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EXHIBIT 4.3
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REGISTRATION RIGHTS AGREEMENT
Dated as of October 17, 1997
relating to up to
$86,250,000 in Aggregate Principal Amount
of 7% Convertible Subordinated
Debentures due 2004
by and between
Fuisz Technologies Ltd.
and
Xxxxx Xxxxxx Inc.,
Credit Suisse First Boston Corporation
and
Xxxxxx Brothers Inc.,
as Initial Purchasers
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This Registration Rights Agreement (the "Agreement") is made
and entered into as of October 17, 1997, by and between Fuisz Technologies
Ltd., a Delaware corporation (the "Company"), and Xxxxx Xxxxxx Inc., Credit
Suisse First Boston Corporation and Xxxxxx Brothers Inc. (the "Initial
Purchasers"), who will purchase up to $ 86,250,000 in aggregate principal
amount of 7% Convertible Subordinated Debentures due 2004 (the "Debentures") of
the Company (including up to an additional $ 11,250,00 aggregate principal
amount that may be purchased by the Initial Purchasers pursuant to their
over-allotment option) pursuant to the Purchase Agreement dated October 17,
1997 (the "Purchase Agreement"), between the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in the
Purchase Agreement. All defined terms used but not defined herein shall have
the meanings ascribed to them in the Indenture (as defined herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which all the Debentures are first
sold by the Company to the Initial Purchasers pursuant to the Purchase
Agreement.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, par value $.01 per share, of
the Company.
Damages Payment Date: With respect to the Debentures or the
Common Stock, as applicable, each Interest Payment Date as defined in the
Indenture.
Effectiveness Target Date: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, to be dated as of October 22, 1997,
among the Company and The Bank of New York, as trustee (the "Trustee"),
pursuant to which the Debentures are to be issued, as such Indenture is amended
or supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Preliminary Prospectus: As defined in Section 3(g).
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including
post-effective amendments, and all material which may be incorporated by
reference into such prospectus.
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Prospectus Supplement: As defined in Section 5(b).
Record Holder: (i) With respect to any Damages Payment Date
relating to the Debentures, each Person who is registered on the books of the
registrar for the Debentures as the holder of Debentures on the record date
with respect to the Interest Payment Date on which such Damages Payment Date
shall occur and (ii) with respect to any Damages Payment Date relating to the
Common Stock, each Person who is a holder of record of such Common Stock
fifteen days prior to the Damages Payment Date.
Registration Expenses: As defined in Section 6(a).
Shelf Registration Statement: As defined in Section 3(a)
hereof.
TIA: The Trust Indenture Act of 1939, as amended, as in
effect on the date of the Indenture.
Transfer Restricted Securities: Each Debenture and share of
Common Stock of the Company issuable upon conversion of a Debenture, until each
such Debenture or share (i) has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement covering it, (ii) is distributed to the public pursuant to Rule 144
or (iii) may be sold or transferred pursuant to Rule 144(k) (or any similar
provisions then in force) under the Securities Act or otherwise.
Underwriter: Any underwriter, placement agent, selling
broker, dealer manager, qualified independent underwriter or similar securities
industry professional.
Underwritten Registration or Underwritten Offering: An
offering in which securities of the Company are sold to an Underwriter or with
the assistance of such Underwriter for reoffering to the public on a firm
commitment or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities
entitled to the benefits of this Agreement are the Transfer Restricted
Securities.
(b) Holders of Transfer Restricted Securities. A Person
is deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities as a Record Holder or,
in the event the Record Holder is the Depository Trust Company or a nominee
thereof, through a direct or indirect participant therein.
SECTION 3. SHELF REGISTRATION
(a) Subject to the provisions of Section 5 hereof, the
Company shall cause to be filed with the Commission on or prior to 60 days
after the Closing Date, a shelf registration statement pursuant to Rule 415
under the Act (the "Shelf Registration Statement") on Form S-1 or Form S-3, if
the use of such form is then available and as determined by the Company, to
cover resales of Transfer Restricted Securities by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. In order for their Transfer
Restricted Securities to be included in the Shelf Registration Statement, the
Holders of such Transfer Restricted Securities shall have provided the
representations required pursuant to Section 3(g) hereof. The Company shall
use its reasonable best efforts to cause such Shelf Registration Statement to
be declared effective by the Commission on or prior to 120 days after the
Closing Date. The Company shall use its reasonable best efforts to keep such
Shelf Registration Statement continuously effective for a period ending two
years from the Closing Date or such shorter period that will terminate when
each of the Transfer Restricted Securities covered by the Shelf Registration
Statement shall cease to be a Transfer Restricted Security (the earlier of such
dates, the "Withdrawal Date"). The Company further agrees to use its
reasonable best efforts to
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prevent the happening of any event that would cause the Shelf Registration
Statement to 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 not misleading or to be not effective and usable for resale of the
Transfer Restricted Securities during the period that such Shelf Registration
Statement is required to be effective and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to 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 not misleading or (ii) to be not effective and
usable for resale of Transfer Restricted Securities during the period that such
Shelf Registration Statement is required to be effective and usable, the
Company shall as promptly as practicable file an amendment to the Shelf
Registration Statement, in the case of clause (i), correcting any such
misstatement or omission, and in the case of either clause (i) or (ii), use its
best efforts to cause such amendment to be declared effective and such Shelf
Registration Statement to become usable as soon as practicable thereafter.
Notwithstanding anything to the contrary in this Section 3,
subject to compliance with Sections 4 and 5(b), if applicable, the Company may
prohibit offers and sales of Transfer Restricted Securities pursuant to the
Shelf Registration Statement at any time if (A) (i) it is in possession of
material non-public information, (ii) the Board of Directors of the Company
determines (based on advice of counsel) that such prohibition is necessary in
order to avoid a requirement to disclose such material non-public information
and (iii) the Board of Directors of the Company determines in good faith that
disclosure of such material non-public information would not be in the best
interests of the Company and its shareholders or (B) the Company has made a
public announcement relating to an acquisition or business combination
transaction including the Company and/or one or more of its subsidiaries (i)
that is material to the Company and its subsidiaries taken as a whole and (ii)
the Board of Directors of the Company determines in good faith that offers and
sales of Transfer Restricted Securities pursuant to the Shelf Registration
Statement prior to the consummation of such transaction (or such earlier date
as the Board of Directors shall determine) is not in the best interests of the
Company and its shareholders (the period during which any such prohibition of
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement is in effect pursuant to clause (A) or (B) of this
subparagraph (a) is referred to herein as a "Suspension Period"). A Suspension
Period shall commence on and include the date on which the Company provides
written notice pursuant to Section 5(d) hereof to Holders of Transfer
Restricted Securities covered by the Shelf Registration Statement that offers
and sales of Transfer Restricted Securities cannot be made thereunder in
accordance with this Section 3 and shall end on the date on which each Holder
of Transfer Restricted Securities covered by the Shelf Registration Statement
either receives copies of a Prospectus Supplement contemplated by Section 5(b)
or is advised in writing by the Company that offers and sales of Transfer
Restricted Securities pursuant to the Shelf Registration Statement and use of
the Prospectus may be resumed.
(b) None of the Company nor any of its security holders
(other than the Holders of Transfer Restricted Securities in such capacity)
shall have the right to include any of the Company's securities in the Shelf
Registration Statement.
(c) If the Holders of a majority of the Transfer
Restricted Securities sold to the Initial Purchasers under the Purchase
Agreement so elect (with holders of Common Stock constituting Transfer
Restricted Securities being deemed to be Holders of the aggregate principal
amount of Debentures converted into such Common Stock for purposes of such
calculation), an offering of Transfer Restricted Securities pursuant to the
Shelf Registration Statement may be effected in the form of an Underwritten
Offering. The Holders of the Transfer Restricted Securities to be registered
shall pay all underwriting discounts and commissions of such Underwriters.
