EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of July 24, 1995,
among ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a
corporation duly organized and validly existing under the laws of
the State of Delaware (hereinafter referred to as the
"Corporation"), and each of the parties (hereinafter referred to,
collectively, as the "Stockholders" and, individually, as a
"Stockholder") identified on Schedule 1 attached hereto who are
signatories hereto.
W I T N E S S E T H :
WHEREAS, each of the Stockholders is party to a Preferred
Stock Subscription Agreement with the Corporation (hereinafter
referred to as the "Subscription Agreements"), pursuant to which
the Corporation shall issue to the Stockholders no less than
85,000 shares of its Series A Cumulative, Convertible Preferred
Stock, $1.00 par value, and up to 120,000 such shares(hereinafter
referred to, collectively, as the "Preferred Shares"), convertible
into shares (hereinafter referred to as the "Conversion Shares")
of its common stock, $.01 par value (as the same may be
constituted from time to time hereinafter referred to as the
"Common Stock") at a current per share price of $4.00 (subject to
adjustment);
WHEREAS, in connection with effectuating the transactions
contemplated by the provisions of the Subscription Agreements the
Corporation and the Stockholders are entering into this Agreement;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following additional terms
shall have the following respective meanings:
The term "Demand Registration" shall have the meaning set
forth in Paragraph A of Article III hereof.
The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
The term "Incidental Registration" shall have the meaning set
forth in Paragraph B of Article IV.
The term "a majority of the Registrable Securities" shall
mean more than 50% of the number of shares of the Registrable
Securities, and shall apply mutatis mutandis whenever a percentage
of Registrable Securities greater than a majority is required in
this Agreement.
The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
The term "Prior Registration Rights Agreement" shall mean the
Registration Rights Agreement dated March 12, 1993 among the
Corporation and the limited partners of ERS Associates Limited
Partnership, a Connecticut limited partnership.
The term "Prospectus" shall mean the prospectus included in
any Registration Statement, 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.
The term "Registration Expenses" shall have the meaning set
forth in Article VII.
The term "Registrable Securities" shall mean (i) the
Conversion Shares, and (ii) any securities issued or issuable with
respect to the Conversion Shares referred to in clause (i)
immediately preceding by way of a stock dividend or stock split or
in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization; provided, however,
that a security ceases to be a Registrable Security when it is no
longer a Restricted Security.
The term "Registration Statement" shall mean any registration
statement of the Corporation which covers Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments (including post-effective amendments) and
supplements to such Registration Statement, all exhibits and all
material incorporated by reference in such Registration Statement.
The term "Restricted Securities" shall mean any security
unless or until: (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public
pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; (iii) it is eligible for sale pursuant
to rule 144(k) (or any similar provisions then in force) under the
Securities Act, or (iv) it has otherwise been transferred and a
new certificate or other evidence of ownership for it not bearing
a restrictive legend pursuant to the Securities Act and not
subject to any stop transfer order has been delivered by or on
behalf of the Corporation and no other restriction on transfer
exists.
The term "Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
The term "Selling Expenses" shall have the meaning set forth
in Article VII.
The term "SEC" shall mean the Securities and Exchange
Commission.
The term "underwritten registration" or "underwritten
offering" shall mean a registration in which securities of the
Corporation are sold pursuant to a firm commitment underwriting to
an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with an underwriter.
ARTICLE II
SECURITIES SUBJECT TO THIS AGREEMENT
A. Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
B. Holders of Registrable Securities. A Person is deemed
to be a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such
Registrable Securities, whether or not such acquisition has
actually been effected, and disregarding any legal restrictions
upon the exercise of such right. Without limiting the generality
of the foregoing, each holder of Preferred Shares shall be deemed
a holder of Registrable Securities.
