EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated the __ day of
October, 1997, between ____________ (the "Purchaser", "Holder" or "Holders")
issued pursuant to the 8% Convertible Preferred Stock Subscription Agreement of
even date herewith, and SGI INTERNATIONAL, a Utah corporation having its
principal place of business at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxx, XX
00000 (the "Issuer" or "Company").
WHEREAS, simultaneously with the execution and delivery of this Agreement, the
Holders are purchasing from the Company, pursuant to a 8% Convertible Preferred
Stock Subscription Agreement dated the date hereof, upon conversion thereof, an
aggregate of up to Two Million ($2,000,000) Dollars principal amount of Shares
of Common Stock and Warrants (hereinafter collectively referred to as the
"Stock" or "Securities" of SGI International); and
WHEREAS, the Company desires to grant to the Holders the registration rights
set forth herein with respect to the Securities.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means each of the Securities; provided, however, that
with respect to any particular Registrable Security, such security shall cease
to be a Registrable Security when, as of the date of determination, (i) it has
been effectively registered under the Securities Act of 1933, as amended (the
"Act") and disposed of pursuant thereto, (ii) registration under the Act is no
longer required for the immediate public distribution of such security as a
result of the provisions of Rule 144 or Regulation S, or (iii) it has ceased to
be outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Section 1.
Section 2. Restrictions on Transfer. The Holder acknowledges
and understands that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144
promulgated under the Act. The Holder understands that no disposition or
transfer of the Securities may be made by Holder in the absence of (i) an
opinion of counsel reasonably satisfactory to the Company that such transfer
may be made or (ii) a registration statement under the Act is then in effect
with respect thereto.
Section 3. Registration Rights.
(a) At any time commencing after the date hereof, any Holder
or Holders of the Securities as defined in the Agreement, shall have the right,
exercisable by written notice to the Company (the "Demand Registration
Request"), to have the Company prepare and file with the Securities and
Exchange Commission ("SEC"), on one occasion a registration statement (the
"Registration Statement"), at the sole expense of the Company (except as
provided in Section 3(c) hereof), in respect of all holders of Registrable
Securities, so as to permit a non-underwritten public offering and sale of the
Registrable Securities under the Act, provided, the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this Section 3(a) in any jurisdiction in which the
Company would be required to qualify as a dealer in Securities, under the
Securities or blue sky laws of such jurisdiction. The number of Conversion
Shares to be registered shall be two hundred (200%) percent of the number of
such shares that would be required, if all of the Securities were converted in
accordance with the Certificate of Designation and assuming a conversion date 5
days prior to the filing of the Registration Statement
(b) The Company will use its best efforts to maintain any Registration
Statement or post-effective amendment filed under this Section 3 hereof current
under the Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold under the provisions of Rule 144, or (iii) the first
anniversary of the effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs incurred by
the Company in connection with the preparation and filing of any Registration
Statement under subparagraph 3(a) and in complying with applicable securities
and Blue Sky laws (including, without limitation, all attorneys' fees) shall be
borne by the Company. The Holder shall bear the cost of underwriting discounts
and commissions, if any, applicable to the Registrable Securities being
registered and the fees and expenses of its counsel. The Company shall use its
best efforts to qualify any of the securities for sale in such states as such
Holder reasonably designates and shall furnish indemnification in the manner
provided in Section 9 hereof. However, the Company shall not be required to
qualify in any state which will require an escrow or other restriction relating
to the Company and/or the sellers. The Company at its expense will supply the
Holder with copies of such Registration Statement and the prospectus or
offering circular included therein and other related documents in such
quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this Section 3 to include a Holder's
Registrable Securities in any Registration Statement which is to be filed if,
in the opinion of counsel for both the Holder and the Company (or, should they
not agree, in the opinion of another counsel experienced in securities law
matters acceptable to counsel for the Holder and the Company) the proposed
offering or other transfer as to which such registration is requested is exempt
from applicable federal and state securities laws and would result in all
purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Act.
(e) From the date of the Demand Registration Request, the Company will use its
best efforts to cause the registration statement to become effective within
sixty (60) days from such demand. If the registration statement is not
declared effective by the SEC by the sixty first (61st) day following the date
the Demand Registration Request is received by the Company, the Holder of the
Series 97-F Preferred Stock has the option of either (a) converting up to fifty
(50%) percent of the Series 97-F Preferred Stock pursuant to the provisions of
Regulation S and/or (to the extent that the Holder converts less than fifty
(50%) percent of the Series 97-F Preferred Stock pursuant to the provisions of
Regulation S, then the following liquidated damages shall be pro rated) (b)
notwithstanding any contrary or different provisions in any other agreement or
document, after the ninety-first (91st) day following the Demand Registration
Request by the Holder of the Series 97-F Preferred Stock requiring the Company
to pay to the Holder thereof liquidated damages, in cash, at the rate of one
and one-half (1.5%) percent of the Liquidation Value (as defined in the
Certificate of Designation) for the first month, and three (3%) percent of the
Liquidation Value for each month thereafter until the Registration Statement is
declared effective by the SEC.
If a form S-3 Registration Statement is not available to the Company, and the
Company shall file a Form SB-2 Registration Statement or other registration
statement, the period of time during which the Registration Statement must be
declared effective after the date the Demand Registration Request is received
by the Company for the purpose of determining liquidated damages shall increase
from sixty one (61) days to one-hundred and twenty one (121) days.
Notwithstanding the proceeding sentence, if the Registration Statement for the
common stock underlying the Series 97-F Preferred Stock is not declared
effective by the one-hundred and twenty first (121st) day following the date
the Demand Registration Request is received by the Company, the holder of the
Series 97-F Preferred Stock has the option of either (a) converting any portion
of the remaining shares of Common Stock underlying the Series 97-F Preferred
Stock pursuant to the provisions of Regulation S and/or (to the extent that the
Holder converts less than its position of the Series 97-F Preferred Stock
pursuant to the provisions of Regulation S, then the following liquidated
damages shall be pro rated) (b) in the event the Holder does not exercise this
option, or exercise this option in part, then the Company shall pay to the
Holder thereof liquidated damages, in cash, at the rate of one and one-half
(1.5%) percent of the Liquidation Value (as defined in the Certificate of
Designation) for the first month, and three (3%) percent of the Liquidation
Value for each month thereafter until the Registration Statement is declared
effective by the SEC.
If the Company does not remit the damages to the Purchaser as set forth above,
the Company will pay the Purchaser reasonable costs of collection, including
attorneys fees, in addition to the liquidated damages. Such payment shall be
made to the Purchaser immediately if the registration of the Securities are not
effected; provided, however, that the payment of such liquidated damages shall
not relieve the Company from its obligations to use its best efforts register
the Securities pursuant to this Section. Except as set forth herein, the
registration of the Securities pursuant to this provision shall not affect or
limit Purchaser's other rights or remedies as set forth in this Agreement.
(f) No provision contained herein shall preclude the Company from selling
securities pursuant to any Registration Statement in which it is required to
include Registrable Securities pursuant to this Section 3.
Section 4. Cooperation with Company. Holders will cooperate with the Company
in all respects in connection with this Agreement, including, timely supplying
all information reasonably requested by the Company and executing and returning
all documents reasonably requested in connection with the registration and sale
of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the Company is required
by any of the provisions of this Agreement to effect the registration of any of
the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and supplements to
such registration statement and the Prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Act with respect to the sale or other disposition
of all securities covered by such registration statement when the Holder or
Holders of such securities shall desire to sell or otherwise dispose of the
same (including prospectus supplements with respect to the sales of securities
from time to time in connection with a registration statement pursuant to Rule
415 of the Commission);
(b) furnish to each Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the Act, and such other documents, as such Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by such Holder;
(c) use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of
such jurisdictions as the Holder, shall reasonably request, and do any and all
other acts and things which may be necessary or advisable to enable each Holder
to consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) use its best efforts to maintain its listing on the OTC Bulletin Board or
any securities exchange on which any securities of the Company
is then listed, if the listing of such securities is then permitted under the
rules of such exchange;
(e) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(f) notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
Section 6. Information by Holder. Each Holder of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
6.
Section 7. Assignment. The rights granted the Holders under this Agreement
shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. In the event of a transfer of
the rights granted under this Agreement, the Holders agree that the Company may
require that the transferee comply with reasonable conditions as determined in
the discretion of the Company. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
Section 8. Termination of Registration Rights. The rights
granted pursuant to this Agreement shall terminate as to each Investor (and
permitted transferee under Section 7 above) upon the occurrence of any of the
following:
(a) all such Holder's securities subject to this Agreement have been
registered;
(b) such Holder's securities subject to this Agreement may be
sold without such registration pursuant to Rule 144 or Reg S promulgated by the
SEC pursuant to the Act;
(c) such Holder's securities subject to this Agreement can be
sold pursuant to Rule 144(k); or
(d) one years from the issuance of the Registrable Security.
Section 9. Indemnification.
(a) In the event of the filing of any Registration Statement with respect
to Registrable Securities pursuant to Section 3 hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the Act ("Distributing Holders")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), to which the
Distributing Holders may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement, or any
related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by the Distributing Holders, specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each officer, director of the Company or person,
if any, who controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such
officer, director or controlling person may become subject under the Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof); arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in a Registration
Statement requested by such Distributing Holder, or any related preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such Registration Statement,
preliminary prospectus, final prospectus, offering circular, notification or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by such Distributing Holder,
specifically for use in the preparation thereof and, provided further, that the
indemnity agreement contained in this Section 9(b) shall not inure to the
benefit of the Company with respect to any person asserting such loss, claim,
damage or liability who purchased the Registrable Securities which are the
subject thereof if the Company failed to send or give (in violation of the Act
or the rules and regulations promulgated thereunder) a copy of the prospectus
contained in such Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Registrable Securities,
where the Company was obligated to do so under the Act or the rules and
regulations promulgated thereunder. This indemnity agreement will be in
addition to any liability which the Distributing Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than as to the particular item as to which indemnification is
then being sought solely pursuant to this Section. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, assume the defense thereof, subject to
the provisions herein stated and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is the Distributing Holder, the fees and
expenses of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in writing
by the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the Distributing Holder and the
indemnifying party and the Distributing Holder shall have been advised by such
counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Distributing Holder (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of the Distributing Holder, it being understood, however, that the indemnifying
party shall, 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 only for the
reasonable fees and expenses of one separate firm of attorneys for the
Distributing Holder, which firm shall be designated in writing by the
Distributing Holder). No settlement of any action against an indemnified party
shall be made without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld.
Section 10. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) the Distributing
Holder or the Company makes a claim for indemnification pursuant to Section 9
hereof but is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 9 hereof provide for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any Distributing Holder or the
Company, then the Company and the applicable Distributing Holder shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (which shall, for all purposes of this Agreement, include,
but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the applicable Distributing Holder,
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 and the Distributing Holder agree that it would not be just and
equitable if contribution pursuant to this Section 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 this Section. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. 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.
Section 11. Notices. Any notice pursuant to this Agreement by the Company or
by the Holder shall be in writing and shall be deemed to have been duly given
if delivered by (i) hand, (ii) by facsimile and followed by mail delivery
or (iii) if mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on the signature
page of this Agreement, with a copy to the person designated in the Agreement.
(b) If to the Company, at the address set forth herein, or to such other
address as any such party may designate by notice to the other party. Notices
shall be deemed given at the time they are delivered personally or five (5)
days after they are mailed in the manner set forth above. If notice is
delivered by facsimile to the Company and followed by mail, delivery shall be
deemed given two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 14. Governing Law, Venue. This Agreement will be construed and
enforced in accordance with and governed by the laws of the State of New York,
except for matters arising under the Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the State of New
York or the state courts of the State of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. Each
party hereby agrees that if another party to this Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
Section 15. Severability/Defined Terms. If any provision of this Agreement
shall for any reason be held invalid or unenforceable, such
invalidity or unenforceablity shall not affect any other provision hereof and
this Agreement shall be construed as if such invalid or unenforceable provision
had never been contained herein. Terms not otherwise defined herein shall be
defined in accordance with the 8% Convertible Preferred Stock Subscription
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, on the day and year first above written.
Attest: SGI INTERNATIONAL
By:__________________________ By:___________________________
Name: Name:
Title:_______________________ Title:________________________
PURCHASER:
______________________________
By:___________________________
Officer
