1
EXHIBIT 10.14
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") dated as of
September 30, 1999, by and between AXCESS Inc., a Delaware corporation (the
"Company"), and Amphion Ventures L.P., a Delaware limited partnership (the
"Stockholder").
The following recitals are true and constitute the basis for this
Agreement:
A. The Stockholder is a party to a Convertible Note dated as of
even date herewith pursuant to which the Stockholder is
advancing up to $6,000,000 to the Company (the "Convertible
Note") and a series of Warrants to acquire up to a maximum of
857,143 shares of the Company's voting common stock; and
B. The Company has agreed to provide the Stockholder with certain
registration rights as set forth herein.
NOW, THEREFORE, in consideration of the premises, obligations, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and subject to and on
the terms and conditions set forth herein, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Registrable Securities" means the Restricted Stock, subject
to adjustment pursuant to the terms of Section 5 hereof. As to any particular
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by, and in compliance
with, Rule 144 (or successor provision) promulgated under the Securities Act,
(c) they shall have been otherwise sold or transferred, new certificates for
them not bearing a legend restricting further transfer shall have been delivered
by the Company and subsequent public distribution of them shall not require
registration of them under the Securities Act or any similar state law then in
force, or (d) such securities shall have been sold as permitted by, and in
compliance with, the Securities Act.
"Registration Expenses" means all expenses incident to the
registration and disposition of the Registrable Securities pursuant to Section 2
hereof, including, without limitation, all registration, filing and national
securities exchange fees, all listing fees, all fees and expenses of complying
with state securities or blue sky laws (including, without limitation, fees and
disbursements of counsel for the underwriters or the Stockholder in connection
with blue sky qualification of the Registrable Securities and determination of
their eligibility for investment under the laws of the various jurisdictions),
all word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the
2
Company and of its independent public accountants, including the expenses of
"cold comfort" letters or any special audits required by or incident to such
registration, all fees and disbursements of underwriters (other than
underwriting discounts and commissions, if any), including any "qualified
independent underwriter", all transfer taxes, and the fees and expenses of
counsel to the Stockholder; provided, however, that Registration Expenses shall
exclude, and the Stockholder shall pay, underwriting discounts and commissions,
if any, in respect of the Registrable Securities being registered.
"Restricted Stock" means the shares of non-voting common stock
of the Company to be acquired by the Stockholder upon either (a) the exercise of
any portion of the Warrant or (b) upon the conversion of any of the non-voting
preferred stock issuable to the Stockholder upon the conversion of any portion
of the Note into non-voting Common Stock.
"Securities Act" means the Securities Act of 1933, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
SECTION 2. Restrictive Legend. In addition to any restrictive legend
required by any other agreement, each certificate representing Restricted Stock,
and each certificate issued upon exchange or transfer of Restricted Stock, other
than in a public sale or as otherwise permitted by the last paragraph of Section
3 hereof, shall be stamped or otherwise imprinted with a legend substantially in
the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
OR THE COMPANY IS IN RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
SECTION 3. Notice of Proposed Transfer. Prior to any proposed transfer
of any Restricted Stock (other than under the circumstances described in
Sections 4.1 or 4.2 hereof), the holder thereof shall give written notice to the
Company of its intention to effect such transfer. Each such notice shall
describe the manner of the proposed transfer and, if requested by the Company
shall be accompanied by an opinion of counsel reasonably satisfactory to the
Company to the effect that the proposed transfer of the Restricted Stock may be
effected without registration under the Securities Act, whereupon the holder of
such Restricted Stock shall be entitled to transfer such Restricted Stock in
accordance with the terms of its notice; provided; however, that no such opinion
or other documentation shall be required if such notice shall cover a
distribution by any holder of Restricted Stock that is a partnership to its
partners. Each certificate for Restricted Stock transferred as above provided
shall bear the legend set forth in Section 2, unless (a) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (b) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act.
The foregoing restrictions on transferability of Restricted Stock shall
terminate as to any particular shares of Restricted Stock when such shares shall
have been effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition by the seller
or sellers thereof set forth in the registration statement concerning such
shares. Whenever a holder of Restricted Stock is able to demonstrate to the
Company (and its counsel) that the provisions of Rule 144(k) under the
Securities Act are available to such holder without limitation, such holder of
Restricted Stock shall be entitled
2
3
to receive from the Company, without expense, a new certificate not bearing the
restrictive legend set forth in Section 2.
SECTION 4. Registration Under Securities Act.
4.1. Registration on Demand.
(a) Demand. Subject to Section 4.1(b) hereof, at any time after
the date hereof, the Stockholder shall have the right to require the Company to
effect the registration under the Securities Act of all of the Registrable
Securities held by the Stockholder, by delivering a written request therefor to
the Company. Upon receipt of such notice from the Stockholder, the Company shall
use its best efforts to effect the registration under the Securities Act of the
Registrable Securities to the extent required to permit the disposition of the
Registrable Securities to be registered. The Company shall, if requested by the
Stockholder, as expeditiously as possible, use its best efforts to obtain
acceleration of the effective date of the registration statement relating to
such registration.
(b) Limitations on Demand Registration. The Stockholder shall
be entitled to require the Company to effect, and the Company shall be required
to effect, one registration pursuant to this Section 4.1.
(c) Effective Registration Statement. A registration requested
pursuant to this Section 4.1 shall not be deemed to have been effected
(including for purposes of paragraph (b) of this Section 4.1) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least one year (or such shorter
period which shall terminate when all the Registrable Securities covered by such
registration statement have been sold pursuant thereto), or (ii) if, after it
has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Stockholder and has not
thereafter become effective.
4.2 Incidental Registration. If the Company at any time (other than
pursuant to Section 4.1 hereof) proposes to register any of its Common Stock
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Form S-8 or S-4 or another form not available for
registering Restricted Stock for sale to the public), and if the holders of the
Restricted Stock shall not have exercised their demand registration rights under
Section 4.1 above as of the date of such proposed registration, it will give
written notice at such time to all holders of Restricted Stock then outstanding
of its intention to do so. Upon the written request of any such holder, given
within 30 days after receipt of any such notice by the Company, to register any
of its Restricted Stock (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause the
Restricted Stock as to which registration shall have been so requested, to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company, all to the extent requisite to permit the sale or
other disposition by the holders (in accordance with their written request) of
such Restricted Stock so registered; provided that nothing herein shall prevent
the Company from abandoning or delaying such registration at any time. In the
event that any registration pursuant to this Section 4.2 shall be, in whole or
in part, an underwritten public offering of Common Stock, any request by a
holder pursuant to this Section 4.2 to register Restricted Stock shall specify
that such Restricted Stock is to be included in the underwriting on the same
terms and conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration. The number of shares of Restricted Stock
to be included in such an underwriting may be reduced (in each case based upon
the number of shares of Restricted Stock, so requested to be registered) if and
to the extent that the managing
3
4
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company being sold in such
offering.
4.3 Registration Statement Form. Registrations under this Section
4.1 or Section 4.2 shall be on such appropriate registration form of the
Commission as shall be selected by the Company and as shall be reasonably
acceptable to the Stockholder. The Company agrees to include in any such
registration statement all information which, in the opinion of counsel to the
Stockholder, to the Company and to any underwriter is required or advisable to
be included.
4.4 Expenses. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section 4.1 or
Section 4.2.
4.5 Postponement. If in the good faith judgment of the Board of
Directors of the Company, the filing of any registration statement required to
be prepared and filed by it pursuant to Section 4.1 or Section 4.2 would be
detrimental to the Company, the Company shall be entitled once in any one-year
period to postpone for a reasonable period of time (but not exceeding 90 days)
(the "Postponement Period") the filing of any registration statement required to
be prepared and filed by it pursuant to Section 4.1 or Section 4.2. The Board of
Directors of the Company must furnish the Stockholder a certificate signed by an
executive officer of the Company stating that the Board of Directors of the
Company has made such a determination, containing a general statement of the
reasons for such postponement and an approximation of the anticipated delay. If
the Company shall so postpone the filing of a registration statement, the
Stockholder shall have the right to withdraw the request for registration by
giving written notice to the Company at any time and, in the event of such
withdrawal, such request shall not be counted for purposes of the requests for
registration to which the Stockholder is entitled pursuant to Section 4.1 or
Section 4.2.
4.6. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 4.1 or Section 4.2,
the Company will as expeditiously as possible:
(a) prepare and (as soon as practicable, and in any event
within sixty (60) days in the case of Form S-l and thirty (30) days in the case
of a registration requested on Form S-2 or S-3 after the end of the period
within which requests for registration may be given to the Company) file with
the Commission the requisite registration statement to effect such registration
(and shall include all financial statements required by the Commission to be
filed therewith) and thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment or supplement
thereto or comparable statements under securities or blue sky laws of any
jurisdiction, the Company shall furnish such documents to the Stockholder, any
underwriter and their respective counsel, which documents will be subject to the
review and comments of the Stockholder, each underwriter and their respective
counsel;
(b) notify the Stockholder of the Commission's requests for
amending or supplementing the registration statement and the prospectus, and
prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement for such period as
shall be required for the disposition of all of such Registrable Securities in
accordance with the intended method of distribution thereof; provided that,
except with respect to any such registration statement filed pursuant to Rule
415 under the Securities Act, such period need not exceed 180 days;
4
5
(c) furnish, without charge, to the Stockholder and each
underwriter such number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities Act, and such other
documents, as such holders and such underwriters may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such securities or blue sky laws of such states of the United
States of America where an exemption is not available and as the Stockholder
shall reasonably request, (ii) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and (iii)
to take any other action which may be reasonably necessary or advisable to
enable such holders to consummate the disposition in such jurisdictions of the
securities to be sold by such holders, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not be required to qualify but
for the requirements of this subdivision or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by such
other federal or state governmental agencies or authorities as may be necessary
in the opinion of counsel to the Company and counsel to the Stockholder to
consummate the disposition of such Registrable Securities;
(f) furnish to the Stockholder and any underwriter a signed
counterpart of (i) an opinion of counsel for the Company, and (ii) a "comfort"
letter signed by the independent public accountants who have certified the
Company's financial statements included or incorporated by reference in such
registration statement, in each case, addressed to the Stockholder and
underwriters, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
the accountants' comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates such opinions
and comfort letters are customarily dated);
(g) promptly notify the Stockholder participating in the
offering of the securities covered by such registration statement and any
underwriter (i) when such registration statement, any pre-effective amendment,
the prospectus or any prospectus supplement related thereto or post-effective
amendment to such registration statement has been filed, and, with respect to
such registration statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission for additional
information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any of the
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose; (v) of the
existence of any fact of which the Company becomes aware which results in such
registration statement, the prospectus related thereto or any document
incorporated therein by reference containing an untrue statement of a material
fact or omitting to state a material fact required to be stated therein or
necessary to make any statement therein in light of the circumstances under
which they were made not misleading; and, in the case of the notification
relating to an event described in clause (v) hereof, at the request of the
Stockholder and any underwriter, the Company shall promptly prepare and furnish
to the Stockholder and any underwriter a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
5
6
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made; and (vi) at any time when the representations and warranties of
the Company contemplated by Section 4 hereof cease to be true and correct;
(h) (i) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed on the principal
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) if no similar securities are then so
listed, use its best efforts to (x) cause all such Registrable Securities to be
listed on a national securities exchange or (y) failing that, secure designation
of all such Registrable Securities as a National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") "national market system
security" within the meaning of Rule 11Aa2-1 of the Commission or (z) failing
that, to secure Nasdaq authorization for such shares and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such shares with the National Association of
Securities Dealers, Inc.;
(i) deliver promptly to counsel to the Stockholder and any
underwriter copies of all correspondence between the Commission and the Company,
its counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to such registration statement; and
(j) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement.
The Company may require the Stockholder to furnish the Company such information
regarding the Stockholder and the distribution of the Registrable Securities as
the Company may from time to time reasonably request in writing.
The Stockholder agrees that upon receipt of any notice from the
Company of the happening of (a) any event of the kind described in paragraph
(g)(iii) of Section 4.6, such holder will, to the extent appropriate,
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until the stop
order shall have been lifted or rescinded; (b) any event of the kind described
in paragraph (g)(iv) of Section 4.6, such holder will, to the extent
appropriate, discontinue its disposition of Registrable Securities pursuant to
the registration statement relating to such Registrable Securities in the
jurisdiction with respect to which the suspension of the qualification of any of
the Registrable Securities for sale has occurred, until the suspension shall
have been lifted or rescinded; and (c) any event of the kind described in
paragraph (g)(v) of Section 4.6, such holder will, to the extent appropriate,
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities, until its
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph (g)(v) of Section 4.6 and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies, then in its possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. If the disposition by
any holder of Registrable Securities of its securities is discontinued pursuant
to the foregoing sentence, the Company shall extend the period of effectiveness
of the registration statement by the number of days during the period from and
including the date of the giving of notice to and including the date when either
(i) the stop order or suspension of qualification shall have been lifted or
rescinded or (ii) the holder of Registrable Securities shall have received
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 4.6, as the case may be; and, if the Company shall not so extend
such period, the Stockholder's request pursuant to which such registration
statement was filed shall not be counted for purposes of the requests for
registration to which the Stockholder is entitled pursuant to Section 4.1
hereof.
6
7
4.7. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the Stockholder and
underwriters, if any, and their respective counsel, accountants and other
representatives and agents the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and, to the extent practicable, each amendment thereof or supplement
thereto, and give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and
employees and the independent public accountants who have certified its
financial statements, and supply all other information reasonably requested by
each of them as shall be necessary or appropriate, in the opinion of such
holder(s)' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
4.8. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, the Stockholder, its
directors, officers, fiduciaries, employees, stockholders, general and limited
partners (and the directors, officers, employees and stockholders thereof),
agents and affiliates and each other Person who participates as an underwriter
or qualified independent underwriter, if any, in the offering or sale of such
securities and each other Person, if any, who controls such Stockholder or any
such underwriter or qualified independent underwriter, if any, within the
meaning of the Securities Act, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof ("Claims") and expenses (including reasonable
fees of counsel and any amounts paid in any settlement effected with the
Company's consent, which consent shall not be unreasonably withheld or delayed)
to which such indemnified party may become subject under the Securities Act or
otherwise, insofar as such Claims or expenses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, together
with the documents incorporated by reference therein, (ii) any omission or
alleged omission to state therein 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, or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company
and relating to action required of or inaction by the Company in connection with
any such registration, and the Company shall reimburse any such indemnified
party for any legal or any other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim
as such expenses are incurred; provided that the Company shall not be liable to
any such indemnified party in any such case to the extent that any such Claim or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of
such indemnified party, specifically stating that it is for use therein. Such
indemnity and reimbursement of expenses 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 such securities by each seller.
(b) Indemnification by the Stockholder. As a condition to
including Registrable Securities of the Stockholder in any registration
statement, the Stockholder shall, severally and not jointly, indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
4.8(a) to the extent permitted by law the Company, and each director of the
Company, each officer of the Company and each other person, if any, who controls
the Company within the meaning of the Securities Act and all other prospective
sellers and their directors, officers, general and limited partners and
respective controlling
7
8
persons with respect to any untrue statement or alleged untrue statement of any
material fact in or omission or alleged omission of any material fact from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, but only
to the extent such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or its representatives by or on behalf of the
Stockholder specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement or document incorporated by reference into
any of the foregoing; provided, however, that the liability of the Stockholder
under this Section 4.8(b) shall be limited to the amount of net proceeds
received by the Stockholder in the offering giving rise to such liability. The
obligations of the Stockholder to indemnify as provided in this Section 4.8(b)
are several and not joint and shall be in proportion to the relative value of
their respective Registrable Securities covered by such registration statement.
Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such securities by the
Stockholder.
(c) Notices of Claims, etc. Any person entitled to
indemnification under this Agreement shall notify promptly the indemnifying
party in writing of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 4.8, but
the failure of any indemnified party to provide such notice shall not relieve
the indemnifying party of its obligations under the preceding paragraphs of this
Section 4.8, except to the extent the indemnifying party is materially
prejudiced thereby and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Section 4.8. In case any action or proceeding is brought against an indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, unless in
the reasonable opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, to assume the defense thereof jointly with any other indemnifying
party similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party that it so chooses,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within twenty (20) days after receiving notice from such indemnified party that
the indemnified party believes it has failed to do so; or (ii) if such
indemnified party who is a defendant in any action or proceeding which is also
brought against the indemnifying party reasonably shall have concluded that
there may be one or more legal defenses available to such indemnified party
which are not available to the indemnifying party; or (iii) if representation of
both parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, then, in any such case, the indemnified party
shall have the right to assume or continue its own defense as set forth above
(but with no more than one firm of counsel for all indemnified parties in each
jurisdiction, except to the extent any indemnified party or parties reasonably
shall have concluded that there may be legal defenses available to such party or
parties which are not available to the other indemnified parties or to the
extent representation of all indemnified parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct) and
the indemnifying party shall be liable for any expenses therefor. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (B)
8
9
does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any indemnified party.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable or is insufficient to hold harmless an indemnified party under
Section 4.8(a) or (b), then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any Claim in
such proportion as is appropriate to reflect the relative benefits received by
the indemnifying party on the one hand and the indemnified party on the other
from such offering of securities. If, however, the allocation provided in the
immediately preceding sentence is not permitted by applicable law, or if the
indemnified party failed to give the notice required by Section 4.8(c) above and
the indemnifying party is materially prejudiced thereby, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 4.8(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the preceding sentences of this Section 4.8(d). The amount paid
or payable in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding anything in this Section 4.8(d) to
the contrary, no indemnifying party (other than the Company) shall be required
pursuant to this Section 4.8(d) to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of Registrable
Securities in the offering to which the losses, claims, damages or liabilities
of the indemnified parties relate, less the amount of any indemnification
payment made pursuant to Section 4.8(b).
(e) Other Indemnification. Indemnification and contribution
similar to that specified in Section 4.8 (with appropriate modifications) shall
be given by the Company and the Stockholder with respect to any required
registration or other qualification of securities under any federal, state or
blue sky law or regulation of any governmental authority other than the
Securities Act. The indemnification agreements contained in this Section 4.8
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the transfer of
any of the Registrable Securities by any of the sellers.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 4.8 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
SECTION 5. Unlegended Certificates. In connection with the offering of
any Registrable Securities registered pursuant to Section 4, the Company shall
(i) facilitate the timely preparation and delivery to the Stockholder of
unlegended certificates representing ownership of such Registrable Securities
being sold in such denominations and registered in such names as requested by
the Stockholder and (ii) instruct any transfer agent and registrar of such
Registrable Securities to release any stop transfer orders with respect to any
such Registrable Securities.
9
10
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to the Stockholder as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation of By-laws of the Company, or any
provision of any indenture, agreement or other instrument to which it or any of
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to considerations of public
policy in the case of the indemnification provisions hereof.
SECTION 7. Changes in Common Stock. If, and as often as, there are any
changes in the Company's common stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization, recapitalization, or other form of business combination in which
the Company's common stock is converted into other securities, or by any other
means, appropriate adjustment shall be made in the provisions hereof, as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Restricted Stock as so changed.
SECTION 8. Modification and Waiver. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof.
SECTION 9. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier, registered or certified mail (return
receipt requested), or by telecopy (receipt confirmed):
if to the Company: AXCESS Inc.
Attention: Chief Financial Officer
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopy No. (000) 000-0000
with a copy to: Xxxxxx & Lidji
Attention: Xxxxxxx X. Xxxxx
4400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
10
11
and if to Stockholder: Amphion Ventures L.P.
c/o Amphion Capital
Attention: Xxxxxxx X.X. Xxxxxx
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No. (000) 000-0000
with a copy to
Proskauer Rose LLP
Attention: Xxxxx X. Xxxxx III
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No. (000) 000-0000
or such other address as shall be furnished in writing by any of the parties,
and any such notice or communication shall be deemed to have been given as of
the date so delivered personally, three (3) days after so mailed, or the next
business day following transmission by telecopy (except that a notice of change
of address shall not be deemed to have been given until received by the
addressee).
SECTION 10. Registration Rights Nontransferable. The registration
rights set forth in this Agreement may not be transferred, except to the holders
of all or any portion of (a) the indebtedness represented by the Convertible
Note, (b) the Warrant or (c) the Restricted Stock; provided, however, that if
any such transfer shall occur, the "Stockholder" shall be deemed to mean the
holder of a majority of the Restricted Stock, after giving effect to the deemed
conversion of the Convertible Note and the exercise of the Warrants.
SECTION 11. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
SECTION 12. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of Delaware, without giving effect to the principles of
conflict of laws of this or any other jurisdiction.
SECTION 13. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Stockholder in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or by
which it is bound. The Company further agrees that if any other registration
rights agreement entered into after the date of this Agreement with respect to
any of its securities contains terms which are more favorable to, or less
restrictive on, the other party thereto than the terms and conditions contained
in this Agreement are (insofar as they are applicable) to the holders of
Registrable Securities, then the terms and conditions of this Agreement shall
immediately be deemed to have been amended without further action by the Company
or the holders of Registrable Securities so that the holders of Registrable
Securities shall be entitled to the benefit of any such more favorable or less
restrictive terms or conditions.
SECTION 14. Further Assurances. At any time or from time to time, each
party hereto shall, at the request of another party and at the expense of the
requesting party, execute and deliver any further
11
12
instruments or documents and take all such further action as the requesting
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and evidence the consummation of the transactions
contemplated hereby.
SECTION 15. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
SECTION 16. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the transactions contemplated
hereby, and supersede all prior agreements and understandings, written or oral,
among the parties to this agreement or between any of such parties, with respect
thereto.
SECTION 17. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
12
13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
AXCESS INC. AMPHION VENTURES L.P.
By: Amphion Partners, LLC
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X.X. Xxxxxx
---------------------------------------------- -------------------------------------------
Xxxxx X. Xxxxx, Chief Financial Officer Xxxxxxx X.X. Xxxxxx, Managing Member
13