ARTICLE III
DEMAND REGISTRATION
The following registration rights shall exist:
A. Requests for Registration. Subject to the provisions of
Paragraph B of this Article III, any holder or holders of at least
500,000 of the Registrable Securities may make a written request
for a registration with the SEC under and in accordance with the
provisions of the Securities Act of all or part (but no fewer than
100,000) of the Registrable Securities (herein referred to as a
"Demand Registration"). Within ten days after receipt of such
request, the Corporation shall give written notice of such
registration request to all holders of Registrable Securities and
shall include in any such registration all Registrable Securities
with respect to which the Corporation shall have received written
requests for inclusion therein within 15 business days after the
mailing or delivery of the Corporation's notice. All requests made
pursuant to this Paragraph A shall specify the number of
Registrable Securities to be registered and shall also specify
the intended methods of disposition thereof; provided, however,
that if the holders of a majority of the Registrable Securities
requested to be included in such registration request an
underwritten offering, the method of disposition shall be such an
underwritten offering.
B. Restrictions on Registrations. The holders of
Registrable Securities shall be entitled to two Demand
Registrations; provided, however, in all cases that each such
obligation shall be deemed satisfied only when a Registration
Statement or Registration Statements covering all Restricted
Securities specified in a request for a Demand Registration
received as aforesaid, for sale in accordance with the method of
disposition specified in such request, shall have become effective
and, if such method of disposition is a firm commitment
underwritten public offering, all such shares have been sold
pursuant thereto. The Corporation shall not be obligated to
proceed with any Demand Registration if the Corporation shall
deliver to the holders of Registrable Securities demanding a
registration an opinion reasonably satisfactory in form and
substance to such holders, of counsel, reasonably satisfactory to
such holders, that the registration of such Registrable Shares is
not necessary to permit such sale in the manner set forth in such
holders' request. In addition, the Corporation shall not be
obligated to proceed with any Demand Registration during any
period during which the Corporation would be required to undertake
an audit in order to have available for inclusion in the
registration statement current financial statements as required in
accordance with the Securities Act, unless the holders of
Registrable Securities demanding a registration undertake to bear
the reasonable costs of such audit. In each case in which the
Corporation is not required to take any action, such holders shall
be deemed not to have given the request giving rise thereto, a
Demand Registration will be deemed not to have occurred and such
holders shall be free to deliver a new notice requesting the
registration of Registrable Securities.
C. Expenses. The Corporation shall pay all Registration
Expenses related to such registration, whether or not the
Registration Statement with respect to such registration has
become effective, and all other expenses incurred by the
Corporation in complying with this Article III. All Selling
Expenses related to such registration shall be borne by the
participating sellers (including the Corporation, if a seller), in
proportion to the number of shares sold by each, or by such
sellers as they may agree.
D. Incidental Rights to Demand Registrations
(i) Conditions. Neither the Corporation nor any of its
securityholders (other than the holders of Registrable Securities)
shall have the right to include any of the Corporation's
securities in any registration initiated as a Demand Registration
unless:
(a) such securities are of the same class as the
Registrable Securities included in such registration;
(b) if any of the Registrable Securities covered
by such registration are sold in an underwritten offering,
the Corporation or such securityholders, as applicable, agree
in writing to sell their securities on the same terms and
conditions as apply to the Registrable Securities being sold;
and
(c) if any of the Registrable Securities covered
by such registration are to be sold in an underwritten
offering, the managing underwriters shall not have advised
the Corporation or the holders of Registrable Securities
demanding a registration that, in their opinion, the total
number or dollar amount of the securities requested to be
included in such registration by the Corporation and/or such
other securityholders would have a materially adverse effect
on the proposed sale or other transfer of the Registrable
Securities demanded to be registered hereunder.
(ii) If the Corporation registers any of its securities
on its own behalf in a registration initiated as a Demand
Registration (in accordance with the provisions of this Paragraph
D), such Demand Registration shall not count for the purpose of
determining the number of Demand Registrations to which the
holders of Registrable Securities are entitled under Paragraph B
of this Article III and the Corporation shall pay the Registration
Expenses of such registration.
(iii) If any securityholders of the Corporation (other
than the holders of Registrable Securities in such capacity)
register securities of the Corporation in a Demand Registration
(in accordance with the provisions of this Paragraph D), such
holders shall pay the fees and expenses of counsel to such holders
and the incremental amount of Registration Expenses incurred as a
result of their participation unless the Corporation has agreed to
pay such expenses and, in the opinion of counsel to the
Corporation, such payment shall not affect the ability of the
Registrable Securities to be qualified under the blue sky laws of
any jurisdiction.
E. Selection of Underwriters. If any of the Registrable
Securities covered by a Demand Registration are to be sold in an
underwritten offering, the investment banker or investment bankers
and manager or managers that will administer the offering shall be
selected by the Corporation.
ARTICLE IV
INCIDENTAL REGISTRATIONS
A. Not a Demand. A registration of Registrable Securities
pursuant to this Article IV shall not be counted as a Demand
Registration under Article III hereof.
B. Notice and Request for Incidental Registration.
Whenever the Corporation proposes to register any of its
securities under the Securities Act, other than pursuant to a
Demand Registration or a registration on Forms S-4 or S-8 or
comparable forms (hereinafter referred to as an "Incidental
Registration"), the Corporation shall give written notice to all
holders of Registrable Securities of its intention to effect such
a registration not later than the earlier to occur of (i) the
tenth day following receipt by the Corporation of notice of
exercise of other demand registration rights or (ii) 30 days prior
to the anticipated effectiveness of such registration. Subject to
the provisions of Paragraphs D and E of this Article IV, the
Corporation shall include in such Incidental Registration all
Registrable Securities with respect to which the Corporation has
received written requests for inclusion therein within 15 days
after the mailing or delivery. If an Incidental Registration is an
underwritten offering effected:
(i) under Paragraph D of this Article IV hereof, all
Persons whose securities are included in the Incidental
Registration shall be obligated to sell their securities on
the same terms and conditions as apply to the securities
being issued and sold by the Corporation; or
(ii) under Paragraph E of this Article IV hereof, all
Persons whose securities are included in the Incidental
Registration shall be obligated to sell their securities on
the same terms and conditions as apply to the securities
being sold by the Person or Persons who initiated the
Incidental Registration under said paragraph.
C. Incidental Registration Expenses. The Corporation shall
pay all Registration Expenses related to such registration, or
incurred as a result of the participation in an Incidental
Registration of the holders of Registrable Securities, whether or
not the Registration Statement with respect to such registration
has become effective, and all other expenses incurred by the
Corporation in complying with this Article IV. All Selling
Expenses related to such registration shall be borne by the
participating sellers (including the Corporation, if a seller), in
proportion to the number of shares sold by each, or by such
sellers as they may agree.
D. Priority on Underwritten Primary Registration. If an
Incidental Registration is an underwritten primary registration on
behalf of the Corporation, and the managing underwriters advise
the Corporation in writing that in their opinion the total number
or dollar amount of securities requested to be included in such
registration exceeds the number or dollar amount of securities
which can be sold in such offering without materially adverse
effect on the proposed sale by the Corporation, the Corporation
shall include in such registration:
(i) first, all securities the Corporation proposes to
sell; and
(ii) second, the Registrable Securities and such other
securities (provided such securities are of the same class as
the securities being sold by the Corporation) requested to be
included in such registration in excess of the number of
securities the Corporation proposes to sell which, in the
opinion of such underwriters, can be sold without materially
adverse effect on the proposed sale by the Corporation
(allocated pro rata among the holders of such Registrable
Securities and other securities on the basis of the number of
securities requested to be included therein by each such
holder);
except, in the event any party to the Prior Registration Agreement
exercises any rights thereunder with respect to such Incidental
Registration, the provisions of Article IV, Section F of the Prior
Registration Agreement with respect to such allocation to such
party shall supersede the provisions of clause (ii) immediately
preceding insofar as relating to the ERS Group (as defined in the
Prior Registration Agreement).
E. Priority on Underwritten Secondary Registration. If an
Incidental Registration is an underwritten secondary registration
on behalf of holders of the Corporation's securities, and the
managing underwriters advise the Corporation in writing that in
their opinion the number of securities requested to be included in
such registration exceeds the number of securities which can be
sold in such offering without materially adverse effect on the
proposed sale by such holders, the Corporation shall include in
such registration:
(i) first, all securities requested to be included in
such registration by the securityholders initiating such
registration; and
(ii) second, up to the full number of Registrable
Securities and such other securities (provided such
securities are of the same class as the securities being sold
by the Corporation) requested to be included in such
registration in excess of the number of securities the
securityholders initiating such registration propose to sell
which, in the opinion of such underwriters, can be sold
without materially adverse effect on the proposed sale by
such holders (allocated pro rata among the holders of such
Registrable Securities and other securities on the basis of
the number of securities requested to be included therein by
each such holder);
except, in the event any party to the Prior Registration Agreement
exercises any rights thereunder with respect to such Incidental
Registration, the provisions of Article IV, Section F of the Prior
Registration Agreement with respect to such allocation to such
party shall supersede the provisions of clause (ii) immediately
preceding insofar as relating to the ERS Group (as defined in the
Prior Registration Agreement).
F. Selection of Underwriters. If any Incidental
Registration is an underwritten offering, the Corporation shall
have the right to select the investment banker or investment
bankers and manager or managers to administer the offering.
ARTICLE V
HOLDBACK AGREEMENTS
Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant
to Article III or IV hereof agrees, if requested by the managing
underwriters, not to effect any public sale or distribution of
securities of the Corporation of the same class as the securities
included in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such
underwritten registration) during the ten-day period prior to, and
during the 180-day period beginning on, the closing date of each
underwritten offering (or best efforts underwritten offering in
the case of a Registration Statement filed under Article III) of
Registrable Securities made pursuant to such Registration
Statement, to the extent timely notified in writing by the
Corporation or the managing underwriters. The foregoing provisions
shall not apply to any holder of Registrable Securities if such
holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such
holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or
distribution of the applicable class of Registrable Securities
commencing on the date of sale of such applicable class of
Registrable Securities unless it has provided 45 days' prior
written notice of such sale or distribution to the underwriter or
underwriters.
ARTICLE VI
REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested
that any Registrable Securities be registered pursuant to this
Agreement, the Corporation shall use its best efforts to effect
such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Corporation shall as
expeditiously as possible:
A. prepare and file with the SEC, not later than six
months after receipt of a request to file a Registration Statement
for a Demand Registration, a Registration Statement on a form for
which the Corporation then qualifies which is satisfactory to the
Corporation and the holders of a majority of the Registrable
Securities being registered (unless the offering is made on an
underwritten basis, including on a best efforts underwriting
basis, in which event the managing underwriter or underwriters
shall determine the form to be used) and which form shall be
available for the sale of the Registrable Securities in accordance
with the intended method or methods of distribution thereof, and
use its best efforts to cause such Registration Statement to
become effective;
B. prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for a
period of not less than six months, or such shorter period which
will terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
C. notify the selling holders of Registrable Securities
and the managing underwriters, if any, promptly, and (if requested
by any such Person) confirm such advice in writing,
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment,
when the same has become effective;
(ii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; and
(iii) of the receipt by the Corporation of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose.
D. make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
E. if requested by the managing underwriters or a holder
of Registrable Securities being sold, incorporate in a Prospectus
supplement or post-effective amendment such information as the
managing underwriters and the holders of a majority of the
Registrable Securities being sold and their respective counsel
reasonably conclude should be included in the Registration
Statement, so that such Registration Statement conforms in both
form and substance to the requirements of the Securities Act,
including without limitation with respect to the number of
Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
F. promptly prior to the filing of any document which is
to be incorporated by reference into the Registration Statement or
the Prospectus (after initial filing of the Registration
Statement) provide copies of such document to counsel to the
selling holders of Registrable Securities and to the managing
underwriters, if any, and make the Corporation's representatives
available for discussion of such document;
G. prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the
Corporation 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 which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
H. cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any
sale of Registrable Securities to the underwriters;
I. upon the happening of any event which makes any
statement made in the Registration Statement, the Prospectus or
any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement,
the Prospectus or any document incorporated therein by reference
in order to make the statements therein not misleading, prepare a
supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein
by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;
J. cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Corporation are then listed
if requested by the holders of a majority of such Registrable
Securities or the managing underwriters, if any;
K. provide a transfer agent and registrar for all
Registrable Securities and a CUSIP number for all Registrable
Securities, in each case not later than the effective date of such
registration statement;
L. enter into such agreements (including an underwriting
agreement satisfactory to the Corporation, containing customary
representations, warranties and agreements) and take all such
other actions in connection therewith in order reasonably 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, in such form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten
offerings;
(ii) obtain opinions of counsel to the Corporation and
updates thereof (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority
of the Registrable Securities being sold) addressed to the
underwriters, if any;
(iii) obtain "cold comfort" letters and updates thereof
from the Corporation's independent certified public
accountants addressed to the underwriters, if any, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters to
underwriters in connection with primary underwritten
offerings; and
(iv) deliver such documents and certificates as may be
requested by the holders of a majority of the Registrable
Securities being sold and the managing underwriters, if any,
to evidence compliance with clause (i) of this Paragraph L
and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Corporation.
The obligations under this Paragraph L above shall be performed at
each closing under such underwriting or similar agreement or as
and to the extent required thereunder.
M. make available for inspection by a representative of
the sellers of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by
the sellers or underwriters, all financial and other records,
pertinent corporate documents of the Corporation, and cause the
Corporation's officers, directors and employees to supply all
information reasonably requested by any such representative,
underwriter, attorney, accountant or agent solely for use in
connection with such registration statement; provided, however,
that any records, information or documents that are designated by
the Corporation in writing as confidential shall be kept
confidential by such Persons pursuant to such reasonable
confidentiality agreements as the Corporation may request;
N. otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any twelve-month period (or 90 days,
if such period is a fiscal year): (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to
underwriters in an underwritten offering, or, if not sold to
underwriters in such an offering; and (ii) beginning with the
first month of the Corporation's first fiscal quarter commencing
after the effective date of the Registration Statement, which
statements shall cover said twelve-month periods.
ARTICLE VII
REGISTRATION AND SELLING EXPENSES
For purposes of this Agreement, all underwriting discounts
and selling commissions applicable to the sale of Registrable
Securities (all such expenses being herein referred to as "Selling
Expenses"), and all expenses incident to the Corporation's
performance of or compliance with this Agreement, including
without limitation:
A. all registration and filing fees (including with
respect to filings required to be made with the National
Association of Securities Dealers, Inc.);
B. fees and expenses of compliance with securities or blue
sky laws (including fees and disbursements of counsel for the
underwriters in connection with domestic blue sky qualifications
of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as
the managing underwriters or holders of a majority of the
Registrable Securities being sold may designate);
C. printing, messenger, telephone and delivery expenses;
D. fees and disbursements of counsel for the Corporation;
E. fees and disbursements of all independent certified
public accountants of the Corporation (including the expenses of
any "cold comfort" letters required by or incident to such
performance);
F. fees and expenses of other Persons retained by the
Corporation;
(all such expenses being herein called "Registration Expenses")
shall be borne as provided in this Agreement; it being understood
and agreed that the Corporation shall, in any event, pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit conducted at
the end of the Corporation's fiscal year in the ordinary course of
business, and the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities
exchange and securities association.
ARTICLE VIII
INDEMNIFICATION
A. Indemnification by Corporation. The Corporation agrees
to indemnify, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and
agents and each Person who controls such holder (within the
meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged
untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to
deliver a copy of the Registration Statement or Prospectus after
the Corporation has furnished such holder with a sufficient number
of copies of the same. The Corporation shall also indemnify
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act)
to the same extent as hereinabove provided with respect to the
indemnification of the holders of Registrable Securities.
B. Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of
Registrable Securities is participating, each such holder will
furnish to the Corporation in writing such information and
affidavits as the Corporation reasonably requests for use in
connection with any Registration Statement or Prospectus and
agrees to indemnify, to the full extent permitted by law, the
Corporation, its directors and officers and each Person who
controls the Corporation (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a
material fact or any omission or alleged omission of a material
fact required to be stated in the Registration Statement or
Prospectus or preliminary Prospectus 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 or affidavit so furnished in writing by such holder to
the Corporation specifically for inclusion in such Registration
Statement or Prospectus. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds received by such
holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation. The Corporation shall be entitled
to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals
participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such
Persons specifically for inclusion in any Prospectus or
Registration Statement.
C. Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at
the expense of such Person unless (a) the indemnifying party has
agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such Person, or (c) in the
reasonable judgment of any such Person and the indemnifying party,
based upon advice of their respective counsel, a conflict of
interest may exist between such Person and the indemnifying party
with respect to such claims (in which case, if the Person notifies
the indemnifying party in writing that such Person elects to
employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the
defense of such claim on behalf of such Person). If such defense
is not assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably
withheld). No indemnifying party shall be required to consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim.
ARTICLE IX
RULE 144
The Corporation covenants that it shall file the reports
required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from
time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Corporation shall deliver to such holder a written
statement as to whether it has complied with such information and
requirements.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, representations and warranties,
underwriting agreements and other certificates and documents, and
provides such opinions of counsel, required under the terms of
such underwriting arrangements or otherwise deemed necessary or
appropriate by the Corporation or counsel to the Corporation.
ARTICLE XI
MISCELLANEOUS
A. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, shall be
entitled to specific performance of its rights under this
Agreement. The Corporation agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a
remedy at law would be adequate.
B. Notices. All notices, requests or instructions
hereunder shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, as follows:
(1) if to the Corporation:
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Xxxxxx Xxxxxx, Esq.
Krugman, Xxxxxxxx & Xxxxxxxx
Park 00 Xxxx - Xxxxx Xxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
(2) if to any Stockholders, at its address set forth
on Schedule 1.
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice
of change of address shall be effective only upon receipt.
C. Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement of the parties
hereto with respect to the transactions contemplated hereby, and
supersede all prior understandings, arrangements, and agreements
with respect to the subject matter hereof. No modification hereof
shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
D. Further Action. Each of the parties hereto shall use
such party's best efforts to take such actions as may be necessary
or reasonably requested by the other party hereto to carry out and
consummate the transactions contemplated by this Agreement.
E. Successors and Assigns. The registration rights granted
to the Stockholders under Article III and under Article IV may be
transferred to a transferee who acquires any Conversion Shares,
which transfer shall be effective when the Corporation is given
written notice by the transferor at the time of such transfer
stating the name and address of the transferee and identifying the
securities with respect to which the rights under Article III and
IV are being assigned.
F. Notice of Shares. All references herein to numbers of
shares of Registrable Securities shall be subject to appropriate
adjustment for stock splits, stock dividends and recapitalizations
of the Corporation.
G. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable in the case of agreements made and to be performed
entirely within such State.
H. Captions. The captions appearing herein are for the
convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
I. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Xxxxx X. Failing, Jr.
----------------------------
XXXXXXXXX LIMITED PARTNERSHIP II
By: G.F. Management Corp.
By s/Norton Xxxxxxxxx
------------------------------
HANSEATIC CORPORATION
By s/Xxxx X. Xxxxxxxxx
-------------------------------
s/Xxxxx X. Failing, Jr.
---------------------------------
Xxxxx X. Failing, Jr.
S/Xxxxxx Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Schedule 1
Names and Address
Xxxxxxxxx Limited Partnership II
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Hanseatic Corporation
000 Xxxx Xxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx X. Failing, Jr.
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
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