Exhibit 10.21
WAVE SYSTEMS CORP.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
March 23, 1999 by and among (i) Wave Systems Corp., a Delaware corporation (the
"Company"), (ii) each person listed on Exhibit A attached hereto (collectively,
the "Initial Investors" and each individually, an "Initial Investor"), and (iii)
each person or entity that subsequently becomes a party to this Agreement
pursuant to, and in accordance with, the provisions of Section 11 hereof
(collectively, the "Investor Permitted Transferees" and each individually an
"Investor Permitted Transferee").
WHEREAS, the Company has agreed to issue and sell to the Initial
Investors, and the Initial Investors have agreed to purchase from the Company,
up to 3,000,000 shares (the "Purchased Shares") of the Company's Class A common
stock, $0.01 par value per share (the "Common Stock"), all upon the terms and
conditions set forth in that certain Securities Purchase Agreement, dated of
even date herewith, between the Company and the Initial Investors (the
"Securities Purchase Agreement"); and
WHEREAS, the terms of the Securities Purchase Agreement provide that it
shall be a condition precedent to the closing of the transactions thereunder,
for the Company and the Initial Investors to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below:
"Board" shall mean the board of directors of the Company.
"Closing" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
"Investors" shall mean, collectively, the Initial Investors and the
Investor Permitted Transferees; provided, however, that the term "Investors"
shall not include any of the Initial Investors or any of the Investor Permitted
Transferees that ceases to own or hold any Purchased Shares.
"Qualifying Holder" shall have the meaning ascribed thereto in Section
11 hereof.
"Registrable Shares" shall mean the Purchased Shares, provided,
however, such term shall not, after the Mandatory Registration Termination Date,
include any of the Purchased Shares of any Purchaser who can sell all of its
Purchased Shares under Rule 144 within the next 90 days.
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"Rule 144" shall mean Rule 144 promulgated under the Securities Act and
any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
all of the rules and regulations promulgated thereunder.
2. EFFECTIVENESS; TERMINATION. This Agreement shall become effective
and legally binding only if the Closing occurs. This Agreement shall terminate
and be of no further force or effect, automatically and without any action being
required of any party hereto therefor, upon the termination of the Securities
Purchase Agreement pursuant to Section 8 thereof.
3. MANDATORY REGISTRATION.
(a) As soon as possible and, in any event, within ten (10) business
days after the Closing, the Company will prepare and file with the SEC a
registration statement on Form S-1 for the purpose of registering under the
Securities Act all of the Registrable Shares for resale by, and for the account
of, the Investors as selling stockholders thereunder (the "Registration
Statement"). The Registration Statement shall permit the Investors to offer and
sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act, any or all of the Registrable Shares. The Company agrees to use its best
efforts to cause the Registration Statement to become effective as soon as
practicable following its filing. The Company shall be required to keep the
Registration Statement effective until such date that is the earlier of (i) the
date when all of the Registrable Shares registered thereunder shall have been
sold or (ii) the second anniversary of the Closing, subject to extension as set
forth below (such date is referred to herein as the "Mandatory Registration
Termination Date"). Thereafter, the Company shall be entitled to withdraw the
Registration Statement and the Investors shall have no further right to offer or
sell any of the Registrable Shares pursuant to the Registration Statement (or
any prospectus relating thereto). In the event the right of the selling
Investors to use the Registration Statement (and the prospectus relating
thereto) is delayed or suspended pursuant to Sections 4(c) or 10 hereof, the
Company shall be required to extend the Mandatory Registration Termination Date
beyond the second anniversary of the Closing by the same number of days as such
delay or Suspension Period (as defined in Section 10 hereof).
(b) The offer and sale of the Registrable Shares pursuant to the
Registration Statement shall not be underwritten.
(c) If the Registration Statement has not been filed with the SEC by
the tenth business day after the Closing Date under the Securities Purchase
Agreement (such tenth business day being the "Penalty Date"), then, on the fifth
business day after the Penalty Date, the Company will execute and deliver to
each Initial Investor a common stock purchase warrant of the Company (each such
warrant being an "Investor Warrant"). The Investor Warrant delivered to each
Initial Investor (I) shall entitle such Initial Investor to purchase that number
of shares of Class A Common Stock of the Company equal to the product of (x) the
number of business days after the Penalty Date (up to a maximum of four) on
which the Registration Statement is filed with the SEC, multiplied by (y) 1/8 of
one share, multiplied by (z) the total number of shares purchased by such
Initial Investor on the Closing Date, (ii) shall have an
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exercise price per share equal to the purchase price per share of Common Stock
under the Securities Purchase Agreement, (iii) shall not include any "cashless
exercise" provisions or anti-dilution protection, other than so-called
"structural" anti-dilution protection, (iv) shall expire on the fifth
anniversary after the Closing Date, and (v) shall otherwise contain customary
terms.
4. OBLIGATIONS OF THE COMPANY. In connection with the Company's
obligation under Section 3 hereof to file the Registration Statement with the
SEC and to use its best efforts to cause the Registration Statement to become
effective as soon as practicable, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all
Registrable Shares covered by the Registration Statement;
(b) Furnish to the selling Investors such number of copies of
a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents
(including, without limitation, prospectus amendments and supplements
as are prepared by the Company in accordance with Section 4(a) above)
as the selling Investors may reasonably request in order to facilitate
the disposition of such selling Investors' Registrable Shares;
(c) Notify the selling Investors, at any time when a
prospectus relating to the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in or relating to the
Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not
misleading; and, thereafter, the Company will promptly (and in any
event within 5 business days) prepare (and, when completed, give notice
to each selling Investor) a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the
statements therein not misleading; provided that upon such notification
by the Company, the selling Investors will not offer or sell
Registrable Shares until the Company has notified the selling Investors
that it has prepared a supplement or amendment to such prospectus and
delivered copies of such supplement or amendment to the selling
Investors (it being understood and agreed by the Company that the
foregoing proviso shall in no way diminish or otherwise impair the
Company's obligation to promptly prepare a prospectus amendment or
supplement as above provided in this Section 4(c) and deliver copies of
same as above provided in Section 4(b) hereof); and
(e) Use commercially reasonable efforts to register and
qualify the Registrable Shares covered by the Registration Statement
under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably appropriate in the opinion of the Company or as
reasonably requested by any Investor, provided that the Company shall
not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and provided further that
(notwithstanding anything in this Agreement to the contrary with
respect to the bearing of
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expenses) if any jurisdiction in which any of such Registrable Shares
shall be qualified shall require that expenses incurred in connection
with the qualification therein of any such Registrable Shares must be
borne by the selling Investors and may not be paid or reimbursed by the
Company, then the selling Investors shall, to the extent required by
such jurisdiction, pay their pro rata share of such qualification
expenses.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall furnish to the Company such information regarding
them and the securities held by them as the Company shall reasonably request and
as shall be required in order to effect any registration by the Company pursuant
to this Agreement.
6. EXPENSES OF REGISTRATION. All expenses incurred in connection with
the registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing,
and fees and disbursements of counsel for the Company, shall be borne by the
Company. In addition, the Company shall reimburse the Investors as a group for
the reasonable accountable costs and expenses incurred by one legal counsel to
the selling Investors as a group.
7. DELAY OF REGISTRATION. The Investors shall not take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.
8. INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each selling Investor, any investment banking firm acting as an
underwriter for the selling Investors, any broker/dealer acting on behalf of any
selling Investors and each officer and director of such selling Investor, such
underwriter, such broker/dealer and each person, if any, who controls such
selling Investor, such underwriter or broker/dealer within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; and will reimburse such
selling Investor, such underwriter, broker/dealer or such officer, director or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission made in connection with
the Registration Statement, any preliminary prospectus or final prospectus
relating thereto or any amendments or supplements to the
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Registration Statement or any such preliminary prospectus or final prospectus,
in reliance upon and in conformity with written information furnished expressly
for use in connection with the Registration Statement or any such preliminary
prospectus or final prospectus by the selling Investors, any underwriter for
them or controlling person with respect to them.
(b) To the extent permitted by law, each selling Investor will
severally and not jointly indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any investment banking firm acting as underwriter for the Company or the
selling Investors, or any broker/dealer acting on behalf of the Company or any
selling Investors, and all other selling Investors against any losses, claims,
damages or liabilities to which the Company or any such director, officer,
controlling person, underwriter, or broker/dealer or such other selling Investor
may become subject to, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or any preliminary prospectus or final
prospectus, relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, in reliance upon and in conformity with written information
furnished by the selling Investor expressly for use in connection with the
Registration Statement, or any preliminary prospectus or final prospectus; and
such selling Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter, broker/dealer or other selling Investor in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that the liability of each selling Investor hereunder shall
be limited to the proceeds (net of underwriting discounts and commissions, if
any) received by such selling Investor from the sale of Registrable Shares
covered by the Registration Statement, and provided, further, however, that the
indemnity agreement contained in this Section 8(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party desires, jointly with any other indemnifying party
similarly noticed, to assume at its expense the defense thereof with counsel
mutually satisfactory to the indemnifying parties with the consent of the
indemnified party which consent will not be unreasonably withheld, conditioned
or delayed. In the event that the indemnifying party assumes any such defense,
the indemnified party may participate in such defense with its own counsel and
at its own expense, provided, however, that the counsel for the indemnifying
party shall act as lead counsel in all matters pertaining to such defense or
settlement of such claim and the indemnifying party shall only pay for such
indemnified party's expenses for the period prior to the date of its
participation on such defense.
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The failure to notify an indemnifying party promptly of the commencement of any
such action, if prejudicial to his ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 8, but the omission so to notify the indemnifying party will not relieve
him of any liability which he may have to any indemnified party otherwise other
than under this Section 8.
(d) Notwithstanding anything to the contrary herein, the indemnifying
party shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such claim, suit or proceeding and
such settlement does not contain any admission of fault by the indemnified
party.
9. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit the Investors to sell the Purchased Shares to
the public without registration, the Company agrees to use commercially
reasonable efforts: (i) to make and keep public information available, as those
terms are understood and defined in the General Instructions to Form X-0, X-0,
or any successor or substitute form, and in Rule 144, (ii) to file with the SEC
in a timely manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Act or the Exchange Act,
(iii) as long as any Investor owns any Purchased Shares, to furnish in writing
upon such Investor's request a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and of the Securities Act
and the Exchange Act, and to furnish to such Investor a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as may be reasonably requested in availing such Investor
of any rule or regulation of the SEC permitting the selling of any such
Purchased Shares without registration, and (iv) undertake any additional actions
reasonably necessary to maintain the availability of the Registration Statement
or the use of Rule 144.
10. DEFERRAL. Notwithstanding anything in this Agreement to the
contrary, if the Company shall furnish to the selling Investors a certificate
signed by the President or Chief Financial Officer of the Company stating that
the Board of Directors of the Company has made the good faith determination (i)
that continued use by the selling Investors of the Registration Statement for
purposes of effecting offers or sales of Registrable Shares pursuant thereto
would require, under the Securities Act, premature disclosure in the
Registration Statement (or the prospectus relating thereto) of material,
nonpublic information concerning the Company, its business or prospects or any
proposed material transaction involving the Company, (ii) that such premature
disclosure would be materially adverse to the Company, its business or prospects
or any such proposed material transaction or would make the successful
consummation by the Company of any such material transaction significantly less
likely and (iii) that it is therefore essential to suspend the use by the
Investors of such Registration Statement (and the prospectus relating thereto)
for purposes of effecting offers or sales of Registrable Shares pursuant
thereto, then the right of the selling Investors to use the Registration
Statement (and the prospectus relating thereto) for purposes of effecting offers
or sales of Registrable Shares pursuant thereto shall be suspended for a period
(the "Suspension Period") of not more than 45 days after delivery by the Company
of the certificate referred to above in this Section 10. During the Suspension
Period, none of the Investors shall offer or sell any Registrable Shares
pursuant to or in reliance upon the Registration Statement (or the prospectus
relating thereto). Notwithstanding the foregoing, the Company shall not be
entitled to
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Suspension Periods totaling more than 90 days in any consecutive twelve-month
period during the term of this Agreement.
11. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Investor
under this Agreement shall be transferred or assigned to any person unless (i)
such person is a Qualifying Holder (as defined below), and (ii) such person
agrees to become a party to, and be bound by, all of the terms and conditions of
this Agreement by duly executing and delivering to the Company an Instrument of
Adherence in the form attached as Exhibit B hereto. For purposes of this Section
11, the term "Qualifying Holder" shall mean, with respect to any Investor, (i)
any partner thereof, (ii) any corporation, partnership or other business entity
controlling, controlled by, or under common control with, such Investor or any
partner thereof, or (iii) any other direct transferee from such Investor of at
least 50% of those Registrable Shares held or that may be acquired by such
Investor. None of the rights of any Investor under this Agreement shall be
transferred or assigned to any Person (including, without limitation, a
Qualifying Holder) that acquires Registrable Shares in the event that and to the
extent that such Person is eligible to resell such Registrable Shares pursuant
to Rule 144(k) of the Securities Act.
12. ENTIRE AGREEMENT. This Agreement constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and it also supersedes any and all prior negotiations,
correspondence, agreements or understandings with respect to the subject matter
hereof.
13. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated,
and no rights or provisions may be waived, except with the written consent of
each Investor and the Company.
(b) This Agreement shall be governed by and construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts, and
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors or assigns, provided that
the terms and conditions of Section 11 hereof are satisfied. This Agreement
shall also be binding upon and inure to the benefit of any transferee of any of
the Purchased Shares provided that the terms and conditions of Section 11 hereof
are satisfied. Notwithstanding anything in this Agreement to the contrary, if at
any time any Investor shall cease to own any Purchased Shares, all of such
Investor's rights under this Agreement shall immediately terminate.
(c) (i) Any notices, reports or other correspondence
(hereinafter collectively referred to as "correspondence") required or permitted
to be given hereunder shall be sent by courier (overnight or same day) or
telecopy or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(ii) All correspondence to the Company shall be
addressed as follows:
Wave Systems Corp.
000 Xxxxxxxx Xxxxxx
Xxx, Xxxxxxxxxxxxx 00000
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Attention: Xxxxxx Xxxxxxx, President and
Chief Operating Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(iii) All correspondence to any Investor shall be sent to
such Purchaser at the address set forth in Exhibit A.
(d) Any entity may change the address to which correspondence
to it is to be addressed by notification as provided for herein.
(e) The parties acknowledge and agree that in the event of any
breach of this Agreement, remedies at law may be inadequate, and each of the
parties hereto shall be entitled to seek specific performance of the obligations
of the other parties hereto and such appropriate injunctive relief as may be
granted by a court of competent jurisdiction.
(e) This Agreement may be executed in a number of
counterparts, an of which together shall for all purposes constitute one
Agreement, binding on all the parties hereto notwithstanding that all such
parties have not signed the same counterpart.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
WAVE SYSTEMS CORP.
By: ____________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
[Initial Investors Signature Pages Follow]
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
EXHIBIT A
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Name and Address
----------------
EXHIBIT B
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WAVE SYSTEMS CORP.
Instrument of Adherence
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Reference is hereby made to that certain Registration Rights Agreement,
dated as of March 23, 1999, among Wave Systems Corp., a Delaware corporation
(the "Company"), the Initial Investors and the Investor Permitted Transferees,
as amended and in effect from time to time (the "Registration Rights
Agreement"). Capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Registration Rights Agreement.
The undersigned, in order to become the owner or holder of [__________
shares of the Class A common stock, par value $0.01 per share (the "Common
Stock"), of the Company], hereby agrees that, from and after the date hereof,
the undersigned has become a party to the Registration Rights Agreement in the
capacity of an Investor Permitted Transferee, and is entitled to all of the
benefits under, and is subject to all of the obligations, restrictions and
limitations set forth in, the Registration Rights Agreement that are applicable
to Investor Permitted Transferees. This Instrument of Adherence shall take
effect and shall become a part of the Registration Rights Agreement immediately
upon execution.
Executed under seal as of the date set forth below under the laws of
The Commonwealth of Massachusetts.
Signature: ______________________________
Name:
Title:
Accepted:
WAVE SYSTEMS CORP.
By: ________________________________
Name:
Title:
Date: ______________________________
