EXHIBIT 10.7
TECHNOLOGY HORIZONS CORP.
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
REGISTRATION RIGHTS AGREEMENT
June 3, 1998
To: Xxxxxx X. Xxxxx
Reference is made to the Assignment Agreement between you and
Technology Horizons Corp. (the "Company") dated June 3, 1998 (the "Assignment
Agreement"). Pursuant to the Assignment Agreement, you (the "Holder"), have
received 363,636 shares of Common Stock of the Company ("Common Stock"), as
set forth in the Assignment Agreement. This letter sets forth the agreement
of the Company to register the shares of Common Stock (collectively, the
"Registrable Securities") under the Securities Act (as defined below) and
your agreement with respect to several matters as set forth below if you
register the Registrable Securities.
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"COMMISSION " means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act (as defined
below).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"REGISTRATION EXPENSES" means, for purposes of Section 5 below, all
expenses incurred by the Company in complying with this Agreement, including,
without limitation, all registration and filing fees, exchange listing fees,
printing expenses, fees and disbursements of counsel for the Company, state
securities or Blue Sky fees and expenses for the State of New York, and the
expense of any special audits incident to or required by any such
registration, but excluding underwriting discounts, selling commissions and
the fees and expenses of the Holder's own counsel.
"REGISTRABLE SECURITIES" means: (i) subject to the provisions of
this Agreement, 40% of the Shares of Common Stock issued to the Holder
pursuant to the Assignment Agreement; and (ii) any other securities of the
Company issued in respect of the foregoing (because of stock splits, stock
dividends, reclassifications, recapitalizations, or similar events).
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of
the Company (other than a registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may from time to time, be in effect.
2. SECURITIES NOT REGISTERED.
The Holder agrees that, unless the Registrable Securities are
registered, the Holder will not dispose of the Registrable Securities or any
interest therein, unless and until the Registrable Securities have been
validly registered under the Securities Act or the Company has determined
that the intended disposition does not violate the Securities Act or the
rules and regulations of the Commission thereunder (the Company may
reasonably rely on an opinion of its counsel in making such determination).
3. REGISTRATION
3.1 (a) On one occasion, the Company shall, as soon as
practicable, (but in any event within six (6) months after the date hereof),
file a Registration Statement pursuant to the Securities Act, in order that
the Registrable Securities may be sold under the Securities Act as Promptly
as practicable thereafter, and the Company will use its commercially
reasonable best efforts to cause such registration to become effective,
provided that the Holder shall furnish the Company with appropriate
information (relating to the intentions of the Holder), in connection
therewith as the Company shall reasonably request in writing. The Company
shall use its best efforts to keep the registration statement current for a
period of six months or until all Registrable Securities registered
thereunder have been sold, which ever is sooner,
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(b) The Company shall be entitled once to postpone for a
reasonable period of time (but not to exceed 90 days) the filing of any
registration statement required to be prepared and filed by it pursuant to
this Section 3.1 if a nationally recognized investment bank shall advise the
Company in writing that, in its opinion, the Company is unable to effect an
underwritten offering due to then currently prevailing market conditions or
due to circumstances affecting the financial condition, business or
operations of the Company. Promptly (but in no event more than 30 days) after
receipt of such opinion, the Company shall give the Holder written notice of
its determination to postpone the filing of any registration statement, and
an approximation of the anticipated delay.
(c) The rights of Holder to registration pursuant to
Section 3.1(a) are subject to the following limitations: (i) the Company
shall not be obligated to effect a registration within six months after the
effective date of any other registration of securities (other than pursuant
to a registration on Form S-4 or S-8 or any successor or similar form which
is then in effect), and (ii) in no event shall the Company be required to
effect more than one registration pursuant to this Section 3.1.
3.2 The Holder's rights under Section 3.1 shall be subject of
the limitation that, in the event that the Company files a Registration
Statement for an underwritten public offering the registration of the
Registrable Securities shall be upon the condition that:
(a) if requested by managing underwriter as a condition of
the offering, they be sold through the underwriters on the same terms and
conditions as are applicable to the Company or all other selling stockholder
of the Company; or
(b) if such condition is imposed by the managing
underwriter, and the Holder does not wish to sell the Registrable Securities
upon such terms and conditions, the Holder will agree not to transfer or
otherwise dispose of any Registrable Securities for a period of time from the
effective date of the Registration Statement (not to exceed one hundred
eighty (180) days) specified by the managing underwriter.
3.3. If a registration of the Company's shares involves an
offering by or through underwriters, the Company, except as otherwise
provided herein, shall not be required to include Registrable Securities
therein if and to the extent the underwriter managing the offering reasonably
believes in good faith and advises the Company in writing that such inclusion
would materially and
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adversely affect such offering; provided that any such reduction or
elimination shall be PRO RATA to all other selling stockholders participating
in such offering, in proportion to the respective number of shares they have
requested to be registered.
3.4. In the event the Company receives private financing in an
amount exceeding $1,000,000 and as a condition of such financing officers,
directors and greater than 5% shareholders arc required to agree not to sell,
assign, or otherwise transfer any shares (a "lock-up Agreement"), the Holder
agrees to enter into a lock-up agreement on the same terms as such other
holders.
3.5. The registration rights granted hereunder shall expire on
earlier of one (1) year from the date the Company has a class of equity
securities registered under Section 12(b) or 12(g) of the Exchange Act or
June, 20, 2000.
3.6. Notwithstanding the provisions of Sections 3 and 4 hereof;
(a) the Company shall have the right to delay or suspend the preparation and
filing of a registration statement for up to 90 days if in the reasonable and
good faith judgment of a majority of the Directors on the Board of Directors
of the Company such preparation or filing would impede, delay or interfere in
any material fashion with any material financing or material business
transaction actively being pursued by the Company at time of receipt of the
request for such registration or with the ability of the Company to conduct
its affairs or would have a material adverse effect on the business,
properties or financial condition of the Company; PROVIDED, HOWEVER, that the
Company shall use its commercially reasonable best efforts to cause the
registration statement to become effective within 180 days, and shall only be
entitled to utilize this clause once in any 12 month period; and (b) if, the
Company is working on an underwritten public offering of Common Stock (a
"Company Initiated Public Offering") and is advised by the managing
underwriter(s) in writing that such offering would in its or their opinion be
adversely affected by such filing, then the Company shall have, the right,
upon notice to the Holder requesting registration within 14 days after
receipt of such request, to delay or suspend the filing of the registration
statement requested by such Holder; PROVIDED that the Company shall use its
best efforts to cause any such registration statement requested by the
Holders to become effective within 180 days (or, if required by the
underwriters for the Company Initiated Public Offering, within 270 days)
after the date on which all securities covered by (the Company Public
Offering have been sold, and that the Company shall use its best efforts to
include any Registrable Securities that are the subject of a notice delivered
by Holders under Section 3 in the registration statement for such Company
Initiated Public Offering.
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4. REGISTRATION PROCEDURES.
If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any of the
Registrable Securities under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause that
Registration Statement to become and remain effective;
(b) as expeditiously as possible, prepare and file with the
commission any amendments and supplements to the Registration Statement and
the prospectus included in the Registration Statement as may be necessary to
keep the Registration Statement effective for a period of not less than nine
months from the effective date;
(c) as expeditiously as possible, use its best efforts to
register or qualify the Registrable Securities covered by the Registration
Statement under the securities or Blue Sky laws of New York, and do any and
all other acts and things that may be necessary or desirable to enable the
Holders to consummate the public sale or other disposition in such states of
the Registrable Securities owned by the Holder, and
(d) as expeditiously as possible, use its best efforts to
register or qualify the Registrable Securities covered by the Registration
Statement under the securities or Blue Sky laws of New York, and do any and
all other acts and things that may be necessary or desirable to enable the
Holders to consummate the public sale or other disposition in such states of
the Registrable Securities owned by the Holder; PROVIDED, HOWEVER, that the
Company shall not be required in connection with this Section 4(d) to qualify
as a foreign corporation or execute a general consent to service of process
in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to
the Holder and, after having done so, the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly
notify the Holder and, if requested, the Holder shall immediately cease
making offers of Registrable Securities and return all prospectuses to the
Company. The Company shall promptly provide the Holder with revised
prospectuses and, following receipt of the revised prospectuses, the Holder
shall be free to resume making offers of the Registrable Securities.
5. ALLOCATION EXPENSES.
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The Company will pay all Registration Expenses of all Registration
Statements under this Agreement.
6. INDEMNIFICATION.
In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
will indemnify and hold harmless the seller of such Registrable Securities,
each underwriter of such Registrable Securities, and each other person, if
any, who controls such seller or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as much 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 Registration Statement under which such
Registrable Securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact, required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such
seller, underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by such seller, underwriter or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; 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 any untrue statement or omission
made in such Registration Statement, preliminary prospectus or prospectus, or
any such amendment or supplement in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
seller, underwriter or controlling person specifically for use in the
preparation thereof.
In the event of any registration of any of the Registrable Securities
under the Securities Act pursuant to this Agreement, each seller of Registrable
Securities, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors, and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers underwriters or controlling person may become subject
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under the Securities Act, Exchange Act, state securities or Blue Sky laws 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 a material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in
the Registration Statement, or any amendment or supplement to the
Registration Statement, or arise out of or are based upon any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of such seller,
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; PROVIDE, HOWEVER, that the
obligations of such seller hereunder shall be limited to an amount equal to
the proceeds to each seller of Registrable Securities sold as contemplated
herein.
Each party entitled to Indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit, the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; PROVIDED, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified party (whose approval shall
not be unreasonably withheld); and, PROVIDED, FURTHER, that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement. The indemnified
Part may participate in such defense at such party's expense; PROVIDED,
HOWEVER, that the Indemnifying Party shall pay such expense if representation
of such Indemnified Party by the counsel retained by the Indemnifying Party
would be inappropriate due to actual or potential differing interests between
the Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include
as, an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent
of the Indemnifying Party.
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7. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING.
In the event that Registrable Securities are sold pursuant to a
Registration Statement in an underwritten offering pursuant to Section 2 or
3, the company agrees to enter into an underwriting agreement containing
customary representations and warranties with respect to the business and
operations of an issuer of the securities being registered and customary
covenants and agreements to be performed by such issuer, including, without
limitation, customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
8. INFORMATION BY THE HOLDER.
The Holder 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 Agreement.
9. SELECTION OF UNDERWRITER.
In the case of any registration effected pursuant to this Agreement,
the Company shall have the exclusive right to designate the managing
underwriter in any underwritten offering.
10. SUCCESSOR AND ASSIGNS.
The provisions of this Agreement shall be binding upon, and inure to
the benefit of, the respective successors, assigns, heirs, executors and
administrators of the parties hereto.
11. FURTHER ASSURANCES.
From and after the date hereof, all persons subject to or bound by
this Agreement shall from time to time, at the request of any such other
person and without further consideration, do execute and deliver, or cause to
be done, executed and delivered, all such further acts, things and
instruments as may reasonably be requested or required more effectively to
evidence and give effect to the provisions, intent and purposes of this
Agreement (including, without limitation, certificates to the effect that
this Agreement continues operative and as to any defaults hereunder or
modifications hereof).
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12. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing, shall be addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and shall be either (1) delivered by hand, (2) sent by reputable
overnight courier by next day, priority, or (3) sent by registered or
certified mail, return receipt requested, postage prepaid,
If to the Holder: Xxxxxx X. Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx. Xxx Xxxx 00000
If to the Company: Technology Horizons Corp,
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
With a copy in each
case to; Xxxxxxxx, Mencher, Klosowski, Xxxxxxx & Scope, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (1) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(2) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (3) if sent by registered
or certified mail, on the fifth business day following the day such mailing
is made.
13. CERTAIN OTHER AGREEMENTS.
In the event Registrable Securities are included in a Registration
Statement, you agree:
(a) to offer the Registrable Securities only in the manner set
forth on the cover page of the Prospectus included in the Registration
Statement;
(b) not to effect any transaction for the purpose of
stabilizing the price of the Registrable Securities offered or any securities
into which the Registrable
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Securities are convertible;
(c) to supply to any broker to whom you offer registered
securities a copy of the Prospectus;
(d) to promptly report all sales made to the Company; and
(e) to comply with the provisions of Rule lOb-6 under the
Exchange Act.
14. APPLICABLE LAW.
This Agreement shall be governed and construed under the laws of the
State of Delaware, without regard to any choice or conflicts of law
principles thereof.
15. PRIORITY.
The registration of the Registrable Securities pursuant to this
Agreement will occur prior to or pari passu with, and not subsequent to, the
registration of any shares of Common Stock presently held by any holder of 5%
or more of the stock of the Company.
Please acknowledge your consent to the terms of this Agreement by
signing and returning a copy of this Agreement to the Company.
TECHNOLOGY HORIZONS CORP.
By:
-------------------------------
Accepted and agreed this 3rd
day of June 1998
-------------------------
Holder/Purchaser
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