Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June 18,
2001, is made and entered into by and between International FiberCom, Inc., an
Arizona corporation (the "COMPANY"), and Crescent International Ltd., an entity
organized and existing under the laws of Bermuda (the "INVESTOR").
WHEREAS, the Company and the Investor have entered into that certain Stock
Purchase Agreement, dated as of June 18, 2001 (the "STOCK PURCHASE AGREEMENT"),
pursuant to which the Company will issue, from time to time, to the Investor and
the Investor shall purchase up to $20,000,000 worth of securities of the Company
including (i) common stock, no par value per share, of the Company (the "COMMON
STOCK") and (ii) 100,000 shares of series D convertible preferred stock, par
value $0.01 per share, of the Company (the "PREFERRED STOCK");
WHEREAS, pursuant to the terms of and in partial consideration for the
Investor entering into the Stock Purchase Agreement, the Company is required to
issue to the Investor an incentive warrant, exercisable from time to time within
five years following the date of issuance (the "INCENTIVE WARRANT") for the
purchase of a number of shares of Common Stock at a price to be determined as
described in such Incentive Warrant;
WHEREAS, pursuant to the terms of and in partial consideration for the
Investor entering into the Stock Purchase Agreement, the Company may be required
to issue protective warrants to the Investor, each of which may become
exercisable from time to time as described in such warrants and in the Stock
Purchase Agreement (collectively, the "PROTECTIVE WARRANTS" and together with
the Incentive Warrant and any new or replacement warrants issued in accordance
with the terms of the Protective Warrants and the Incentive Warrant, the
"Warrants") for the purchase of a number of shares of Common Stock at a price to
be determined as described in each such Protective Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor's agreement to enter into the Stock 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, and in
the Stock 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 Stock Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
SECTION 1.1. REGISTRATION STATEMENTS.
a. FILING OF REGISTRATION STATEMENTS. The Company shall register for
resale all Commitment Shares issued or issuable to the Investor pursuant to the
Stock 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 effect such registration in the manner provided below:
(i) FIRST REGISTRATION STATEMENT. On or before the end of the 20
calendar day period immediately following the First Sale, the Company shall file
with the SEC a registration statement (the "FIRST REGISTRATION STATEMENT") on
Form S-3 if such form is then available to the Company and, if not, 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
all Conversion Shares, and the Incentive Warrant Shares, in accordance with the
intended method of distribution of such securities. The aggregate number of
shares of Common Stock to be registered under the First Registration Statement
shall be 5,500,000;
(ii) SUBSEQUENT REGISTRATION STATEMENTS.
(1) If the Company shall, pursuant to any Subsequent Sale,
require the Investor to purchase shares of Common Stock not previously
registered and not covered by an effective Registration Statement filed with the
SEC which is not a Failed Registration Statement (as hereinafter defined) (an
"UNREGISTERED SALE"), then on or before the end of a 20 calendar day period
immediately following each Closing Date relating to each such Subsequent Sale,
the Company shall file with the SEC a registration statement (each a "SUBSEQUENT
REGISTRATION STATEMENT," and together with the First Registration Statement and
any other registration statement covering Registrable Securities or otherwise
required to be filed by the Company with the SEC as provided in this Agreement,
the "REGISTRATION STATEMENTS" or each, a "REGISTRATION STATEMENT") on Form S-3
if such form is then available to the Company and, if not, 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 Subsequent Sale Shares purchased by the Investor and any Conversion Shares
and Warrant Shares that have not been previously registered, in accordance with
the intended method of distribution of such securities. The aggregate number of
shares to be registered under each Subsequent Registration Statement shall be
equal to (w) the number of Subsequent Sale Shares purchased by the Investor on
the applicable Closing Date, plus (x) a number of Protective Warrant Shares
equal to the number of Subsequent Sale Shares purchased by the Investor on the
applicable Closing Date plus (y) any Conversion Shares not previously registered
plus (z) any Warrant Shares not previously registered;
(2) Prior to any Subsequent Sale which is not an
Unregistered Sale, the Company shall file with the SEC a Registration Statement
on Form S-3 if such form is then available to the Company and, if not, on such
form promulgated by the SEC for which the Company qualifies, that counsel for
2
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, in accordance with the
intended method of distribution of such securities. The aggregate number of
shares to be registered under such Registration Statement shall be determined by
the Company.
b. EFFECTIVENESS OF THE REGISTRATION STATEMENTS. The following
conditions for effectiveness shall apply to the Registration Statements required
to be filed by the Company with the SEC pursuant to paragraph (a) above, without
limiting the Company's obligation to file such Registration Statements. The
Company shall use its best efforts: (i) to have the First Registration Statement
declared effective by the SEC in no event later than 90 calendar days after the
Closing Date relating to the First Sale, and (ii) to have each Subsequent
Registration Statement declared effective by the SEC in no event later than 60
calendar days after the Closing Date relating to each Unregistered Sale, and in
any event prior to any further Subsequent Sales. Upon the written request of the
Company, the foregoing 90 and 60 calendar day periods will each be extended for
one additional period of 15 calendar days; any further extensions will be
subject to the mutual agreement of the Company and the Investor. The Company
shall ensure that each Registration Statement and any amendments thereto remain
in effect until the later of (1) a period ending 1 day following the date of
expiration of the Incentive Warrant Exercise Period (as such term is defined in
the Incentive Warrant) if the Incentive Warrant has not been exercised in full
and if such Registration Statement covers the Warrant Shares issuable under such
Incentive Warrant, and (2) the date the Registrable Securities covered by such
Registration Statement and issued or issuable to the Investor pursuant to the
Stock Purchase Agreement may be sold by the Investor without registration and
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act or have otherwise
been sold; 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.
c. FAILURE TO OBTAIN OR MAINTAIN EFFECTIVENESS OF REGISTRATION
STATEMENTS.
(i) 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 for the
time period set forth in Section 1.1(b) (an "INEFFECTIVE REGISTRATION STATEMENT"
together with a Tardy Registration Statement, a "FAILED REGISTRATION STATEMENT")
or upon the occurrence of any event of the kind described in Section 2.1(g)(iv)
hereof (unless the Registrable Securities covered by such Registration Statement
shall have become freely tradable pursuant to Rule 144(k) of the Securities Act
or have been otherwise sold), then, in either event an amount equal to two
percent (2.0%) of the aggregate Purchase Price of all of the Registrable
Securities covered by any such Failed Registration Statement then held by the
Investor for each calendar month and for each portion of a calendar month, PRO
RATA, (the "FAILED REGISTRATION STATEMENT FEE") during any period of such
ineffectiveness or, in the case of the occurrence of an event of the kind
described in Section 2.1(g)(iv) hereof, until the Investor shall have received
copies of the supplemental or amended prospectus contemplated by Section
2.1(g)(iv) hereof (an "INEFFECTIVE PERIOD"), shall become due and payable to
Investor.
3
(ii) If Failed Registration Statement Fees accrue with respect to
any Ineffective Registration Statement, payment of such Failed Registration
Statement Fees shall be made on the first Trading Day after the earlier to occur
of (1) the expiration of the applicable Ineffective Period and (2) the last day
of each calendar month during an Ineffective Period.
d. RESTRICTED PERIOD. While in possession of material non-public
information received from the Company (a "RESTRICTED PERIOD"), the Investor
shall not dispose of any Registrable Securities until such information is
disclosed to the public; provided that, the liquidated damages described in
Section 1.1(c) hereof shall not apply until and unless such Restricted Period
exceeds 30 days during any such 360 day period and; provided further that, if
such Restricted Period exceeds 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 number of
Protective Warrant Shares included in the First Registration Statement or each
Subsequent Registration Statement is less than the total number of Protective
Warrant Shares issuable upon exercise at the Exercise Price (as such term is
defined in each Protective Warrant) (such deficit in the number of shares is
referred to herein as the "DEFICIT SHARES"), then (i) the Company 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) the Company shall pay to the Investor in immediately available funds
into an account designated by the Investor an amount equal to 2.0% of the
product of (x) the number of Deficit Shares multiplied by (y) the Closing Trade
Price of the Common Stock on the applicable Effective Date, 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 prior to the filing of a Registration Statement therefor.
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:
4
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
Stock Purchase Agreement, and the Warrants.
c. Five Trading Days prior to filing 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, and thereafter 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
5
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 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 or 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 promptly shall 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, at its
option, may 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
government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, concerning any Registration
Statement, and also will 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
6
be confidential and that it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; PROVIDED, however, that prior to any disclosure or release
pursuant to clause (ii), the Inspectors shall provide the Company with prompt
notice of any such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors' obligation not to
disclose such Records; and, PROVIDED, FURTHER, that if failing the entry of a
protective order or the waiver by the Company permitting the disclosure or
release of such Records, the Inspectors, upon advice of counsel, are compelled
to disclose such Records, the Inspectors may disclose that portion of the
Records 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 upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, it
will 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 otherwise shall 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 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, Inc.
(the "NASD"). The Investor agrees to provide such information requested in
connection with any registration within ten 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
7
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.
a. 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 NASD,
(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, subject to paragraph (b) below, the Investor 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.
b. The Company shall pay all reasonable fees and expenses of counsel
for the Investor incurred in connection with the review, and assistance in
preparation, of each Registration Statement up to $10,000 per Registration
Statement, unless a greater amount is required due to the nature of the review
performed by Investor's counsel or the extent of assistance provided by
Investor's counsel (an estimate of such greater fees and expenses of such firm
of counsel to the Investor shall be provided to the Company prior to the
undertaking of such counsel's additional review or assistance).
8
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
SECTION 3.1. INDEMNIFICATION
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, becomes subject to 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 of the 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 at
or prior to the written confirmation of the sale of Registrable Securities to
such person 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, and PROVIDED that such written information furnished to the Company by
9
the Investor, or any other person who participates as a seller or as an
underwriter in the offering or sale of such securities, is not materially
altered by the Company.
The Investor agrees to indemnify and hold harmless the Company, its
Affiliates, officers, directors, employees, and duly authorized agents from and
against any Damages, joint or several, and any action in respect thereof to
which the Company, its Affiliates, officers, directors, employees, and duly
authorized agents becomes subject to 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) 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. Notwithstanding the foregoing, the Investor shall in no event be
required to indemnify the Company for any amount in excess of the amount by
which the total price at which the Registrable Securities of the Investor were
sold to the public (less underwriting discounts and commissions) exceeds the
amount actually paid by the Investor under the Stock Purchase Agreement for such
Registrable Securities sold to the public.
a. All claims for indemnification shall be asserted and resolved as
set forth in Section 9.2 of the Stock Purchase Agreement.
SECTION 3.2. ARBITRATION. Any controversy, claim or dispute arising out of
or in connection with this Agreement, including any question regarding its
existence, validity, interpretation, breach, or termination, shall be referred
to and finally resolved in accordance with Section 9.3 of the Stock Purchase
Agreement.
SECTION 3.3. OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article III (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 3.4. 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.
10
The Company and the Investor agree that it would not be just and equitable
if contribution pursuant to this Section 3.4 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 3.4, 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. Except as set forth on
SCHEDULE 4.1 hereto, the Company represents and warrants to the Investor that
there is not in effect on the date hereof any agreement by the Company pursuant
to which any holders of securities of the Company have a right to cause the
Company to register or qualify such securities under the Securities Act or any
securities or blue sky laws of any jurisdiction. The Company hereby covenants
and agrees that until 270 calendar days after the Registration Statement has
been declared effective by the SEC it will not, without the prior written
consent of the Investor, enter into or amend 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 securities under the Securities Act or any
securities or blue sky laws of any jurisdiction; provided, however, that the
foregoing shall not apply to a Third Party (as such term is defined in the Stock
Purchase Agreement) for which the Investor has elected not to exercise its right
of first refusal pursuant to Section 6.12 of the Stock Purchase Agreement.
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 reasonably may request to enable such holders of Registrable
Securities to sell Registrable Securities without registration under the
11
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act ("RULE 144"), as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. If at
any time the Company is not required to file such reports, it will, 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 SEC
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 Stock Purchase
Agreement, 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.
12
SECTION 4.7. SEVERABILITY. 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 third 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:
International FiberCom, Inc.
0000 X. Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxx Xxxxxxx Xxxx LLP
Renaissance Xxx Xxxxxxxx
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxxxx X. Xxxxxxx III, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
13
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. 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 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.
14
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:
------------------------------------
Name:
Title:
INTERNATIONAL FIBERCOM, INC.
By:
------------------------------------
Name:
Title:
15
