REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 9,
2000, is made and entered into by and between FiberCore, Inc., a Nevada
corporation (the "Company"), and Crescent International Ltd., an entity
organized and exiting under the laws of Bermuda (the "Investor").
WHEREAS, the Company and the Investor have entered into that certain
Securities Purchase Agreement, dated as of the date hereof (the "Securities
Purchase Agreement"), pursuant to which the Company will issue, from time to
time, to the Investor up to $30,000,000 worth of securities which will include
shares of common stock, par value $0.001 per share, of the Company (the "Common
Stock"), and convertible notes in the aggregate amount of up to $7,500,000 (the
"Convertible Notes");
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor entering into the Securities Purchase Agreement, the Company has issued
to the Investor an incentive warrant dated as of the date hereof, exercisable
from time to time within five (5) years following the date of issuance (the
"Incentive Warrant") for the purchase of an aggregate of up to 500,000 shares of
Common Stock at a price specified in such Incentive Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor entering into the Securities Purchase Agreement, the Company has issued
to the Investor an early put warrant, which may become exercisable from time to
time as described in the Securities Purchase Agreement (the "Early Put Warrant"
and together with the Incentive Warrant, the "Warrants") for the purchase of a
number of shares of Common Stock and at a price to be determined as described in
such Early Put Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor's agreement to enter into the Securities Purchase Agreement, the
Company has agreed to provide the Investor with certain registration rights as
described herein;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrants, in the
Convertible Notes and in the Securities Purchase 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
respective meanings ascribed to them in the Securities Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENTS.
a. Filing of Registration Statements. The Company shall register for
resale all Put Shares and Note Conversion Shares issued or issuable to the
Investor pursuant to the Securities Purchase Agreement and all Warrant Shares
issued or issuable upon full exercise of the Warrants. Subject to the terms and
conditions of this Agreement, the Company shall file with the SEC on or before
the end of a twenty (20) calendar day period immediately following the
Subscription Date, and subject to the provisions of Section 2.1(c) hereof, a
registration statement (the "Initial Registration Statement") on such form
promulgated by the SEC for which the Company qualifies, that counsel for the
Company shall deem appropriate and which form shall be available for the sale of
the Early Put Shares, the Warrant Shares and the Note Conversion Shares. The
aggregate number of shares to be registered under the Initial Registration
Statement shall be 12,000,000 shares. Prior to any subsequent Put, the Company
shall provide the Investor with written notice of the result (the "Result")
obtained from the following calculation: (W+X+Y)-Z, where W is the number of
shares to be issued pursuant to such subsequent Put, X is the number of Warrant
Shares which have not been previously registered, Y is the number of shares
which could, at the Conversion Price (as such term is defined in the applicable
Convertible Note) on the date such calculation is made, be issued pursuant to
conversion of the unconverted principal balance of the Convertible Notes, and Z
is the number of shares previously registered under the Initial Registration
Statement but not yet issued. If the Result is a number greater than zero, the
Company shall file with the SEC a registration statement covering a number of
shares equal to or greater than the Result (the "Subsequent Registration
Statement" and together with the Initial Registration Statement, the
"Registration Statements") on such form promulgated by the SEC for which the
Company qualifies, that counsel for the Company shall deem appropriate and which
form shall be available for the sale of the shares of Common Stock to be
purchased by the Investor and any Warrant Shares which have not previously been
registered.
b. Effectiveness of the Registration Statements. The Company shall,
subject to the provisions of Section 2.1(c) hereof, use its best efforts to have
the Initial Registration Statement declared effective by the SEC in no event
later than ninety (90) calendar days after the Subscription Date and to have the
Subsequent Registration Statement declared effective by the SEC prior to any
subsequent Put. The Company shall ensure that all Registration Statements remain
in effect for a period ending 180 days following the earlier of termination of
the Commitment Period and termination of the Investor's obligations pursuant to
Section 2.5 of the Securities Purchase Agreement; provided that such period
shall be extended one day for each day after the applicable Effective Date that
any Registration Statement covering Registrable Securities is not effective
during the period such Registration Statement is required to be effective
pursuant to this Agreement; and provided further that the Company shall not be
required to ensure that any Registration Statement covering Registrable
Securities remain in effect for such 180 day period if the shares registered
thereunder shall have become tradable pursuant to Rule 144 under the Securities
Act ("Rule 144"), as such Rule may be amended from time to time, or have
otherwise been sold.
