EXHIBIT 10.4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
May 31, 2002 ("Execution Date"), is made and entered into among Borough
Corporation, a Delaware corporation (the "Company"), and BWY Holdings,
LLC, a Delaware limited liability company ("Investor").
RECITALS
A. The Company and the Investor have entered into that
certain Stock Purchase Agreement dated as of the date hereof (the
"Investment Agreement"), pursuant to which the Company will issue,
from time to time, to the Investor 1.039 million of Company common
stock, par value $.0001 ("Common Stock") and warrants ("Warrants") to
purchase up to 2.3 million shares of common stock at $1.09 per share.
B. Pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Investment Agreement, the
Company has agreed to provide the Investor with certain registration
rights with respect to the Warrants ("Registrable Securities").
NOW, THEREFORE, in consideration of the premises, the
representations, warranties, covenants and agreements contained herein
and in the Investment Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto
agree as follows (capitalized terms used herein and not defined herein shall
have the meaning ascribed to them in the Investment Agreement).
ARTICLE I
REGISTRATION RIGHTS
Section 1.1 FORM OF REGISTRATION STATEMENTS.
(a) Filing of Registration Statement. At any time following the
earlier to occur of (i) eighteen (18) months from the Execution Date, (ii)
180 days following a Qualified Offering of Common Stock, or (iii) 90
days following the merger into a publicly traded entity, the Company shall
file with the Securities and Exchange Commission, a registration
statement on Form S-1 or SB-2 under the Securities Act (the
"Registration Statement") for the registration of the resale by the Investor
of Registrable Securities.
(b) Effectiveness of the Registration Statement. The Company
shall use its reasonable best efforts to have the Registration Statement
declared effective by the SEC by no later than one hundred and twenty
(120) days after the Filing of the Registration Statement to insure that the
Registration Statement remains in effect throughout the term of this
Agreement as set forth in Section 4.2, subject to the terms and conditions
of this Agreement.
(c) Failure to Maintain Effectiveness of Registration
Statements. Subsequent to the initial effectiveness of a Registration
Statement, in the event the Company fails to maintain the effectiveness of
a Registration Statement (or the underlying prospectus) throughout the
period set forth in Section 4.2, and the Investor holds any Registrable
Securities at any time during the period of such ineffectiveness (an
"Ineffective Period"), the Company shall pay to the Investor, in
immediately available funds into accounts designated by the Investor, an
amount equal to one percent (1%) of the aggregate purchase price of such
Registrable Securities which are issued and payable to the Investor and
aggregate Purchase Price (as defined in the Warrant) of the Warrant
Shares (payable proportionately to the Investor of all of the Registrable
Securities then held by the Investor for each seven-calendar-day period (or
portion thereof) of an Ineffective Period. Such payments shall be made on
the first Trading Day after the earliest to occur of (i) the expiration of
the Commitment Period, (ii) the expiration of an Ineffective Period, (iii)
the expiration of the first twenty-eight calendar days of an Ineffective
Period and (iv) the expiration of each additional twenty-eight calendar-day
periods during an Ineffective Period.
(e) The parties hereto acknowledge and agree that the sums
payable under Sections 1(c) above shall constitute liquidated damages and
not penalties. The parties further acknowledge that (i) the amount of loss
or damages likely to be incurred is incapable or is difficult to precisely
estimate, (ii) the amounts specified in such Sections bear a reasonable
proportion and are not plainly or grossly disproportionate to the probable
loss likely to be incurred in connection with any failure by the Company to
obtain or maintain the effectiveness of a Registration Statement, (iii) one
of the reasons for the parties reaching an agreement as to such amounts
was the uncertainty and cost of litigation regarding the question of actual
damages, and (iv) the parties are sophisticated business parties and have
been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm's length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1 FILINGS; INFORMATION. The Company will
facilitate the registration of such Registrable Securities in accordance with
the Investor's intended methods of disposition thereof. Without limiting
the foregoing, the Company in each such case will do the following as
expeditiously as possible, but in no event later than the deadline, if any,
prescribed therefor in this Agreement:
(a) The Company shall prepare and file with the SEC a
registration statement on Form S-1 or Form SB-2 (if use of such forms
are then available to the Company pursuant to the rules of the SEC and, if
not, on such other form promulgated by the SEC for which the Company
then qualifies and which counsel for the Company shall deem appropriate
and which form shall be available for the sale of the Registrable Securities
to be registered thereunder in accordance with the provisions of this
Agreement and in accordance with the intended method of distribution of
such Registrable Securities); use reasonable best efforts to cause such filed
Registration Statement to become and remain effective (pursuant to Rule
415 under the Securities Act, if applicable, or otherwise); prepare and file
with the SEC 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 during the term of
this Agreement; prepare and file, within one day after each Closing Date,
any prospectus supplement required under the Securities Act; and comply
with the provisions of the Securities Act with respect to the disposition of
all Registrable Securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
Investor set forth in such Registration Statement.
(b) The Company shall file all necessary amendments to the
Registration Statement in order to effectuate the purpose of this
Agreement.
(c) If so requested by the managing underwriters, if any, or the
holders of a majority in aggregate amount of the Registrable Securities
being registered, the Company shall (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as
the managing underwriters, if any, and such holders agree should be
included therein, and (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment; provided,
however, that the Company shall not be required to take any action
pursuant to this Section 2.1(c)(ii) that would, in the opinion of counsel
for the Company, violate applicable law.
(d) In connection with the filing of a Registration Statement,
the Company shall enter into such agreements and take all such other
reasonable actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the holders of a
majority in aggregate principal amount of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such Registrable
Securities, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration, (i) make such representations and warranties to
the holders of such Registrable Securities and the underwriters, if any,
with respect to the business of the Company (including with respect to
businesses or assets acquired or to be acquired by the Company), and the
Registration Statement, prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the selling
holders of such Registrable Securities and the underwriters, if any, than
those set forth herein (or such other provisions and procedures acceptable
to the holders of a majority in aggregate principal amount of Registrable
Securities covered by such Registration Statement and the managing
underwriters, if any); and (iii) deliver such documents and certificates as
may be reasonably requested by the holders of a majority in aggregate
principal amount of the Registrable Securities being sold, their counsel
and the managing underwriters, if any, to evidence the continued validity
of their representations and warranties made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company.
(e) Five Trading Days prior to filing a Registration Statement
or prospectus, or any amendment or supplement thereto (excluding
amendments deemed to result from the filing of documents incorporated
by reference therein), the Company shall deliver to the seller of
Registrable Securities and counsel representing the seller of Registrable
Securities, in accordance with the notice provisions of Section 4.8, copies
of such Registration Statement as proposed to be filed, together with
exhibits thereto, which documents will be subject to review by such
parties, and thereafter deliver to the seller of Registrable Securities and
its counsel, in accordance with the notice provisions of Section 4.8, such
number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the
prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents or information as the
Investor or counsel may reasonably request in order to facilitate the
disposition of the Registrable Securities.
(f) After the filing of the Registration Statement, the Company
shall promptly notify the Investor of any stop order issued or threatened
by the SEC in connection therewith and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
(g) The Company shall use its reasonable best efforts to (i)
register or qualify such Registrable Securities under such other securities
or blue sky laws of such jurisdictions in the United States as the Investor
may reasonably (in light of its intended plan of distribution) request, and
(ii) cause such Registrable Securities to be registered with or approved by
such other governmental agencies or authorities in the United States as
may be necessary by virtue of the business and operations of the Company
and do any and all other acts and things that may be reasonably necessary
or advisable to enable the Investor to consummate the disposition of the
Registrable Securities; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (g), subject itself
to taxation in any such jurisdiction, or consent or subject itself to general
service of process in any such jurisdiction.
(h) The Company shall immediately notify the Investor upon
the occurrence of any of the following events in respect of a Registration
Statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request for additional information by the SEC
or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii)
receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; (iv) the happening of any event that makes
any statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that in the case of the related prospectus, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and (v) the Company's reasonable determination
that a post-effective amendment to the Registration Statement would be
appropriate; and the Company will promptly make available to the
Investor any such supplement or amendment to the related prospectus.
(i) The Company shall enter into customary agreements and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities (whereupon the
Investor may, at its option, require that any or all of the representations,
warranties and covenants of the Company also be made to and for the
benefit of the Investor).
(j) The Company shall make available to the Investor (and will
deliver to Investor's counsel), subject to restrictions imposed by the
United States federal government or any agency or instrumentality
thereof, copies of all correspondence between the SEC and the Company,
its counsel or auditors and will also make available for inspection by the
Investor and any attorney, accountant or other professional retained by the
Investor (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the
Company's officers and employees to supply all information reasonably
requested by any Inspectors in connection with such Registration
Statement. Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such
Registration Statement or (ii) the disclosure or release of such Records is
requested or required pursuant to oral questions, interrogatories, requests
for information or documents or a subpoena or other order from a court
of competent jurisdiction or other process; provided that prior to any
disclosure or release pursuant to clause (ii), the Inspectors shall provide
the Company with prompt notice of any such request or requirement so
that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and, provided further,
that if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records which counsel has advised the
Inspectors that the Inspectors are compelled to disclose. The Investor
agrees that information obtained by it solely as a result of such inspections
(not including any information obtained from a third party who, insofar as
is known to the Investor after reasonable inquiry, is not prohibited from
providing such information by a contractual, legal or fiduciary obligation
to the Company) shall be deemed confidential and shall not be used by it
as the basis for any market transactions in the securities of the Company
or its Affiliates unless and until such information is made generally
available to the public. The Investor further agrees that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential.
(k) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to the Investor a signed counterpart, addressed
to the Investor, of (1) an opinion or opinions of counsel to the Company,
in such form reasonably acceptable to the Investor, and (2) to the extent
required by law or reasonably necessary to effect a sale of Registrable
Securities in accordance with prevailing business practices at the time of
any sale of Registrable Securities pursuant to a Registration Statement, a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case may
be, as the Investor therefore reasonably requests.
(l) The Company shall otherwise comply with all applicable
rules and regulations of the SEC, including, without limitation, compliance
with applicable reporting requirements under the Exchange Act.
(m) The Company shall appoint a transfer agent and registrar
for all such Registrable Securities covered by such Registration Statement
not later than the effective date of such Registration Statement.
(n) The Company may require the Investor to promptly furnish
in writing to the Company such information as may be legally required in
connection with such registration including, without limitation, all such
information as may be requested by the SEC or the National Association
of Securities Dealers. The Investor agrees to provide such information
requested in connection with such registration within ten (10) business
days after receiving such written request and the Company shall not be
responsible for any delays in obtaining or maintaining the effectiveness of
the Registration Statement directly caused by the Investor's failure to
timely provide such information.
Section 2.2 REGISTRATION EXPENSES. In connection
with each Registration Statement, the Company shall pay all registration
expenses incurred in connection with the registration thereunder (the
"Registration Expenses"), including, without limitation: (i) all registration,
filing, securities exchange listing and fees required by the National
Association of Securities Dealers, (ii) all registration, filing, qualification
and other fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection
with blue sky qualifications of the Registrable Securities), (iii) all word
processing, duplicating, printing, messenger and delivery expenses, (iv)
the Company's internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection with the listing of
the Registrable Securities, (vi) reasonable fees and disbursements of
counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company
(including the expenses of any special audits or comfort letters or costs
associated with the delivery by independent certified public accountants of
such special audit(s) or comfort letter(s) requested pursuant to Section
2.1(l) hereof), (vii) the fees and expenses of any special experts retained
by the Company in connection with such registration, (viii) premiums and
other costs of policies of insurance against liabilities arising out of any
public offering of the Registrable Securities being registered, and (ix) any
fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting fees, discounts, transfer
taxes or commissions, if any, attributable to the sale of Registrable
Securities, which shall be payable by each seller of Registrable Securities
pro rata on the basis of the number of Registrable Securities of each such
seller that are included in a registration under this Agreement.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1 INDEMNIFICATION BY THE COMPANY. The
Company agrees to indemnify and hold harmless each seller of Registrable
Securities, its partners, Affiliates, officers, directors, employees and
duly authorized agents, and each Person or entity, if any, who controls the
seller of Registrable Securities within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the
partners, Affiliates, officers, directors, employees and duly authorized
agents of such controlling Person or entity (collectively, the "Controlling
Persons"), from and against any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements and costs and expenses of investigating and defending any
such claim) (collectively, "Damages"), joint or several, and any action or
proceeding in respect thereof to which the seller of Registrable Securities,
its partners, Affiliates, officers, directors, employees and duly authorized
agents, and any such Controlling Person may become subject under the
Securities Act or otherwise as incurred and, insofar as such Damages (or
actions or proceedings in respect thereof) arise out of, or are based upon,
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or prospectus relating to the
Registrable Securities or any preliminary prospectus, or arises out of, or
are based upon, any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based
upon information furnished in writing to the Company by the seller of
Registrable Securities expressly for use therein, and shall reimburse the
seller of Registrable Securities, its partners, Affiliates, officers,
directors, employees and duly authorized agents, and each such Controlling
Person for any legal and other expenses reasonably incurred by the seller of
Registrable Securities, its partners, Affiliates, officers, directors,
employees and duly authorized agents, or any such Controlling Person, as
incurred, in investigating or defending or preparing to defend against any
such Damages or actions or proceedings; provided, however, that the
Company shall not be liable to the seller of Registrable Securities to the
extent that any such Damages arise out of or are based upon an untrue
statement or omission made in any preliminary prospectus if (A) the seller
of Registrable Securities failed to send or deliver a copy of the final
prospectus delivered by the Company to the seller of Registrable
Securities with or prior to the delivery of written confirmation of the sale
by the seller of Registrable Securities to the Person asserting the claim
from which such Damages arise, and (B) the final prospectus would have
corrected such untrue statement or alleged untrue statement or such
omission or alleged omission, or (C) such untrue statement or omission
made in any prospectus was furnished to the Company by a seller of
Registrable Securities or described such seller of Registrable Securities in
a manner consistent with representations made by any Investor in the
Investment Agreement.
Section 3.2 INDEMNIFICATION BY SELLER OF
REGISTRABLE SECURITIES. Each Seller of Registrable Securities
agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company, or entity, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each officer of the Company who
signs the Registration Statement, the Company's directors, together with
the partners, Affiliates, officers, directors, employees and duly authorized
agents of such controlling Person or entity (collectively, the "Controlling
Persons"), from and against any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements and costs and expenses of investigating and defending any
such claim) (collectively, "Damages"), joint or several, and any action or
proceeding in respect thereof to which the Company and Controlling
Person may become subject under the Securities Act or otherwise as
incurred and, insofar as such Damages (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or prospectus relating to the Registrable Securities or any
preliminary prospectus, or arises out of, or are based upon, 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, only
insofar as the same are based upon information furnished in writing to the
Company by the seller of Registrable Securities expressly for use therein,
and shall reimburse the Company and each such Controlling Person for
any legal and other expenses reasonably incurred by the Company, or any
such Controlling Person, in investigating or defending or preparing to
defend against any such Damages or actions or proceedings; provided,
however, that the seller of Registrable Securities shall be limited to the
proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the Registrable
Securities sold by the seller under such Registration Statement bears to
the total public offering price of all securities offered thereunder, but not
in any event to exceed the net proceeds received by the seller of
Registrable Securities from the sale of Registrable Securities covered by
such registration statement.
Section 3.3 CONDUCT OF INDEMNIFICATION
PROCEEDINGS. Promptly after receipt by any person or entity in
respect of which indemnity may be sought pursuant to Section 3.1 or 3.2
(an "Indemnified Party") of notice of any claim or the commencement of
any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity may be
sought (the "Indemnifying Party"), notify the Indemnifying Party in
writing of the claim or the commencement of such action; in the event an
Indemnified Party shall fail to give such notice as provided in this Section
3.3 and the Indemnifying Party to whom notice was not given was
unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, the
indemnification provided for in Section 3.1 and 3.2 shall be reduced to the
extent of any actual prejudice resulting from such failure to so notify the
Indemnifying Party; provided, that the failure to notify the Indemnifying
Party shall not relieve it from any liability that it may have to an
Indemnified Party otherwise than under Section 3.1 or 3.2. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be
entitled to participate therein, and, to the extent that it wishes, jointly
with any other similarly notified Indemnifying Party, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party.
After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or action, the Indemnifying
Party shall not be liable to the Indemnified Party for any legal or other
expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation;
provided that the Indemnified Party shall have the right to employ separate
counsel to represent the Indemnified Party and its controlling persons who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for
the account of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) in the reasonable judgment of the Company and such
Indemnified Party, representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interest
between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or 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 together
with appropriate local counsel) at any time for all Indemnified Parties, or
for fees and expenses that are not reasonable. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of
which the Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party
from all liability arising out of such claim or proceeding. Whether or not
the defense of any claim or action is assumed by the Indemnifying Party,
such Indemnifying Party will not be subject to any liability for any
settlement made without its consent, which consent will not be
unreasonably withheld.
Section 3.4 OTHER INDEMNIFICATION. Indemnification
similar to that specified in the preceding paragraphs of this Article 3 (with
appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act. The provisions
of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified
Party may have pursuant to law, equity, contract or otherwise.
Section 3.5 CONTRIBUTION. If the indemnification provided
for in this Article III is unavailable to the Indemnified Parties in respect
of any Damages referred to herein, then the 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 Damages between
the Company on the one hand and the Investor on the other, in such
proportion as is appropriate to reflect the relative fault of the Company
and of the Investor in connection with such statements or omissions, as
well as other equitable considerations. The relative fault of the Company
on the one hand and of the Investor on the other 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 such party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Investor agree that it would not be just and equitable if contribution
pursuant to this Section 3.5 were determined by pro rata allocation or by
any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result
of the Damages 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.
Notwithstanding the provisions of this Section 3.5, the Investor shall in no
event be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of the seller of
Registrable Securities were sold to the public (less underwriting discounts
and commissions) exceeds the amount of any damages which the Investor
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
Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1 NO OUTSTANDING REGISTRATION RIGHTS.
The Company represents and warrants to the seller of Registrable
Securities that there is not in effect on the date hereof any agreement by
the Company pursuant to which any holders of securities of the Company
have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any
jurisdiction that would conflict or be inconsistent with any provision of
this Agreement or the Investment Agreement. The Company further
represents and warrants that upon issuance, the Registrable Securities will
not have been issued or sold in violation of any preemptive or other
similar rights of holders of any securities of the Company or any other
person.
Section 4.2 TERM. The registration rights provided to the
holders of Registrable Securities hereunder shall terminate at such time as
all Put Shares and Warrant Shares (i) have been disposed of pursuant to
the Registration Statement, (ii) have been sold under circumstances under
which all of the applicable conditions of Rule 144 (or any similar provision
then in force) under the Securities Act ("Rule 144") are met, (iii) have
been otherwise transferred to holders who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend, or (iv) may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act in the opinion of counsel to the Company,
which counsel shall be reasonably acceptable to the holder of Registrable
Securities; provided, however, that such registration rights shall not
terminate sooner than two years following the end of the Commitment
Period. Notwithstanding the foregoing, paragraph (c) of Section 1.1,
Article III, Section 4.8 and Section 4.9 shall survive the termination of
this Agreement.
Section 4.3 RULE 144. The Company covenants that it will
file all reports required to be filed by it under the Securities Act and the
Exchange Act and that it will take such further action as holders of
Registrable Securities may reasonably request, all to the extent required
from time to time to enable the seller of Registrable Securities to sell
Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. If at any time the Company is not required
to file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available other information so long as necessary
to permit sales pursuant to Rule 144. Upon the request of the seller of
Registrable Securities, the Company will deliver to the seller of
Registrable Securities a written statement as to whether it has complied
with such requirements.
Section 4.4 CERTIFICATE. The Company will, at its expense,
forthwith upon the request of any holder of Registrable Securities, deliver
to such holder a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number
(including area code), (b) the Company's Internal Revenue Service
identification number, (c) the Company's Commission file number, (d) the
number of shares of each class of Stock outstanding as shown by the most
recent report or statement published by the Company, and (e) whether the
Company has filed the reports required to be filed under the Exchange Act
for a period of at least ninety (90) days prior to the date of such
certificate and in addition has filed the most recent annual report required
to be filed thereunder.
Section 4.5 AMENDMENT AND MODIFICATION. Any
provision of this Agreement may be waived, provided that such waiver is
set forth in a writing executed by the parties to this Agreement. 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 the holders of a majority of
the then outstanding Registrable Securities. Notwithstanding the
foregoing, the waiver of any provision hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and does
not directly or indirectly affect the rights of other holders of Registrable
Securities may be given by holders of at least a majority of the Registrable
Securities being sold by such holders; provided that the provisions of this
sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. No
course of dealing between or among any Person having any interest in this
Agreement will be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any person under or
by reason of this Agreement.
Section 4.6 SUCCESSORS AND ASSIGNS; ENTIRE
AGREEMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto. The Investor
and Company may not assign their rights under this Agreement. This
Agreement, together with the Investment Agreement set forth the entire
agreement and understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
Section 4.7 SEPARABILITY. In the event that any provision
of this Agreement or the application of any provision hereof is declared to
be illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected except
to the extent necessary to delete such illegal, invalid or unenforceable
provision unless that provision held invalid shall substantially impair the
benefits of the remaining portions of this Agreement.
Section 4.8 NOTICES. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with
charges prepaid, or (iv) transmitted by hand delivery, telegram or
facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business day
during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
If to Borough Corporation:
Borough Corporation
0000 X. Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
If to the Investor:
BWY Holdings LLC
000 Xxxxx Xxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Wentworth Advisors, LLC, Managing Member
Either party hereto may from time to time change its address or facsimile
number for notices under this Section by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the
other party hereto.
Section 4.9 GOVERNING LAW. This Agreement shall be
subject to the same choice of law, venue and jurisdiction as the Investment
Agreement and construed under the laws of the State of Delaware,
without giving effect to provisions regarding conflicts of law or choice of
law.
Section 4.10 HEADINGS. The headings in this Agreement are
for convenience of reference only and shall not constitute a part of this
Agreement, nor shall they affect their meaning, construction or effect.
Section 4.11 COUNTERPARTS. This Agreement may be
executed in multiple counterparts, each of which shall be deemed to be an
original instrument and all of which together shall constitute one and the
same instrument.
Section 4.12 FURTHER ASSURANCES. Each party shall
cooperate and take such action as may be reasonably requested by another
party in order to carry out the provisions and purposes of this Agreement
and the transactions contemplated hereby.
Section 4.13 REMEDIES. In the event of a breach or a
threatened breach by any party to this Agreement of its obligations under
this Agreement, any party injured or to be injured by such breach will be
entitled to specific performance of its rights under this Agreement or to
injunctive relief, in addition to being entitled to exercise all rights
provided in this Agreement and granted by law. The parties agree that the
provisions of this Agreement shall be specifically enforceable, it being
agreed by the parties that the remedy at law, including monetary damages,
for breach of any such provision will be inadequate compensation for any
loss and that any defense or objection in any action for specific
performance or injunctive relief that a remedy at law would be adequate is
waived.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be executed by the undersigned,
thereunto duly authorized, as of the date first set forth above.
BOROUGH CORPORATION "Company"
By:_____________________
Xxxxx X. Xxxxxxx, Xx., President
BWY HOLDINGS LLC "Investor"
On behalf of:
Wentworth Advisors, LLC, Managing Member
By:
_________________________
Xxxx X. Xxxxxx, Chief Executive
