party and any other Indemnified Parties with respect to such claim,
in which event the Indemnifying Party shall be obligated to pay the fees and
expenses of such additional counsel for the Indemnified Parties. No
Indemnifying Party shall consent to entry of any judgment or enter into any
settlement without the consent of the Indemnified Party 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. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) Contribution. If the indemnity and reimbursement obligation
provided for in any paragraph of this Section 6 is unavailable or insufficient
to hold harmless an Indemnified Party in respect of any Losses (or actions or
proceedings in respect thereof) referred to therein, then (unless, and except to
the extent that, such unavailability or insufficiency results from defenses or
limitations provided by this Section 5) the Indemnifying Party shall contribute
to the amount paid or payable by the Indemnified Party as a result of such
Losses (or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and the Indemnified Party on the other hand in connection with statements
or omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this paragraph were to be determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this paragraph. The amount
paid by an Indemnified Party as a result of the Losses referred to in the first
sentence of this paragraph shall be deemed to include any legal and other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any Loss which is the subject of this paragraph.
(e) Fraudulent Misrepresentation. No Indemnified Party guilty of
fraudulent misrepresentation (within the meaning
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of Section 11(f) of the Securities Act) shall be entitled to indemnification or
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
(f) Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 5 (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. The provisions of this Section 6 shall be in addition to
any other rights to indemnification, contribution or other remedies which an
Indemnified Party may have pursuant to law, equity, contract or otherwise.
(g) Indemnification Payments. The indemnification required by this
Section 5 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 Losses
are incurred.
6. Covenants Relating to Rule 144. The Company will file reports in
compliance with the Exchange Act, and will, at its expense, forthwith upon the
request of any holder of Registrable Securities, deliver to such Investor a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company' s Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of Shares of each class of Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
7. Piggyback Registration of The Warrant Shares. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to its Common Stock or securities convertible or exchangeable into its
Common Stock (other than a registration statement (i) on Form S-4 or Form S-8 or
any successor forms to such Forms, (ii) filed in connection with an exchange
offer or an offering of its common stock or of securities convertible or
exchangeable into its common stock made solely to its existing stockholders in
connection with a rights offering or solely to employees of the Company, or
(iii) filed in connection with an offering for any consideration other than
cash), whether or not for its own account, then the Company shall, at such time,
promptly give each Investor written notice of such registration which shall
describe (including those jurisdictions where registration or qualification
under the securities or blue sky laws is intended) and, upon the written request
of any Investor given within 10 days after the date of any such notice, proceed
to include in such registration The Shares underlying The
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Warrants as have been requested by any such Investor to be included in such
registration. Any Investor shall in its request describe briefly the proposed
disposition of such Shares underlying The Warrants. The Company shall in each
instance use its best efforts to cause any shares of Registrable Securities (for
which any Investor has requested registration thereof pursuant to this Section)
to be registered under the Act and qualified under the securities or blue sky
laws of any jurisdiction requested by a prospective seller, all to the extent
necessary to permit the sale or other disposition thereof (in the manner stated
in such request) by a prospective seller of the securities so registered. There
shall be no limit to the number or duration of times the shareholder may
request, and have, registration of The Warrant Shares pursuant to this Section
so long as The Warrants or The Shares underlying The Warrants are owned by any
of the Investors and such Investor cannot rely on Rule 144 for the disposition
of The Warrant Shares.
8. Other Registration Rights.
No Existing Agreements. The Company represents and warrants to the
Investor that there is not in effect on the date hereof any agreement by the
Company pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify such securities under the Securities
Act or any securities or blue sky laws of any jurisdiction that would conflict
or be inconsistent with any provision of this Agreement.
9. Definitions.
(a) Except as otherwise specifically indicated, the following terms
will have the following meanings for all purposes of this Agreement:
"Agreement" means this Registration Rights Agreement, as the same
shall be amended from time to time.
"Business Day" means a day other than Saturday, Sunday or any other
day on which banks located in the State of New York are authorized or obligated
to close.
"Commission" means the United States Securities and Exchange
Commission, or any successor governmental agency or authority.
"Company" has the meaning specified in the preamble hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Indemnified Party" means a party entitled to indemnity in accordance
with Section 5.
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"Indemnifying Party" means a party obligated to provide indemnity in
accordance with Section 5.
"Inspectors" has the meaning ascribed to it in Section 5(k).
"Losses" has the meaning ascribed to it in Section 6(a).
"Managing Underwriter" means, with respect to any underwritten Public
Offering, the underwriter or underwriters managing such Public Offering.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union
or association.
"Public Offering" means any offering of common stock of the Company
("Common Stock"), Preferred Stock or warrants to purchase Common Stock or
Preferred Stock to the public, either on behalf of the Company or any of its
security holders, pursuant to an effective registration statement under the
Securities Act.
"Records" has the meaning ascribed to it in Section 5(i).
"Registrable Securities" means (i) The Shares and The Additional
Shares, (ii) any additional shares of Common Stock or preferred stock of the
Company issued or distributed to the Investor by way of a dividend, stock split
or other distribution in respect of The Shares, (iii) any additional shares of
Common Stock or preferred stock of the Company acquired by the Investor by way
of any rights offering or similar offering made in respect of The Shares and
(iv) any additional shares of Common Stock issued or issuable to the Investor
upon conversion, exercise or exchange of any capital stock, right, option,
warrant, evidence of indebtedness or other security of any type whatsoever that
shall have been issued pursuant to or with respect to the Subscription Agreement
or The Shares. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (i) 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, (ii) they shall have been
distributed to the public pursuant to Rule 144, or (iii) they shall have ceased
to be outstanding.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with its obligations under this Agreement to effect
the registration of Registrable
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Securities in a Requested Registration, including, without limitation, all
registration, filing, securities exchange listing and NASD fees, all
registration, filing, qualification and other fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, premiums and other costs of policies of
insurance against liabilities arising out of the Public Offering of the
Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting discounts and commissions and transfer taxes, if any, in respect of
Registrable Securities, which shall be payable by each holder thereof, pro rata
on the basis of the number of Registrable Securities of each such holder that
are included in a registration under this Agreement.
"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act, and any successor provision thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Executive Officer" means, as to the Company, its Chairman,
President, Chief Financial Officer, Treasurer or Controller or any person
performing any of such functions, whether or not holding such title.
"Shares" has the meaning specified in the preamble hereto.
(b) Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; and (iv) the term "Section" refers to the specified Section of
this Agreement. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified.
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10. Miscellaneous.
(a) Notices. All written communications provided for hereunder shall be
sent by registered or certified mail or nationwide overnight delivery service
(with charges prepaid) or delivered by hand to the following addresses or such
other address as the appropriate party may specify to each other party hereto
in writing:
If to Investor(s), to:
Investor's address of record with the
transfer agent or any address which may
be specified by the Investor in the future.
If to the Company, to:
VASCO Corp.
0000 X. Xxxxxxxx Xxx.
Xxxxx 000-X
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Chief Financial Officer
Telephone: 000-000-0000
Telecopy: 000-000-0000
provided, however, that any such communication to the Company shall be in
writing and may also, at the option of the Investor, be delivered by any other
means to the Company at the address specified above in this Section or to any
Senior Executive Officer of the Company. Any notice or other communication
given under this Section will be deemed effective two days after deposit in the
United States Mail if mailed as aforesaid and otherwise upon receipt. With
respect to any other holder of Registrable Securities, such notices, requests
and other communications shall be sent to the addresses set forth in the stock
transfer records regularly maintained by the Company.
(b) Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof.
(c) Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument (which may be executed in any number of
counterparts which may include a facsimile transmission) duly executed by or on
behalf of each of the Company and Persons owning sixty-six and two-thirds
percent (66 2/3%) or more of the Registrable Securities.
(d) Waiver. Subject to paragraph (e) of this Section, any term or
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or
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condition. No waiver by any party of any term or condition of this Agreement,
in any one or more instances, shall be deemed to be or construed as a waiver of
the same term or condition of this Agreement on any future occasion.
(e) Consents and Waivers by Holders of Registrable Securities. Any
consent of Investors holding Registrable Securities pursuant to this Agreement,
and any waiver by such Investors of any provision of this Agreement, shall be in
writing (which may be executed in any number of counterparts) and may be given
or taken by Persons owning sixty-six and two-thirds percent (66 2/3%) or more of
the Registrable Securities, and any such consent or waiver so given or taken
will be binding on all Investors holding Registrable Securities.
(f) No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto, their
respective successors or permitted assigns and any other holder of Registrable
Securities, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Indemnified Person.
(g) Successors and Assigns. This Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and their respective
successors and assigns. The registration rights of the Investor as set forth
herein are assignable, in whole or in part, by the Investor to one or more
transferees of Registrable Securities, provided that written notice of such
assignment is furnished to the Company; provided, however, that the Investor
will not assign any rights under this Agreement to any Person that competes
directly or indirectly with the Company without the prior written consent of the
Company.
(h) Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
(i) Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
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(j) Remedies. Except as otherwise expressly provided for herein, no
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver by any such party of the right to pursue any other available remedies.
Damages in the event of breach of this Agreement by a party hereto or
any other holder of Registrable Securities would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and the Company and each holder of Registrable
Securities, by its acquisition of such Registrable Securities, hereby waives any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.
(k) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to conflict of laws
principles.
(l) Counterparts. This Agreement may be executed in any number of
counterparts, which may be in the form of a facsimile transmission, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
COMPANY:
VASCO CORP.
By:
----------------------------
Xxxxxxx X. Xxxxxx
Chief Financial Officer
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INVESTORS:
XXXXX XXXXXXX ENTERPRISES, INC.
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
President
XXXXX XXXXXX
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx
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XXXXXX XXXX
By: /s/ Xxxxxx Xxxx
------------------------------
Xxxxxx Xxxx
XXXXXXX XXXXXXX
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Xxxxxxx Xxxxxxx
XXXXXXX XXXXXXX
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Xxxxxxx Xxxxxxx
XXXX XXXXXXX
By: /s/ Xxxx Xxxxxxx
------------------------------
Xxxx Xxxxxxx
XXXXX XXXXXXX
By: /s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
XXXX XXXXXXXXX
By: /s/ Xxxx Xxxxxxxxx
------------------------------
Xxxx Xxxxxxxxx
XXXX XXXXXXXXX
By: /s/ Xxxx Xxxxxxxxx
------------------------------
Xxxx Xxxxxxxxx
00
00
Schedule A
SUBSCRIPTION ALLOCATION SCHEDULE
SUBSCRIBER UNITS AMOUNT
---------- ------ ------
Xxxxx Xxxxxxx Enterprises, Inc. 6,000 $20,400.00
Xxxxx Xxxxxx 6,500 $22,100.00
Xxxxxx Xxxx 6,000 $20,400.00
Xxxxxxx Xxxxxxx 14,705 $49,997.00
Xxxxxxx Xxxxxxx 300 $ 1,020.00
Xxxx Xxxxxxx 2,000 $ 6,800.00
Xxxxx Xxxxxxx 2,000 $ 6,800.00
Xxxx Xxxxxxxxx 3,000 $10,200.00
Xxxx Xxxxxxxxx 12,495 $42,483.00
------ ----------
TOTAL 53,000 $180,200.00
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