c. Failure to Obtain or Maintain Effectiveness of Registration
Statements. In the event the Company fails for any reason to obtain the
effectiveness of any Registration Statement within the time periods set forth in
Section 1.1(b) (a "Tardy Registration Statement") or in the event that the
Company fails for any reason to maintain the effectiveness of any Registration
Statement (or the underlying prospectus) covering Registrable Securities (an
"Ineffective Registration Statement" together with a Tardy Registration
Statement, a "Failed Registration Statement") (unless the Registrable Securities
covered by such Registration Statement shall have become tradable pursuant to
Rule 144 or have been otherwise sold), for a period ending 180 days following
the earlier of termination of the Commitment Period and termination of the
Investor's obligations pursuant to Section 2.5 of the Securities Purchase
Agreement (provided that such period shall be extended one day for each day
after the applicable Effective Date that the Registration Statement covering
Registrable Securities is not effective during the period such Registration
Statement is required to be effective pursuant to this Agreement) (the
"Applicable Period"), at any time during any period of such ineffectiveness (an
"Ineffective Period"), then, in either event an amount equal to two percent
(2.0%) of the aggregate Purchase Price paid by Investor for Registrable
Securities that have not yet been registered in an effective Registration
Statement and were required, pursuant to this Agreement, to be registered under
such Failed Registration Statement, for each calendar month and for each portion
of a calendar month, pro rata, during an Ineffective Period (the "Failed
Registration Statement Fee"), shall become due and payable to the Investor. The
Investor shall retain a sum of $250,000 (the "Escrow Amount") in a separate
account in respect of the Company's obligations under this subsection (c). On
the first Trading Day after the earlier to occur of (i) the expiration of the
applicable Ineffective Period and (ii) the last day of each calendar month
during an Ineffective Period, the Investor shall deduct from the Escrow Amount
the amount of any Failed Registration Statement Fees then due and payable;
provided, however, that if the amount of such Failed Registration Statement Fees
exceeds the balance of the Escrow Amount, the Company shall pay to the Investor
in immediately available funds into an account designated by the Investor an
amount equal to the portion of such Failed Registration Statement Fees which
exceeds the balance of the Escrow Amount. On the first Trading Day following the
Applicable Period, the Investor shall pay to the Company in immediately
available funds into an account designated by the Company an amount equal to the
balance of the Escrow Amount on such date, less any Failed Registration
Statement Fees then due and payable.
d. Restricted Period. While in possession of material non-public
information received from the Company, the Investor shall not dispose of any
Registrable Securities until such information is disclosed to the public (a
"Restricted Period"); provided that, if such Restricted Period exceeds one
hundred twenty (120) days, the liquidated damages described in Section 1.1(c)
hereof shall be increased to three percent (3.0%) until such Restricted Period
shall have elapsed.
e. Failure to Register Sufficient Number of Shares. If the total
number of Note Conversion Shares and Early Put Warrant Shares included in the
Initial Registration Statement is less than the total number of Note Conversion
Shares issuable upon conversion at the Conversion Price (as such term is defined
in the Convertible Notes) and Early Put Warrant Shares issuable upon exercise at
the Exercise Price (as such term is defined in the Early Put Warrant) (such
deficit in the number of shares is referred to herein as the "Deficit Shares"),
then the Company (i) shall immediately amend such Registration Statement (or
file a new Registration Statement) to cover the Deficit Shares (such amended or
new Registration Statement is referred to herein as a "Deficit Shares
Registration Statement") and (ii) shall pay to the Investor in immediately
available funds into an account designated by the Investor an amount equal to
one and a half percent (1.5%) of A + B, where A is the product of (x) the number
of Deficit Shares related to the Early Put Warrant Shares multiplied by (y) the
Trade Price of the Common Stock on the applicable Effective Date, and B is the
outstanding and unconverted amount of the Convertible Notes, for each calendar
month and for each portion of a calendar month, pro rata, during the period from
the Effective Date of the applicable Registration Statement to the Effective
Date of the applicable Deficit Shares Registration Statement.
f. Liquidated Damages. The Company and the Investor hereby
acknowledge and agree that the sums payable under subsections 1.1(c), 1.1(d) and
1.1(e) hereof 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 estimate precisely, (ii) the amounts specified
in such subsections 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 Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor 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 effect the
registration of the Registrable Securities in accordance with the intended
methods of disposition thereof as furnished to the Company by any proposed
seller of such Registrable Securities. 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 (i) prepare and file with the SEC the
Registration Statement(s) covering the shares as described in subsection 1.1(a)
above; (ii) use its best efforts to cause such filed Registration Statement(s)
to become and remain effective (pursuant to Rule 415 under the Securities Act or
otherwise) for the period prescribed by Section 1.1(b); (iii) prepare and file
with the SEC such amendments and supplements to each Registration Statement and
the prospectus used in connection therewith as may be necessary to keep each
Registration Statement effective for the time period prescribed by Section
1.1(b); and (iv) comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by each Registration Statement
during such period in accordance with the intended methods of disposition by the
Investor set forth in each Registration Statement.