(d) If any of the Transfer Restricted Securities covered
by the Shelf Registration Statement are to be sold in an Underwritten Offering,
the Underwriter(s) that will administer the offering will be selected by the
Holders of a majority of the outstanding Transfer Restricted Securities to be
included in such Underwritten Offering (with holders of Common Stock
constituting Transfer Restricted Securities being deemed to be Holders of the
aggregate principal amount of Debentures converted into such Common
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Stock for purposes of such calculation); provided, however, that such
Underwriter(s) shall be reasonably satisfactory to the Company.
(e) Each Holder whose Transfer Restricted Securities are
covered by a Shelf Registration Statement filed pursuant to this Section 3
agrees, upon the request of the Underwriter(s) in any Underwritten Offering,
not to effect any sale or distribution of securities of the Company of the same
class as the securities included in such Shelf Registration Statement, for a
period of up to 90 days beginning on the date any such Underwritten Offering
made pursuant to such Shelf Registration Statement commences, to the extent
timely notified in writing by such Underwriter(s).
(f) The Company agrees not to effect any public or
private offer, sale or distribution of Securities of the same quality and
nature as the Transfer Restricted Securities to be registered in an
Underwritten Offering during the 90-day period beginning on the date any such
Underwritten Offering made pursuant to the Shelf Registration Statement
commences, to the extent timely notified in writing by the Underwriter(s)
(except as part of such registration, if permitted, or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such Forms), unless
the Underwriter(s) shall consent in writing to a shorter period of time.
(g) No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless such Holder has advised the Company
in writing that such Holder intends to offer and sell Transfer Restricted
Securities under the Shelf Registration Statement (any such Holder, a "Selling
Holder") and furnishes to the Company in writing, within 10 business days after
receipt of a request therefor, such information as the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus (a "Preliminary Prospectus") included
therein.
SECTION 4. LIQUIDATED DAMAGES
(a) If (i) the Shelf Registration Statement is not filed
with the Commission on or prior to 60 days after the Closing Date, (ii) the
Shelf Registration Statement has not been declared effective by the Commission
within 120 days after the Closing Date (the "Effectiveness Target Date"), or
(iii) the Shelf Registration Statement is filed and declared effective but
shall thereafter cease to be effective (without being succeeded immediately by
an additional registration statement filed and declared effective) or useable
for resale for a period of time (including any Suspension Period) which shall
exceed 60 days in the aggregate in any 12-month period during the period
beginning on the Closing Date and ending on the Withdrawal Date (each such
event referred to in clauses (i) through (iii), a "Registration Default"), the
Company will pay liquidated damages to each Holder of Transfer Restricted
Securities who has complied with such Holder's obligations under this
Agreement. The amount of liquidated damages payable during any period during
which a Registration Default shall have occurred and be continuing is that
amount which is equal to one-quarter of one percent (25 basis points) per annum
per $1,000 principal amount of Debentures or $2.50 per annum per 75.472 shares
of Common Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) constituting Transfer Restricted
Securities for the first 90-days during which a Registration Default has
occurred and is continuing and 50 basis points per annum per $1,000 principal
amount of Debentures or $5.00 per annum per 75.472 shares (subject to
adjustment as set forth above) of Common Stock constituting Transfer Restricted
Securities for all additional days during which a Registration Default has
occurred and is continuing. The Company shall notify the Trustee and the
Initial Purchasers within three business days after each and every date on
which a Registration Default occurs. All accrued liquidated damages shall be
paid to Record Holders by wire transfer of immediately available funds or by
federal funds check by the Company on each Damages Payment Date. Following the
cure of all Registration Defaults, liquidated damages will cease to accrue with
respect to such Registration Default.
All of the Company's obligations in respect of the payment of
liquidated damages set forth in the preceding paragraph which are outstanding
with respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such time as
all such
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liquidated damages with respect to such security shall have been paid in full.
The parties hereto agree that the liquidated damages provided
in this Section 4 constitute a reasonable estimate of the damages that will be
incurred by Holders of Transfer Restricted Securities by reason of the failure
of the Shelf Registration Statement to be filed, declared effective or to
remain effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the
Company will use its best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution or disposition thereof, and pursuant
thereto the Company will as expeditiously as possible after the Closing Date:
(a) on or prior to the date 60 days after the Closing
Date, prepare and file with the Commission a Shelf Registration Statement
relating to the registration on Form S-1 or Form S-3, if the use of such form
is then available and as determined by the Company, for the sale of the
Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof and shall include all financial statements
required to be included or incorporated by reference therein; cooperate and
assist in any filings required to be made with the NASD and use its reasonable
best efforts to cause such Shelf Registration Statement to become effective and
approved by such governmental agencies or authorities as may be necessary to
enable the Selling Holders to consummate the disposition of such Transfer
Restricted Securities; provided, however, that before filing a Shelf
Registration Statement or any Prospectus, or any amendments or supplements
thereto, the Company will furnish to the Initial Purchasers, the Selling
Holders and the Underwriter(s), if any, copies of all such documents proposed
to be filed (except that the Company shall not be required to furnish any
exhibits to such documents, including those incorporated by reference, unless
so requested by an Initial Purchaser, Holder or Underwriter in writing), and
the Company will not file any Shelf Registration Statement or amendment thereto
or any Prospectus or any supplement thereto to which (i) the Initial Purchasers
or the Underwriter(s), if any, shall reasonably object or (ii) if there are no
Underwriters, the Initial Purchasers or the Selling Holders owning a majority
of the outstanding Transfer Restricted Securities shall reasonably object (with
holders of Common Stock constituting Transfer Restricted Securities being
deemed to be Holders of the aggregate principal amount of Debentures converted
into such Common Stock for purposes of such calculation), in each such case
within five business days after the receipt thereof. An Initial Purchaser, the
Selling Holder or Underwriter, if any, shall be deemed to have reasonably
objected to such filing if the Shelf Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
which misstatement or omission is specifically identified to the Company in
writing within such five business days;
(b) prepare and file with the Commission such amendments
and post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof; cause the Prospectus to be
supplemented by any required supplement thereto (a "Prospectus Supplement"),
and as so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with the applicable provisions of Rules 424 and 430A under the Act
in a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement;
(c) if reasonably requested by the Holders of Transfer
Restricted Securities, or if the Transfer Restricted Securities are being sold
in an Underwritten Offering, the Underwriter(s) of such Underwritten Offering,
promptly incorporate in the Prospectus, any Prospectus Supplement or
post-effective amendment to the Shelf Registration Statement such information
as the Underwriters and/or the Holders of Transfer Restricted Securities being
sold agree should be included therein relating to the plan
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of distribution of the Transfer Restricted Securities, including, without
limitation, information with respect to the principal amount of Debentures
and/or the number of shares of Common Stock being sold to such Underwriter(s),
the purchase price being paid therefor and any other terms with respect to the
offering of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus, Prospectus Supplement or
post-effective amendment as soon as practicable after the Company is notified
of the matters to be incorporated in such Prospectus, Prospectus Supplement or
post-effective amendment;
(d) advise the Initial Purchasers, the Underwriter(s), if
any, and Selling Holders promptly and, if requested by such Persons, to confirm
such advice in writing, (i) when the Prospectus or any Prospectus Supplement or
post-effective amendment to the Shelf Registration Statement has been filed,
and, with respect to the Shelf Registration Statement or any post-effective
amendment thereto, when the same has become effective, (ii) of any request by
the Commission for amendments to the Shelf Registration Statement or amendments
or supplements to the Prospectus or for additional information relating
thereto, (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (iv) if at any
time the representations and warranties of the Company contemplated by
paragraph (l)(i) below cease to be true and correct, and (v) of any Suspension
Period or of the existence of any fact and the happening of any event that
makes any statement of a material fact made in the Shelf Registration
Statement, the Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Shelf Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use their reasonable best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time;
(e) furnish to each Initial Purchaser, each Holder and
each of the Underwriter(s), if any, without charge, at least one copy of the
Shelf Registration Statement, as first filed with the Commission, and of each
amendment thereto (excluding documents incorporated by reference therein and
exhibits thereto unless requested by such Initial Purchaser, Holder or
Underwriter);
(f) deliver to each Initial Purchaser, each Selling
Holder and each of the Underwriter(s), if any, without charge, as many copies
of any Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto as such Persons may reasonably request; and, subject to the
Company's rights under this Agreement to prevent or suspend offers, sales
and/or the use of any such Preliminary Prospectus and Prospectus, the delivery
of such copies shall constitute the Company's consent to the use of such copies
of the Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto by each of the Selling Holders and each of the
Underwriter(s), if any, in connection with the public offering and the sale of
the Transfer Restricted Securities covered by any Preliminary Prospectus and
the Prospectus or any amendments or supplements thereto;
(g) prior to any public offering of Transfer Restricted
Securities, cooperate with the Selling Holders, the Underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or Underwriter(s) may request and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdiction of the Transfer Restricted Securities covered
by the Shelf Registration Statement; provided, however, that the Company shall
not be required (i) to register or qualify as a foreign corporation where it is
not now so qualified or (ii) to take any action that would subject it to the
service of process in suits, other than as to matters and transactions relating
to the Shelf Registration Statement, in any jurisdiction where it is not now so
subject;
(h) cooperate with the Selling Holders and the
Underwriter(s), if any, to facilitate
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the timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends; and
enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the Underwriter(s), if any, may
request at least two business days prior to any sale of Transfer Restricted
Securities;
(i) use its best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other United States federal or state governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
Underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (g) above;
(j) if any fact or event contemplated by clause (d)(v)
above shall exist or have occurred, prepare a post-effective amendment or
supplement to the Shelf Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading;
(k) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Shelf Registration
Statement and provide the Trustee under the Indenture and/or the transfer agent
for the Common Stock with certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with the Depository Trust Company;
(l) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith as may
reasonably be required in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to the Shelf Registration
Agreement, in connection with an Underwritten Registration, and (i) make such
representations and warranties to the Selling Holders and the Underwriter(s),
in form, substance and scope as they may reasonably request and as are
customarily made by issuers to Underwriters in primary Underwritten Offerings
and covering matters including, but not limited to, those set forth in the
Purchase Agreement; (ii) obtain opinions of counsel for the Company and updates
thereof in customary form and covering matters reasonably requested by the
Underwriter(s) of the type customarily covered in legal opinions to
Underwriters in connection with primary Underwritten Offerings addressed to
each selling Holder and the Underwriter requesting the same and covering the
matters as may be reasonably requested by such Holders and Underwriters; (iii)
obtain "cold comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to the selling Holders of
Transfer Restricted Securities and the Underwriters requesting the same, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters to Underwriters in connection with primary
Underwritten Offerings; (iv) set forth in full or incorporate by reference in
the underwriting agreement the indemnification provisions and procedures of
Section 7 hereof with respect to all parties to be indemnified pursuant to said
Section; and (v) deliver such documents and certificates as may be reasonably
requested by the Selling Holders or the Underwriter(s) of such Underwritten
Offering to evidence compliance with clause (i) above and with any customary
conditions contained in the underwriting agreement entered into by the Company
pursuant to this clause (l). The above shall be done at or prior to each
closing under such underwriting agreement, as and to the extent required
thereunder;
(m) make available at reasonable times and in a
reasonable manner for inspection by a representative of the Holders of the
Transfer Restricted Securities, any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney or
accountant retained by such selling Holders or any of the Underwriters, all
financial and other records, pertinent corporate documents and properties of
the Company and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Holder, Underwriter, attorney
or accountant in connection with such Shelf Registration Statement prior to its
effectiveness, provided, however, that such representatives, attorneys or
accountants shall agree to keep confidential (which agreement shall be
confirmed in writing in advance to the Company if the Company shall so request)
all information, records
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or documents made available to such persons which are not otherwise available
to the general public unless disclosure of such records, information or
documents is required by court or administrative order (of which the Company
shall have been given prior notice and an opportunity to defend) after the
exhaustion of all appeals therefrom, and to use such information obtained
pursuant to this provision only in connection with the transaction for which
such information was obtained, and not for any other purpose;
(n) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act, for the twelve-month period (i)
commencing at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to Underwriters in a firm commitment or best efforts
Underwritten Offering or (ii) if not sold to Underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Shelf Registration Statement;
(o) cause the Indenture to be qualified under the TIA,
and, in connection therewith, cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for such Indenture to
be so qualified in accordance with the terms of the TIA; and execute and use
its best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes and all other forms and documents required to
be filed with the Commission to enable such Indenture to be so qualified in a
timely manner;
(p) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration Statement
at the earliest possible moment;
(q) cause all Transfer Restricted Securities covered by
the Shelf Registration Statement to be listed on each securities exchange or
quotation system on which similar securities issued by the Company are then
listed if requested by the Holders of a majority of the outstanding Transfer
Restricted Securities (with holders of Common Stock constituting Transfer
Restricted Securities being deemed to be Holders of the aggregate principal
amount of Debentures converted into such Common Stock for purposes of such
calculation) or the Underwriters, if any; and cause the Debentures covered by
the Shelf Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate principal
amount of such Debentures or the Underwriters; and
(r) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence investigation by
any Underwriter (including any "qualified independent Underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
Each Holder as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading or necessary to cause
such Shelf Registration Statement not to omit a material fact with respect to
such Holder necessary in order to make the statements therein not misleading.
Each Holder agrees that the information furnished by such Holder specifically
for inclusion in any Shelf Registration Statement will not contain any
misstatement of material fact or omit to state a material fact necessary in
order to make such information not misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence
of any fact of the kind described in Section 5(d)(v) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings with respect to the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities current at the time of receipt of such notice.
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SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of
or compliance with this Agreement (the "Registration Expenses") will be borne
by the Company, regardless of whether a Shelf Registration Statement becomes
effective, including without limitation:
(i) all registration and filing fees and expenses
(including any filings made with the NASD);
(ii) fees and expenses of the Company's compliance with
federal securities or state blue sky laws;
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer
Restricted Securities in a form eligible for deposit with Depository
Trust Company and of printing the Prospectus and any Preliminary
Prospectus), messenger and delivery services and telephone;
(iv) reasonable fees and disbursements of counsel for the
Company and for the Holders of the Transfer Restricted Securities
(subject to the provisions of Section 6(b) hereof);
(v) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incidental to
the preparation and filing of a Shelf Registration Statement and
Prospectus and the disposition of Transfer Restricted Securities);
(vi) fees and expenses associated with any NASD filing
required to be made in connection with the Shelf Registration
Statement, including, if applicable, the fees and expenses of any
"qualified independent Underwriter" (and its counsel) that is required
to be retained in accordance with the rules and regulations of the
NASD; and
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in
accordance with Section 5(q) hereof.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, rating agency fees and the fees and expenses of any Person, including
special experts, retained by the Company. The Holders of Transfer Restricted
Securities shall bear the expense of any broker's commission or Underwriter's
discount or commission.
(b) In connection with the Shelf Registration Statement,
the Company will reimburse the Selling Holders for the reasonable fees and
disbursements of not more than one counsel chosen by the Selling Holders owning
a majority of the outstanding Transfer Restricted Securities (with holders of
Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Debentures converted into such
Common Stock for purposes of such calculation).
Notwithstanding the provisions of this Section 6(b), each
Holder of Transfer Restricted Securities shall pay all Registration Expenses to
the extent required by applicable law.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i)
each of the Initial Purchasers, (ii) each Holder, (iii) each person, if any,
who controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the Initial Purchasers or any Holder (any of the persons
referred to in this clause (iii) being hereinafter referred to as a
"controlling person") and (iv) the respective
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officers, directors, partners, employees, representatives and agents of any of
the Initial Purchasers or any Holder or any controlling person (any person
referred to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to
as a "Non-Company Indemnitee"), to the fullest extent lawful, from and against
any and all losses, claims, damages, liabilities and judgments caused by any
untrue statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement, Prospectus or Preliminary Prospectus (or any
amendments or supplements thereto), including any document incorporated by
reference therein, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except, with respect to any Non-Company
Indemnitee, insofar as such losses, claims, damages, liabilities or judgments
(1) are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to the
Company by such Non-Company Indemnitee expressly for use therein or (2) with
respect to any Preliminary Prospectus, result from the fact that such
Non-Company Indemnity sold Transfer Restricted Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final Prospectus, as amended or supplemented, if the
Company shall have previously furnished copies thereof to such Non-Company
Indemnitee in accordance with this Agreement and the final Prospectus, as
amended or supplemented, would have corrected such untrue statement or
omission.
(b) In case any action shall be brought against any
Non-Company Indemnitee, based upon the Shelf Registration Statement,
Prospectus, or Preliminary Prospectus (or any amendments or supplements
thereto), and with respect to which indemnity may be sought against the
Company, such Non-Company Indemnitee shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses; provided, however,
that the omission so to notify the Company shall not relieve the Company from
any liability that it may have to any Non-Company Indemnitee (except to the
extent that the Company is materially prejudiced or otherwise forfeits
substantive rights or defenses by reason of such failure). Such Non-Company
Indemnitee shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of counsel
shall be paid by such Non-Company Indemnitee, unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company, (ii)
the Company shall have failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both such Non-Company Indemnitee and the Company and it would be inappropriate
for the same counsel to represent such Non-Company Indemnitee and the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Non-Company Indemnitee, it being understood,
however, that the Company shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for the Non-Company Indemnitees, which firm shall be
designated in writing by the Non-Company Indemnitees and whose fees and
expenses reasonably incurred shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without the written consent of the Company, but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Non-Company Indemnitee from and against any amounts payable pursuant to such
written consent in connection with such settlement. Notwithstanding the
immediately preceding sentence, if in any case where the fees and expenses of
counsel are at the expense of the Company and a Non-Company Indemnitee shall
have requested the Company to reimburse such Non-Company Indemnitee for such
fees and expenses of counsel as incurred, the Company agrees that it shall be
liable for any settlement of any action effected without its written consent if
(i) each settlement is entered into more than 30 business days after the
receipt by the Company of the aforesaid request and (ii) the Company shall have
failed to reimburse such Non-Company Indemnitee in accordance with such request
for reimbursement prior to the date of such settlement. The Company shall not,
without the prior written consent of such Non-Company Indemnitee, effect any
settlement of any pending or threatened proceeding in respect of which such
Non-Company Indemnitee is or could have been a party and indemnity could have
been sought hereunder by such Non-Company Indemnitee, unless such settlement
includes an unconditional release of such Non-Company Indemnitee from all
liability on claims that are the subject matter of such proceeding.
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(c) Each Holder of Transfer Restricted Securities agrees
to indemnify and hold harmless (i) the Company, (ii) each of the Initial
Purchasers, (iii) each other Holder, (iv) any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Company, any of the Initial Purchasers and each other Holder and (v) the
respective officers, directors, partners, employees, representatives and agents
of each of the parties referred to in clauses (i), (ii), (iii) and (iv), to the
same extent as the foregoing indemnity from the Company to each of the
Non-Company Indemnitees, but only with respect to information relating to such
Holder that was furnished in writing by such Holder expressly for use in the
Shelf Registration Statement (or any amendment or supplement thereto). In no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sales
of the Transfer Restricted Securities giving rise to such indemnification
obligation.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to herein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments in such proportion as is appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and
the indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, 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, on the one hand, or the
indemnified party, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, each of the Initial Purchasers and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were 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 immediately preceding
paragraph. The losses, claims, damages, liabilities or judgments of an
indemnified party referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim prior to the indemnifying
party's assumption of the defense thereof or subsequent thereto to the extent
permitted by the second sentence of Section 7(b) hereof. Notwithstanding the
provisions of this Xxxxxxx 0, xxxx of the Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total amount received by such Holder with respect to the sale of Transfer
Restricted Securities exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 7(d) are several in proportion to the respective principal amount of
Notes held by each of the Holders hereunder and not joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as any
of the Debentures or shares of Common Stock that are Transfer Restricted
Securities remain outstanding and during any such period in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, to make available to
any Initial Purchaser or any beneficial owner of the Debentures or shares of
such Common Stock in connection with any sale thereof and any prospective
purchaser of such Debentures or Common Stock from such Initial Purchaser or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
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SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements, (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements and (c) furnishes the Company in writing information
in accordance with Section 3(g) and agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act to the extent contemplated by Section 7(c).
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the
Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering pursuant to Section 3(c) and
3(d).
SECTION 11. MISCELLANEOUS
(a) Remedies. Each Holder of Transfer Restricted
Securities, in addition to being entitled to exercise all rights provided
herein, and as provided in the Purchase Agreement and granted by law, including
recovery of damages, will be entitled to specific performance of such Holder's
rights under this Agreement. Each Holder of Transfer Restricted Securities
agrees that the Company shall be entitled to exercise all rights provided
herein, and as provided in the Purchase Agreement and granted by law, including
recovery of damages and specific performance against such Holder. The Company
and the Selling Holders agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by any of them of the
provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on
or after the date of this Agreement enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders of Transfer
Restricted Securities hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any other agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of a majority of the outstanding Transfer Restricted
Securities affected by such amendment, modification, supplement, waiver or
departure (with holders of Common Stock constituting Transfer Restricted
Securities being deemed to be Holders of the aggregate principal amount of
Debentures converted into such Common Stock for purposes of such calculation).
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to such Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Transfer Restricted Securities shall be valid only
with the written consent of Holders of at least 66-2/3% of the Transfer
Restricted Securities being sold, in each case calculated in accordance with
the provisions of Section 3(c).
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder of Transfer Restricted
Securities, at the address set forth on
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the records of the registrar under the Indenture, with a copy to the
registrar; and
(ii) if to the Company or an Initial Purchaser,
initially at its address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in
accordance with the provisions of this Section.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder of Transfer Restricted Securities unless
and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder; and provided further that nothing herein shall be
deemed to permit any assignment, transfer or any disposition of Transfer
Restricted Securities in violation of the terms of the Purchase Agreement. If
any transferee of any Holder shall acquire Transfer Restricted Securities, in
any manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(j) Entire Agreement. This Agreement together with the
other Operative Documents (as defined in the Purchase Agreement) is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the securities sold pursuant to the Purchase Agreement.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
FUISZ TECHNOLOGIES LTD.
By:
-------------------------------
Name:
Title:
XXXXX XXXXXX INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXX BROTHERS INC.
BY: XXXXX XXXXXX INC.
By:
-------------------------------
Name:
Title:
