EXHIBIT AJ
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of December 20, 1996,
is by and between PHOENIX INFORMATION SYSTEMS CORP., a Delaware corporation (the
"Company"), and S-C Phoenix Partners, a New York general partnership (the
"Rights Holder").
This Agreement is made pursuant to the Series C Convertible
Preferred Stock Purchase Agreement (the "Purchase Agreement") dated the date
hereof, between the Company and the Rights Holder relating to the purchase by
the Rights Holder of 1,388,888.889 shares of Series C Convertible Preferred
Stock, par value $.01 per share, of the Company (the "Shares"), which are
convertible into shares of common stock, par value $.01 per share, of the
Company ("Common Shares"). In order to induce the Rights Holder to purchase the
Shares, the Company has agreed to provide registration rights with respect to
the Common Shares issuable upon conversion of the Shares, as set forth herein.
Accordingly, the parties hereby agree as follows:
12. Definitions. For the purposes of this Agreement:
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(a) The terms, "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933 (the "1933 Act"),
and the declaration or ordering of effectiveness of such registration statement
or document; and
(b) The term "Registrable Securities" means (i) the Common Shares
issued to the Rights Holder upon conversion of the Shares, and (ii) any other
Common Shares issued by the Company that are acquired by the Rights Holder by
purchase or transfer or issued to the Rights Holder by the Company upon the
conversion or exercise of any warrant, right or other security that is issued as
a dividend or other distribution with respect to, in exchange for or in
replacement of any Common Shares or other securities of the Company.
13. Registration Rights.
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13.1 Registration upon Demand. (a) At any time after the date
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hereof, upon the written request of the holders of fifty (50%) percent or more
of the Registrable Securities to which rights hereunder have been assigned in
accordance herewith (also "Rights Holders"), requesting that the Company effect
the registration under the 1933 Act of all or part of the Registrable
Securities, which request shall specify the intended method of distribution
thereof, the Company shall use its best efforts to so register (a "Demand
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Registration"), as expeditiously as may be practicable, the Registrable
Securities that such holders have requested the Company to register; provided,
however, that the Rights Holders shall have the right to make only two Demand
Registrations; and provided further that at least 180 days shall have elapsed
after the effective date of the first Demand Registration before any Rights
Holders may request the second Demand Registration hereunder or under any other
registration rights agreement relating to securities of the Company to which the
Rights Holders are parties.
(b) If at any time after the date hereof the Company is eligible
to file a Registration Statement on Form S-3 under the 1933 Act, upon written
request of any Rights Holder, the Company shall use its best efforts to prepare
and file such Registration Statement with the Securities and Exchange Commission
(the "Commission"), registering all or part of the Registrable Securities, at
such Rights Holder's expense; provided, that in each such registration the price
of the Registrable Securities being offered, without regard to any discounts or
commissions, shall be at least $1,000,000.
13.2 "Piggy-back" Registrations. If, at any time after the date
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hereof, the Company proposes to register any securities under the 1933 Act in
connection with any offering of its securities, whether or not for its own
account, the Company shall furnish prompt written notice to the Rights Holders
of the Company's intention to effect such registration and the intended method
of distribution in connection therewith. Upon the written request of the Rights
Holders made to the Company within 30 days after the receipt of such notice, the
Company shall include in such registration the number of Registrable Securities
requested to be registered by such Rights Holders (a "Piggy-back Registration").