b. The Company shall file all necessary amendments to each
Registration Statement in order to effectuate the purpose of this Agreement, the
Securities Purchase Agreement, the Convertible Notes and the Warrants.
c. Five (5) Trading Days prior to the date the Company intends to
file each 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 Investor
and one firm of counsel representing the Investor, 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 and comment by the Investor and such counsel; provided, however, that if
the Investor or counsel to the Investor shall not within three (3) Trading Days
following receipt of such Registration Statement deliver written comments
regarding such Registration Statement to the Company, the applicable time
periods set forth in Sections 1.1(a) and 1.1(b) shall be extended by one Trading
Day for each Trading Day on which the Investor or counsel to the Investor fails
to deliver such written comments to the Company following such initial three (3)
Trading Day period. Thereafter, the Company shall deliver to the Investor and
such 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
d. The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each broker as directed by the Investor such
number of conformed copies of such Registration Statement and of each amendment
and supplement thereto (in each case including all exhibits and documents
incorporated by reference), such number of copies of the prospectus contained in
such Registration Statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 promulgated
under the Securities Act relating to the Registrable Securities, and such other
documents, as may be reasonably requested to facilitate the disposition of the
Registrable Securities.
e. After the filing of each 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 commercially reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
f. The Company shall use its best efforts to (i) register or qualify
the 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 the 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, however,
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 (f), subject itself to taxation in any such jurisdiction, or consent
or subject itself to general service of process in any such jurisdiction.
g. The Company shall immediately notify the Investor, but in no
event later than two (2) business days by facsimile and by overnight courier,
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 a 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 such 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 a 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; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such supplement or amendment to the related prospectus.
h. 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).
i. 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, concerning any Registration
Statement, and, except during a Blackout Period, 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 any Registration Statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless 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, however, that prior to any disclosure or release pursuant to the
preceding clause, 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 that 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, if material non-public
information, the Investor shall not while in possession of such information
engage in 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.
j. 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, the Company shall deliver to the Investor a signed counterpart,
addressed to the Investor, of (1) an opinion or opinions of counsel to the
Company and (2) 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 of comfort letters, as the case may
be, as the Investor therefor reasonably requests.
k. 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.
l. The Company shall appoint a transfer agent and registrar for all
of the class that includes the Registrable Securities covered by a Registration
Statement not later than the effective date of a Registration Statement.
m. The Company may require the Investor to furnish promptly in
writing to the Company such information as may be legally required in connection
with any 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 any
registration within ten (10) Trading Days after receiving such written request
and the Company shall not be responsible for any delays in obtaining or
maintaining the effectiveness of a Registration Statement caused by the
Investor's failure to timely provide such information. Each seller of
Registrable Securities shall notify the Company as promptly as practicable of
any inaccuracy or change in information previously furnished by such seller to
the Company or of the occurrence of any event, in either case as a result of
which any prospectus relating to the Registrable Securities contains or would
contain an untrue statement of a material fact regarding such seller or its
intended method of disposition of such Registrable Securities or omits to state
any material fact regarding such seller or such seller's intended method of
disposition of such Registrable Securities 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 promptly furnish to the Company
any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such seller or the disposition of such Registrable Securities,
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
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 required hereby), (iii) all of the Company's 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 by the Company 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(j) 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 purchased at the
discretion of the Company 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 holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
Section 2.3. BLACKOUT PERIOD. Investor agrees by acquisition of
Registrable Securities that, upon receipt of written notice from the Company of
the occurrence of any event of the kind described in Section 2.1(g)(iv), for a
period not to exceed 120 days (a "Blackout Period") the Investor shall forthwith
discontinue the Investor's offer of the Registrable Securities pursuant to the
Registration Statement relating to such Registrable Securities until the
Investor shall have received copies of the supplemented or amended prospectus
contemplated by Section 2.1(g)(iv) and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies other than
permanent file copies then in the Investor's possession, of the prospectus
relating to such Registrable Securities at the time of receipt of such notice.
In the event that any Investor uses a prospectus in connection with the offering
and sale of any of the Registrable Securities covered by such prospectus, such
Investor will use only the latest version of such prospectus provided by the
Company to the Investor.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Investor, its partners, affiliates, officers,
directors, employees and duly authorized agents, and each Person or entity, if
any, who controls the Investor 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 "Investor Controlling Persons"),
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, any and all reasonable attorneys' fees
and disbursements and costs and expenses of investigating and defending any such
claim and any and all amounts paid in settlement of, any action, suit or
proceeding between any of the indemnified parties and any indemnifying parties
or between any indemnified party and any third party, or otherwise, or any claim
asserted) (collectively, "Damages"), joint or several, and any action or
proceeding in respect thereof to which the Investor, its partners, affiliates,
officers, directors, employees and duly authorized agents, and any Investor
Controlling Person, may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, as and when incurred, insofar as such Damages (or actions or
proceedings in respect thereof) (i) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, documents filed under the Exchange Act and deemed to be
incorporated by reference into any Registration Statement, application or other
document executed by or on behalf other Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Registrable Securities under the securities or blue sky laws thereof
or filed with the SEC, amendment or supplement relating to the Registrable
Securities or (ii) arise 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, and shall reimburse the
Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, and each such Investor Controlling Person, for any legal and
other expenses reasonably incurred by the Investor, its partners, affiliates,
officers, directors, employees and duly authorized agents, or any such Investor
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 extent that any such Damages arise
out of the Investor's failure to send or give a copy of the final prospectus or
supplement at or prior to the written confirmation of the sale of Registrable
Securities to the persons asserting an untrue statement or alleged untrue
statement or omission or alleged omission if such statement or omission was
corrected in such final prospectus or supplement, and provided that the Investor
had been obligated under applicable law to deliver such final prospectus or
supplement to such person; provided, further, that the Company shall not be
liable to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, or any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Investor or
any other person who participates as a seller or as an underwriter in the
offering or sale of such securities, in either case, in any questionnaire or
other request by the Company, or otherwise specifically stating that it is for
use in the preparation thereof.
Section 3.2. INDEMNIFICATION BY THE INVESTOR. The Investor agrees to
indemnify and hold harmless the Company, its partners, affiliates, officers,
directors, employees and duly authorized agents, and each Person 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, together with the partners, Affiliates,
officers, directors, employees and duly authorized agents of such controlling
Person or entity (collectively, the "Company Controlling Persons"), from and
against any Damages, joint or several, and any action or proceeding in respect
thereof to which the Company, its partners, affiliates, officers, directors,
employees and duly authorized agents, and any Company Controlling Person, may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, as and when
incurred, insofar as such Damages (or other actions or proceedings in respect
thereof) arise out of an untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement, or any
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by the Investor in any questionnaire or other request by the
Company, or otherwise specifically stating that it is for use in the preparation
thereof; provided, however, that such written information furnished to the
Company by the Investor is not materially altered by the Company.
Section 3.3. METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party (as defined below) under Sections 3.1
or 3.2 shall be asserted and resolved as follows:
a. In the event any claim or demand in respect of which any person
claiming indemnification under any provision of Section 3.1 or Section 3.2 (an
"Indemnified Party") might seek indemnity under Section 3.1 or Section 3.2, as
the case may be, is asserted against or sought to be collected from such
Indemnified Party by a person other than the Company, the Investor or any
affiliate of the Company (a "Third Party Claim"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of Section 3.1 or Section 3.2, as the case may be, against any person
(the "Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party shall notify the
Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether
the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under Section 3.1 or Section 3.2, as the case may be, and
whether the Indemnifying Party desires, at its sole cost and expense, to defend
the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this Section
3.3(a), then the Indemnifying Party shall have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at the sole cost and expense
of the Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
other than the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party shall not be indemnified in
full pursuant to Section 3.1 or Section 3.2, as the case may be). The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party may, at the sole cost and expense of the Indemnified Party, at
any time prior to the Indemnifying Party's delivery of the notice referred to in
the first sentence of this clause (i), file any motion, answer or other
pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests; and provided
further, that if requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third Party Claim that
the Indemnifying Party elects to contest. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this clause (i), and except as
provided in the preceding sentence, the Indemnified Party shall bear its own
costs and expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the defense or
settlement of a Third Party Claim at any time if it irrevocably waives its right
to indemnity under Section 3.1 or Section 3.2, as the case may be, with respect
to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to defend
the Third Party Claim pursuant to Section 3.3(a), or if the Indemnifying Party
gives such notice but fails to prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Dispute Period, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings shall be
prosecuted by the Indemnified Party in a reasonable manner and in good faith or
will be settled at the discretion of the Indemnified Party (with the consent of
the Indemnifying Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions of
this clause (ii), if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its liability or
the amount of its liability hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this clause (ii) or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this clause (ii), and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability or the amount of its liability to the
Indemnified Party with respect to the Third Party Claim under Section 3.1 or
Section 3.2, as the case may be, or fails to notify the Indemnified Party within
the Dispute Period whether the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party with respect to such Third
Party Claim, the Damages in the amount specified in the Claim Notice shall be
conclusively deemed a liability of the Indemnifying Party under Section 3.1 or
Section 3.2, as the case may be, and the Indemnifying Party shall pay the amount
of such Damages to the Indemnified Party on demand. If the Indemnifying Party
has timely disputed its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party shall proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the period of thirty (30) calendar days immediately
following the Dispute Period, such dispute shall be resolved by arbitration in
accordance with Section 3.4.
b. In the event any Indemnified Party should have a claim under
Section 3.1 or Section 3.2, as the case may be, against the Indemnifying Party
that does not involve a Third Party Claim, the Indemnified Party shall deliver a
written notification of a claim for indemnity under Section 3.1 or Section 3.2,
as the case may be, specifying the nature of and basis for such claim, together
with the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an "Indemnity Notice") with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the Damages in the
amount specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Section 3.1 or Section 3.2, as the case may be,
and the Indemnifying Party shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying Party has timely disputed its
liability or the amount of its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the period of thirty (30) calendar days immediately following the Dispute
Period, such dispute shall be resolved by arbitration in accordance with Section
3.4.
Section 3.4. ARBITRATION. Any dispute under this Agreement (including,
without limitation, pursuant Section 3.3), the Convertible Notes or the Warrants
shall be submitted to arbitration and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (the "Board of Arbitration") selected as hereinafter provided. Each of
the Company, on the one hand, and the Investor and/or any other Indemnified
Party, on the other hand, shall select one (1) member and the third member shall
be selected by mutual agreement of the other members, or if the other members
fail to reach agreement on a third member within twenty (20) days after their
selection, such third member shall thereafter be selected by the American
Arbitration Association upon application made to it for such purpose by the
other members. The Board of Arbitration shall meet on consecutive business days
in New York City, New York or such other place as a majority of the members of
the Board of Arbitration determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration). In connection with rendering its decision, the Board of
Arbitration shall adopt and follow such rules and procedures as a majority of
the members of the Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Company and the Investor and/or any other Indemnified Party.
Any decision made by the Board of Arbitration (either prior to or after the
expiration of such thirty (30) calendar day period) shall be final, binding and
conclusive on the Company and the Investor and/or any other Indemnified Party
and entitled to be enforced to the fullest extent permitted by law and entered
in any court of competent jurisdiction. The non-prevailing party to any
arbitration shall bear the expense of both parties in relation thereto,
including but not limited to the parties' attorneys' fees, if any, and the
expenses and fees of the Board of Arbitration.
Section 3.5. OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company 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 3.6. CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless 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 as between the Company on the one
hand and the Investor or seller on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Investor or
seller 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 or seller 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 3.6 were determined by pro rata
allocation or by any other method of allocation that does not take account of
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 3.6, the Investor or seller 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 Investor or seller were sold to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
the Investor or seller 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. OUTSTANDING REGISTRATION RIGHTS. The Company represents and
warrants to the Investor that, except as disclosed in Schedule 4.1 attached
hereto, 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.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities.
Notwithstanding the foregoing, paragraphs (c) and (d) 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. If the Company is required to file reports under
the Exchange Act, the Company will file in a timely manner, information,
documents and reports in compliance with the Securities Act and the Exchange Act
and will, at its expense, promptly take such further action as holders of
Registrable Securities may reasonably request to enable such holders of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 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, at its
expense, forthwith upon the written request of any holder of Registrable
Securities who intends to make a sale under Rule 144, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
financial officer, as to whether it has complied with such requirements. This
Section 4.3 shall terminate at the same time as the registration rights as
provided in Section 4.2.
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
both 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 and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement and agree
to be bound by the provisions of this Agreement as a condition to such holder's
claim to any rights hereunder. This Agreement, together with the Securities
Purchase Agreement, the Convertible Notes, the Warrants and the exhibits and
schedules to such agreements together 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) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (ii) delivered by reputable air courier service with
charges prepaid, or (iii) 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 and facsimile numbers for such communications shall be:
If to the Company:
FiberCore, Inc.
000 Xxxxxxxxx Xx.
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xx. Xxxx X. Xxxxxx/Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Cadwalader Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
00, xx Xxxxx-Xxxxx
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Attention: Xxx Xxxx/Maxi Brezzi
Telephone: x00 00 000 00 00
Facsimile: x00 00 000 00 00
with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq./Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 4.8 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 construed under the
laws of the State of New York.
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. ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 4.14. 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 may be inadequate
compensation for any loss.
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.
Crescent International Ltd.
By:
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Name:
Title:
FiberCore, Inc.
By:
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Name:
Title:
