Exhibit 99.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 4, 1997 (the
"Agreement"), is made by and between BASE TEN SYSTEMS, INC., a New Jersey
corporation (the "Company"), and the Investors set forth on the signature pages
hereto (the "Initial Investors").
W I T N E S S E T H :
WHEREAS, in connection with the Securities Purchase Agreement dated
December 4, 1997 between the Initial Investors and the Company (the "Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of said Purchase Agreement, to issue and sell to the Initial
Investors (the "Offering") Nineteen Million U.S. Dollars face amount of the
Company's Convertible Preferred Shares (the "Preferred Shares"), convertible
into shares of the Company's Class A Common Shares, par value $1.00 per share
(the "Common Stock"), together with Stock Purchase Warrants (the "Warrants") to
purchase additional shares of Common Stock. The shares of common stock of the
Company into which the Preferred Shares are convertible and the Warrants are
exercisable for are collectively referred to herein as the "Common Shares."
WHEREAS, to induce the Initial Investors to execute and deliver the
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Common Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
(a) "Holders" are stockholders of the Company who, by virtue of
agreements with the Company, are entitled to include their securities in certain
Registration Statements filed by the Company.
(b) "Investors" means the Initial Investors and any transferee or
assignee of the Initial Investors who agrees to become bound by the provisions
of this Agreement in accordance with Section 9 hereof.
(c) "Registrable Securities" means the Common Shares, together with
any shares of Common Stock which may be issued as a dividend or other
distribution and any
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additional shares of Common Stock which may be issued due to anti-dilution
adjustments with respect to the Preferred Shares or Common Shares, which are
required to be included in a Registration Statement pursuant to Section 2(a)
below.
(d) "Registration Period" means the period between the date of this
Agreement and the earlier of (i) the date on which all of the Registrable
Securities have been sold, or (ii) the date on which the Registrable Securities
(in the opinion of Investors' counsel) may be immediately sold without
registration pursuant to Rule 144(k) under the Securities Act.
(e) "Registration Statement" means a registration statement filed with
the Securities and Exchange Commission (the "SEC") under the Securities Act and
any subsequent Registration Statement filed to register additional Registrable
Securities.
(f) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
2. Registration.
(a) Mandatory Registration. The Company will file a Registration
Statement on Form S-3 with the SEC registering the Registrable Securities in
respect of the First Closing and the Second Closing for resale within
twenty-five (25) business days of the initial closing of the purchase of the
Preferred Shares (the "Closing Date"). To the extent allowable under the
Securities Act (including Rule 416), the Registration Statement shall include
the Common Shares and such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Preferred Shares and
exercise of the Warrants (i) to prevent dilution resulting from stock splits,
stock dividends or similar transactions, or (ii) by reason of changes in the
conversion price of the Preferred Shares or the exercise price of the Warrants
in accordance with the terms thereof. The number of shares of Common Stock
initially included in such Registration Statement shall be no less than
4,250,000 Common Shares. The Registration Statement (and each amendment or
supplement thereto) shall be provided to, and subject to the approval of, the
Initial Investors and their counsel, such approval not to be unreasonably
withheld or delayed. The Company shall use its best efforts to cause such
Registration Statement to be declared effective by the SEC no earlier than
February 25, 1998 and no later than March 2, 1998 (the "Required Effective
Date"). Such best efforts shall include, but not be limited to, promptly
responding to all comments received from the staff of the SEC. The Initial
Investors shall use reasonable efforts to cause their counsel to provide any
comments or approve of any amendment to the Registration Statement within two
business days of receipt. Once declared effective by the SEC, the Company shall
cause such Registration Statement to remain effective throughout the
Registration Period, and any amendment of such Registration Statement necessary
to reflect the Second Closing shall not relieve the Company of its obligation to
cause the Registration Statement to remain effective under this Agreement.
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(b) Late Registration Payments. If the Registration Statement required
pursuant to Section 2(a) above has not been declared effective by the Required
Effective Date the Company will make cash payments to the Investors as partial
compensation for such delay (the "Late Registration Payments"). The Late
Registration Payments will be equal to one and one-half percent (1.5%) of the
purchase price paid for the Preferred Shares for each month following the
Required Effective Date, continuing through the date the Registration Statement
is declared effective by the SEC. The Late Registration Payments will be
prorated on a daily basis for partial months and will be paid to the Initial
Investors in cash within five (5) business days following the earlier of: (i)
the end of each month following the Required Effective Date, or (ii) the
effective date of the Registration Statement. Nothing herein shall limit any
Investor's right to pursue actual damages for the Company's failure to file a
Registration Statement or to have it declared effective by the SEC on or prior
to the Required Effective Date in accordance with the terms of this Agreement.
(c) Piggyback Registrations. If, at any time prior to the expiration
of the Registration Period, the Company decides to register any of its
securities for its own account or for the account of others (excluding
registrations relating to equity securities to be issued solely in connection
with an acquisition of any entity or business or in connection with stock option
or other employee benefit plans), the Company will promptly give the Investors
written notice thereof, and will use its best efforts to include in such
registration all or any part of the Registrable Securities so requested by such
Investors (excluding any Registrable Securities previously included in a
Registration Statement). Each Investor's request for registration must be given
to the Company in writing within ten (10) days after receipt of the notice from
the Company. If the registration for which the Company gives notice is a public
offering involving an underwriting, the Company will so advise the Investors as
part of the above-described written notice. In such event, if the managing
underwriter(s) of the public offering impose a limitation on the number of
shares of Common Stock which may be included in the Registration Statement
because, in such underwriter(s)' judgment, such limitation would be necessary to
effect an orderly public distribution, then the Company will be obligated to
include only such limited portion, if any, of the Registrable Securities with
respect to which such Investors have requested inclusion hereunder. Any
exclusion of Registrable Securities shall be made pro-rata among all Holders of
the Company's securities seeking to include shares of Common Stock (including,
for purposes of this Section 2(c) holders of securities of the Company other
than the Registrable Securities who hold and are attempting to exercise
registration rights) in proportion to the number of shares of Common Stock
sought to be included by such Holders; provided, however, that the Company will
not exclude any Registrable Securities unless the Company has first excluded all
outstanding securities the Holders of which are not entitled by right to
inclusion of securities in such Registration Statement. No right to registration
of Registrable Securities under this Section 2(c) shall be construed to limit in
any way the registration required under Section 2(a) above. The obligations of
the Company under this Section 2(c) will expire upon the earlier of: (i) after
the Company has afforded the opportunity for the Investors to exercise
registration rights under this Section 2(c) for two registrations; provided,
however, that any Investor who shall have had any Registrable Securities
excluded from any Registration Statement in accordance with this Section 2(c)
shall be entitled to include in any additional Registration Statement filed by
the Company the Registrable Securities so excluded; or (ii) when all of the
Registrable Securities held by any
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Investor may be sold by such Investor under Rule 144(k) under the 1933 Act
without being subject to any volume restrictions.
(d) Underwriter's Lock-Up. The underwriters in connection with any
firm commitment public offering of the Company's common stock resulting in
proceeds of at least $10,000,000 to the Company shall have the right to require
that the Investors enter into an agreement restricting the Investors from
selling Common Shares held by such Investors in any public sale for a period not
to exceed 90 days following the closing of such underwriting, if they deem this
to be reasonably necessary to effect such underwritten public offering; provided
that all executive officers, directors and persons holding 5% or more of the
Company's common equity securities shall have also agreed to identical (or more
restrictive) restrictions. The Investors shall be subject to no more than two
such restrictions during each 18 month period, and the aggregate number of days
in all such restrictions during any 18 month period shall not exceed 90 days.
(e) Eligibility for Form S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors of the Registrable Securities, and the Company
shall file all reports required to be filed by the Company with the SEC in a
timely manner so as to maintain such eligibility for the use of Form S-3.
3. Additional Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall have the following
additional obligations:
(a) The Company shall keep each Registration Statement required by
Section 2(a) hereof effective pursuant to Rule 415 under the Securities Act at
all times during the Registration Period as defined in Section 1(d) above.
(b) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Company
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during such period, shall comply with the provisions
of the Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the sellers thereof as set forth in the
Registration Statement. In the event the number of shares of Common Stock
included in a Registration Statement filed pursuant to this Agreement (excluding
piggyback registrations as provided for in Section 2(c) above) is insufficient
to cover all of the Registrable Securities, the Company shall amend the
Registration Statement and/or file a new Registration Statement so as to cover
all of the Registrable Securities as soon as practicable, but in no event more
than twenty (20) business days after the Company first determines (or reasonably
should have determined) the need therefor. The Company shall use its
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best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. The Late
Registration Payment provisions of Section 2(b) above shall become applicable
with respect to the effectiveness of such amendment and/or new Registration
Statement on the sixtieth (60th) day following the date the Company first
determines (or reasonably should have determined) the need for the amendment
and/or new Registration Statement.
(c) The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement (i) promptly after the
same is prepared and publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment thereto; each
preliminary prospectus and final prospectus and each amendment or supplement
thereto; and, in the case of the Registration Statement required under Section
2(a) above, each letter written by or on behalf of the Company to the SEC and
each item of correspondence from the SEC, in each case relating to such
Registration Statement (other than any portion of any item thereof which
contains information for which the Company has sought confidential treatment);
and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto, and such other documents
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor.
(d) The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or blue sky laws of such jurisdictions as the Investors
reasonably request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations as
may be necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions.
Notwithstanding the foregoing provision, the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause more than nominal expense
or burden to the Company, or (v) make any change in its charter or bylaws, which
in each case the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its stockholders.
(e) In the event Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for such
offering, the Company shall enter into and perform its obligations under an
underwriting agreement in usual and customary form including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering. If the Registration Statement required
pursuant to Section 2(a) is not then effective, the Company shall be responsible
for payment of the reasonable attorney fees and costs incurred by one law firm
selected by such Investors to represent their interests in the underwritten
offering.
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(f) The Company shall notify each Investor who holds Registrable
Securities being sold pursuant to a Registration Statement of the happening of
any event of which the Company has knowledge as a result of which (i) the
prospectus included in the 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, in light of
the circumstances under which they were made, not misleading, or (ii) sales
cannot be made pursuant to such Registration Statement in compliance with the
securities laws for any other reason (a "Suspension Event"). The Company shall
make such notification as promptly as practicable after the Company becomes
aware of such Suspension Event, shall promptly use its best efforts to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and shall deliver a number of copies of such supplement
or amendment to each Investor as such Investor may reasonably request. If an
Investor reasonably believes that a Suspension Event is in effect, but has not
received notice thereof from the Company, such Investor may deliver a written
request, setting forth in reasonable detail the basis and source (including any
individual) for such belief, that the Company confirm that no Suspension Event
is in effect. The Company shall respond to any such request with a letter
executed by an executive officer of the Company stating that, in consultation
with its counsel, the Company has determined that a Suspension Event is or is
not in effect, on or before the third business day following receipt of such
request. If the Company fails to respond within such time period, a Suspension
Event shall be deemed to be in effect commencing retroactively as of the day
that the Investor delivered its request to the Company, and shall continue until
the Investor is otherwise notified by the Company. Notwithstanding the foregoing
provision, the Company shall not be required to maintain the effectiveness of
the Registration Statement or to amend or supplement the Registration Statement
for a period (a "Delay Period") beginning on the date of occurrence of the
Suspension Event and expiring upon the earlier to occur of (i) the date on which
such material information is disclosed to the public or ceases to be material,
(ii) the date on which the Company is able to comply with its disclosure
obligations and SEC requirements related thereto, or (iii) thirty (30) days
after the occurrence of the Suspension Event; provided, however, that there
shall not be more than two Delay Periods in any twelve (12) month period. In the
event that the total number of days in any Delay Period(s) within a twelve-month
period exceeds thirty (30) days, the Company shall extend the automatic
conversion date of the Preferred Shares for a number of days equal to the total
number of days in such Delay Period(s). In the event that the number of days in
all Delay Period(s) taken together within a twelve-month period exceeds sixty
(60) days, or in the event that there are more than two Delay Periods in any
twelve-month period, regardless of the duration, the Company shall compensate
the Investors for such delay by making monthly cash payments, prorated on a
daily basis, to each such Investor of one and one-half percent (1.5%) of the
purchase price paid for the Registrable Shares still held by such Investor at
such time for each month, continuing through the date the Delay Period ceases
(the "Delay Compensation"). The Delay Compensation will begin to accrue on the
sixty-first (61st) day falling within one or more Suspension Events in any
twelve-month period (or on the first day of any Delay Period in excess of the
first two Delay Periods) and will be payable thirty days from that date and each
thirty days thereafter until the Registration Statement is brought effective.
(g) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement
and, if such an order is
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issued, shall use its best efforts to obtain the withdrawal of such order at the
earliest possible time and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.
(h) The Company shall permit counsel designated by the Investors who
hold Registrable Securities being sold pursuant to such registration to review
the Registration Statement and all amendments and supplements thereto (as well
as all requests for acceleration or effectiveness thereof) a reasonable period
of time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects.
(i) The Company shall make generally available to its security Holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in a form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter following
the effective date of the Registration Statement.
(j) At the request of any Investor who holds Registrable Securities
being sold pursuant to such registration, the Company shall furnish on the date
that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement (i) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the Investors; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and Investors.
(k) The Company shall make available for inspection by any Investor
whose Registrable Securities are being sold pursuant to such registration, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by any such
Investor or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable each Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request for purposes of such due diligence;
provided, however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction, or is reasonably necessary in connection with litigation or other
legal process, or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall
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have entered into confidentiality agreements (in form and substance satisfactory
to the Company) with the Company with respect thereto, substantially in the form
of this Section 3(k). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at the Company's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit any Investor's
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.
(l) The Company shall hold in confidence and shall not make any
disclosure of information concerning an Investor provided to the Company
pursuant hereto unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, or is reasonably necessary in connection with litigation or other
legal process, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor and allow such Investor, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
(m) The Company shall use its best efforts either to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed on
Nasdaq (as defined below), the AMEX or the NYSE and on each additional national
securities exchange on which similar securities issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) secure designation of all the
Registrable Securities covered by the Registration Statement as a National
Association of Securities Dealers Automated Quotations System ("Nasdaq")
"national market system security" within the meaning of Rule 11Aa2-1 of the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the quotation of the Registrable Securities on the Nasdaq National Market System
or, if, despite the Company's best efforts to satisfy the preceding clause (i)
or (ii), the Company is unsuccessful in satisfying the preceding clause (i) or
(ii), to secure listing on a national securities exchange or Nasdaq
authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
(n) The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
Closing Date.
(o) The Company shall cooperate with the Investors who hold
Registrable Securities being sold and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing
666427.1
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Registrable Securities to be sold pursuant to the Registration Statement and
enable certificates to be in such denominations or amounts as the case may be,
and registered in such names as the managing underwriter or underwriters, if
any, or the Investors may reasonably request; and, within five business days
after a Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) instructions to the transfer agent to
issue new stock certificates without a legend and an opinion of such counsel
that the Common Shares have been registered.
(p) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the Registrable
Securities pursuant to the Registration Statement.
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the number of Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required by the rules of the SEC to effect the registration of the
Registrable Securities. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Investor of the information the Company requires from each such Investor
(the "Requested Information") if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration Statement. If
within five (5) business days of such notice the Company has not received the
Requested Information from an Investor (a "Non-Responsive Investor"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor.
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
(c) In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
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(d) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(e) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or managers of such underwriting and legal expenses of
the underwriter applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company pursuant to the terms of this
Agreement.
5. Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company, and the reasonable fees and disbursements of one counsel selected
by the Initial Investors pursuant to Section 3(e) hereof, shall be borne by the
Company.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act, any underwriter (as defined in the
Securities Act) for the Investors, the directors, if any, of such underwriter
and the officers, if any, of such underwriter, and each person, if any, who
controls any such underwriter within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively "Claims") to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged
666427.1
43
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or any state
securities law or any rule or regulation (the matters in the foregoing clauses
(i) through (iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6(c) with respect to the number of legal
counsel, the Company shall reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (A) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (B) with respect to any preliminary prospectus
shall not inure to the benefit of any such person from whom the person asserting
any such Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if a
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; and (C) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to indemnify and hold harmless, to
the same extent and in the same manner set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon 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 to the Company by such Investor expressly for use in
connection with such Registration Statement, and such Investor will promptly
reimburse any legal or other expenses reasonably incurred by them in connection
with
666427.1
44
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld;
provided further, however, that the Investors shall be liable under this Section
6(b) for only that amount of a Claim as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. Contribution. To the extent any indemnification provided for herein
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation, and (iii)
666427.1
45
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Reports under the Exchange Act, with a view to making available to
the Investors the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) File with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Exchange Act
so long as the Company remains subject to such requirements and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) Furnish to each Investor so long as such Investor holds
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities only if (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being transferred or assigned, (iii) following such transfer or assignment the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company received the written notice contemplated by
clause (ii) of this sentence, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement, and (vi) such transferee shall be an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.
10. Amendment of Registration Rights. Provisions of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and Investors who hold a majority interest of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.
11. Third Party Beneficiary. The parties acknowledge and agree that
Shoreline Pacific Institutional Finance, the Institutional Division of Financial
West Group ("Shoreline"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this
666427.1
46
Agreement, entitled to enforce the terms thereof, and to indemnification for any
damages resulting to Shoreline from any actual or threatened breach thereof by
the Company, both in Shoreline's personal capacity and, should Shoreline so
elect, and provided that Shoreline has obtained the prior written consent of the
Investor, on behalf of the Investor.
12. Miscellaneous.
(a) Conflicting Instructions. A person or entity is deemed to be a
holder of Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (with
return receipt requested) or delivered personally or by courier (including
a nationally recognized overnight delivery service) or by facsimile
transmission. Any notice so given shall be deemed effective three days after
being deposited in the U.S. Mail, or upon receipt if delivered personally or by
courier or facsimile transmission, in each case addressed to a party at the
following address or such other address as each such party furnishes to the
other in accordance with this Section 12(b):
If to the Company:
Base Ten Systems, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxxx X. Xxxxxxx
with a copy to:
Battle, Xxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
666427.1
47
If to JMG Capital Partners, L.P.
JMG Capital Partners, L.P.
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxx Xxxxxx
If to Triton Capital Investments, Ltd.:
Triton Capital Investments, Ltd.
c/o JMG Capital Partners, L.P.
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxx Xxxxxx
If to RGC International Investors, LDC:
RGC International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P.
RGC General Partner Corp
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxxxx
and with a copy to:
Ballard, Spahr, Xxxxxx Xxxxxxxxx
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx, Esq.
If to Shepherd Investments International, Ltd.:
Shepherd Investments International, Ltd.
c/o Staro Asset Management
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
666427.1
48
Telecopy: (000) 000-0000
Attention: Mr. Xxx Xxxxx
and with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxx, Esq.
If to Xxxxx International:
Xxxxx International
c/o Staro Asset Management
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Mr. Xxx Xxxxx
and with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxx, Esq.
If to Societe Generale:
Societe Generale
1221 Avenue of the Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxxx Xxxxxx
with a copy to:
Xxxxxx & Whitney LLP
000 Xxxx Xxxxxx
000000.0
00
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxx Xxxx, Esq.
If to Elara Ltd.:
Elara Ltd.
x/x Xxxxxxxx Xxxxxxx
XX Xxx 000
Xxxxxx Xxxx Xxxxxxxx
Wickhams Cay
Road Town, Tortolla
British Virgin Islands
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx Xxxxxx
If to Keyway Investments:
Keyway Invesments
c/o Midland Xxxxxx Capital, Inc.
BCE Xxxxx-000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X0X0
Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
If to Midland Xxxxxx Capital, Inc.:
Midland Xxxxxx Capital, Inc.
with a copy to:
Xxxxxxx Xxxxxxxx Xxxxx & Squier
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Mr. Xxxx Xxxxx, Esq.
in each case with a copy to:
666427.1
50
Shoreline Pacific Institutional Finance
0 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
and:
Xxxxx & Co.
0 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Mr. Xxxx Xxxxx
(c) Waiver. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) Governing Law: Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the Company's jurisdiction of
incorporation (in respect of matters of corporation law) and the laws of the
State of New York (in respect of all other matters) applicable to contracts made
and to be performed in the State of New York. The parties hereto irrevocably
consent to the jurisdiction of the United States federal courts and state courts
located in the Borough of Manhattan in the State of New York in any suit or
proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and each
Investor irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in such forum. The Company and each
Investor further agrees that service of process upon the Company or such
Investor, as applicable, mailed by the first class mail in accordance with
Section 12(b) shall be deemed in every respect effective service of process upon
the Company or such Investor in any suit or proceeding arising hereunder.
Nothing herein shall affect any Investor's right to serve process in any other
manner permitted by law. The parties hereto agree that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
The parties hereto irrevocably waive any right to trial by jury under applicable
law.
(e) Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
666427.1
51
(f) Entire Agreement. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement supersedes all prior agreements
and understandings among the parties hereto with respect to the subject matter
hereof.
(g) Successors and Assigns. Subject to the requirements of Section 9
hereof, this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(h) Use of Pronouns. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.
(i) Headings. The headings and subheadings in the Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission, and
facsimile signatures shall be binding on the parties hereto.
(k) Further Acts. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(l) Remedies. No provision of this Agreement providing for any remedy
to any party shall limit any remedy which would otherwise be available to such
Investor at law or in equity. Nothing in this Agreement shall limit any rights
an Investor may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to an
Investor. Accordingly, the Company and the Investors acknowledge that the remedy
at law for a breach of their respective obligations under this Agreement will be
inadequate and that, in the event of a breach or threatened breach by the
Company or the Investors, respectively, of the provisions of this Agreement,
that an Investors or Company, respectively, shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach and
requiring immediate compliance, without the necessity of showing economic loss
and without any bond or other security being required.
(m) Consents. All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made by Investors holding a
majority of the Registrable
666427.1
52
Securities, determined as if all shares of preferred stock of the Company issued
in the Offering and all Warrants then outstanding had been converted into or
exercised for Registrable Securities.
666427.1
53
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
BASE TEN SYSTEMS, INC.
By: __________________________________
Name:
Title:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
PURCHASERS:
JMG CAPITAL PARTNERS, L.P.
By: __________________________________
Xxxxxxxx Xxxxxx
President, JMG Capital Management,
Inc.
General Partner, JMG Capital
Partners, LP
DATE:
TRITON CAPITAL INVESTMENTS, LTD
By: __________________________________
Xxxxxxxx Xxxxxx
Vice President, Triton Capital
Investments, Ltd.
DATE:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
PURCHASERS CONTINUED
666427.1
54
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, LP
RGC General Partner Corporation
By: ___________________________________
Xxxx X. Xxxxxxxx
Managing Director
DATE:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
PURCHASERS CONTINUED
SHEPHERD INVESTMENTS INTERNATIONAL, LTD.
By: __________________________________
Name:
Managing Member, Staro Asset
Management, LLC
Investment Manager, Shepherd
Investments International, Ltd.
DATE:
XXXXX INTERNATIONAL
By: __________________________________
Name:
Managing Member, Staro Asset
Management, LLC Investment
Manager, Xxxxx International
DATE:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
PURCHASERS CONTINUED
666427.1
55
SOCIETE GENERALE
By: ____________________________________
Name:
Title:
DATE:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
PURCHASERS CONTINUED:
ELARA LTD.
By: __________________________________
Xxxxxxxx Xxxxxx, Talisman Capital
President, Elara Ltd.
DATE:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
PURCHASERS CONTINUED:
KEYWAY INVESTMENTS
By: __________________________________
Xxxxxxx X. Xxxxxx
Title:
DATE:
666427.1
56