13.3 Obligations of the Company. Whenever the Company is required
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under this Section 2 to effect the registration of any Registrable Securities,
the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective and keep such registration
statement effective for up to 60 days;
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
applicable law with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish to each Rights Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of applicable law, and such other documents as it may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by such Rights Holder;
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities laws of such
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states as shall be reasonably requested by the Rights Holders or the
underwriters, in the case of an underwritten offering; provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdictions;
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The managing
underwriter shall be selected by Rights Holders holding a majority of the
Registrable Securities to be included in such registration in the case of a
Demand Registration, which managing underwriter shall be reasonably satisfactory
to the Company. The Rights Holders also shall enter into and perform their
obligations under such an agreement; and
(f) Notify the Rights Holders, at any time when a prospectus
relating thereto is required to be delivered under applicable law, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Use commercially reasonable efforts to list such Registrable
Securities on any national securities exchange on which any Common Shares are
listed or, if the Common Shares are not listed on a national securities
exchange, use commercially reasonable efforts to qualify such Registrable
Securities for inclusion on the automated quotation system of the National
Association of Securities Dealers, Inc.
13.4 Furnish Information. It shall be a condition precedent to
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the obligation of the Company to take any action pursuant to this Section 2 that
each Rights Holder shall furnish to the Company such information regarding such
Rights Holders, the Registrable Securities held by it and the intended method of
disposition of such Registrable Securities as shall be required to effect the
registration of the Registrable Securities.
13.5 Expenses of Registration. With respect to a Demand
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Registration or Piggy-back Registration, the Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities including (without limitation) all registration,
filing and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and, in the case of a Demand
Registration, one counsel selected by the Rights Holders, but excluding
underwriting discounts and commissions relating to Registrable Securities.
13.6 Underwriting Requirements. In connection with any offering
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involving an underwriting of Common Shares in which a Rights Holder has
"piggy-back" rights, the Company shall not be required under Section 2.2 to
include any of the Registrable Securities of the Rights Holder in the
registration of the securities to be included in such underwriting unless the
Rights Holder accepts the terms of the underwriting as agreed upon between the
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Company and the underwriters selected by it, and then only in such quantity as
the underwriters determine in their reasonable discretion will not jeopardize
the success of the offering by the Company. If the total amount of securities,
including Registrable Securities requested by the Rights Holders and any other
shareholder to be included in such offering, exceeds the number of securities
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering up to 105,000 Common Shares held by Xxxxxx Xxxxxxx ("Xxxxxxx") and only
such number of Registrable Securities as, together with the securities, if any,
being registered by all other shareholders, including Xxxxxx X. Xxxxxx
("Xxxxxx") and the other holders of registration rights with respect to
securities of the Company on the date hereof (the "Other Rights Holders"), the
underwriters determine in their reasonable discretion will not jeopardize the
success of the offering. The securities of all other shareholders (other than
Xxxxxx, Conrads and the Other Rights Holders) shall be reduced (or eliminated)
in order to satisfy the reduction required by the underwriters before any
Registrable Securities of the Rights Holder are reduced (or eliminated). For so
long as a Rights Holder has rights pursuant to Sections 2.1 and 2.2 hereof, if
the Company grants to any person any rights to have his or its securities
included in any registration statement to be filed by the Company, such rights
shall be subordinate to the rights granted to the Rights Holder herein.
13.7 Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company shall indemnify
and hold harmless the Rights Holder, any underwriter (as defined in the 1933 Act
or other appli- cable law) for the Rights Holder, each person, if any, who
controls the Rights Holder or underwriter within the meaning of the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 Act") or other applicable law,
and any officer, director, partner or other person who controls such entity
within the meaning of the 1933 Act or other applicable law or agent thereof,
against any and all losses, claims, damages or liabilities (joint or several) to
which any of the foregoing persons may become subject under the 1933 Act or
other applicable law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading or (iii) any
violation or alleged violation by the Company of the 1933 Act or other
applicable law, or any rule or regulation promulgated under the 1933 Act or
other applicable law; and the Company shall pay to the Rights Holder,
underwriter or controlling person any reasonable legal or other expenses
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided that the indemnity agreement
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contained in this Section 2.7(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon (iii).1 a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Rights Holder or such underwriter or controlling
person or Page 34 of 50 Pages (iii).2 the use by any party, after receipt of a
notice from the Company pursuant to Section 2.3(f) above, of the prospectus
referred to in such notice.
(b) To the extent permitted by law, the Rights Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or other applicable law,
any underwriter and any controlling person of any such underwriter, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject under the 1933 Act or other applicable law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon (i) any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by the Rights Holder expressly
for use in connection with such registration, or (ii) the use by the Rights
Holder, after receipt of a notice from the Company pursuant to Section 2.3(f)
above, of the prospectus referred to in such notice; and the Rights Holder shall
pay any reasonable legal or other expenses incurred by any person to be
indemnified pursuant to this Section 2.7(b) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided that the
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indemnity agreement contained in this Section 2.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Rights Holder, which consent
shall not be unreasonably withheld; and provided, further, that in no event
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shall any indemnity under this Section 2.7(b) exceed the proceeds from the
offering received by the Rights Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.7 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section 2.7,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party so desires, to assume the defense thereof;
provided that an indemnified party (together with all other indemnified parties
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that may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time after the commencement
of any such action, if prejudicial to the ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.7, but the omission so to deliver written notice to the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.7.
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(d) The obligations of the Company to the Rights Holder under
this Section 2.7 shall survive the completion of any offering of Registrable
Securities under any registration statement pursuant to this Section 2 or
otherwise.
13.8 "Market Stand-off" Agreement. The Rights Holder hereby
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agrees that, during the period specified by the Company and the managing
underwriter in connection with any underwritten public offering of any of the
Company's securities, the Rights Holder shall not, to the extent reasonably
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of any securities
of the Company held by the Rights Holder at any time during such period, except
for any Common Shares included in such registration; provided, that private
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transfers of such securities shall not be restricted during such period; and
provided further, that such period shall not extend more than 15 days prior to
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or beyond 120 days after the closing of the offering and, provided, further,
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that, with the exception of Conrads, such restriction shall be no more extensive
in scope or duration than the restrictions imposed on any other person who has
been granted registration rights or is an officer or director of the Company. In
order to enforce the foregoing covenant, the Company may impose stop transfer
instructions with respect to the Registrable Securities of the Rights Holder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
14. Miscellaneous.
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14.1 Successors and Assigns. The provisions of this Agreement
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shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto; provided, however, that the Company
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shall not assign any of its obligations hereunder without the prior written
consent of the Rights Holder and that the Rights Holder may not assign any of
its rights hereunder except to transferees to which it has transferred any
Registrable Securities, in accordance the Purchase Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
14.2 Governing Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the State of New York, without
regard to the conflicts of law principles thereof.
14.3 Counterparts. This Agreement may be executed by one or more
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of the parties to this Agreement on separate counterparts, each of which shall
be deemed an original, but both of which together shall constitute one and the
same instrument.
14.4 Captions and Headings. The captions and headings used in
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this Agreement are used for convenience only and are not to be considered in
construing or inter- preting this Agreement.
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14.5 Notices. Any notice, demand or delivery authorized by this
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Agreement shall be in writing and shall be sufficiently given or made upon
receipt thereof, if made by personal delivery or facsimile transmission (with
confirmed receipt thereof), or four business days after mailed, if sent by
first-class mail, postage prepaid, addressed, to the Rights Holder or the
Company, as the case may be, at their respective addresses below, or such other
address as shall have been furnished to the party giving or making such notice,
demand or delivery:
(a) If to the Company, to it at:
Phoenix Information Systems Corp.
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Chairman
Facsimile: 000-000-0000
(b) If to the Rights Holder, to it at:
S-C Phoenix Partners
c/o S-C Phoenix Holdings, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Fund Management
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
[Next Page is Signature Page]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
S-C Phoenix Partners
By: S-C PHOENIX HOLDINGS, L.L.C.,
a General Partner
By: __________________________________
Name:
Title:
PHOENIX INFORMATION SYSTEMS CORP.
By: __________________________________
Name:
Title:
