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EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 24,
1997, by and among WavePhore, Inc., an Indiana corporation (the "Company"), and
each of the entities whose names appear on the signature pages hereof. Such
entities are each referred to herein as a "Purchaser" and, collectively, as the
"Purchasers".
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"Securities Purchase Agreement"), to issue and sell to each Purchaser (i) shares
(the "Preferred Shares") of the Company's Series C Convertible Preferred Stock
(the "Preferred Stock") and (ii) a Warrant (each, a "Warrant" and, when taken
together with all of the warrants issued to the other Purchasers hereunder, the
"Warrants") entitling the holder thereof to purchase shares (the "Warrant
Shares") of Common Stock (as defined below). The Preferred Shares are
convertible into shares (the "Conversion Shares") of the Company's Common Stock
(the "Common Stock"), pursuant to the Company's Articles of Incorporation, as
amended as of the date hereof (the "Articles of Incorporation"). In order to
induce the Purchasers to enter into the Securities Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended (the "Securities Act"), and under applicable state
securities laws. Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Securities Purchase Agreement.
In consideration of each Purchaser entering into the Securities
Purchase Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified:
(a) "Closing" shall have the meaning specified in the
Securities Purchase Agreement;
(b) "Registration Deadline" means October 22, 1997;
(c) "Holder" means any person owning or having the right to
acquire, through conversion of Preferred Shares or exercise of
the Warrant, Registrable Securities, including initially each
Purchaser and thereafter any permitted assignee thereof;
(d) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or statements in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act ("Rule 415")
or any successor rule providing for the offering of securities
on a continuous basis ("Registration Statement"), and the
declaration or ordering of effectiveness of the
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Registration Statement by the Securities and Exchange
Commission (the "Commission"); and
(e) "Registrable Securities" means the Conversion Shares and
the Warrant Shares, and any other shares of Common Stock
issuable pursuant to the terms of the Preferred Stock, whether
as a dividend, payment of a redemption price or otherwise, and
any shares of capital stock issued or issuable from time to
time (with any adjustments) in replacement of, in exchange for
or otherwise in respect of the Conversion Shares or the
Warrant Shares.
2. MANDATORY REGISTRATION.
(a) On or before August 23, 1997, the Company shall use all
commercial efforts to prepare and file a Registration Statement on Form S-3 (or,
if Form S-3 is not available, on such form of Registration Statement as is then
available to effect a registration of the Registrable Securities, subject to the
consent of each Purchaser, which consent will not be unreasonably withheld) as a
"shelf" registration statement under Rule 415 covering the resale of at least
175% of the number of shares of Registrable Securities then issuable on (i)
conversion of the Preferred Shares (assuming conversion at the Fixed Conversion
Price) and (ii) exercise in full of the Warrants. The Registration Statement
shall state, to the extent permitted by Rule 416 under the Securities Act, that
it also covers such indeterminate number of shares of Common Stock as may be
required to effect (i) conversion of the Preferred Shares to prevent dilution
resulting from stock splits, stock dividends or similar events, or by reason of
changes in the Conversion Price in accordance with the terms of the Articles of
Incorporation and (ii) exercise of the Warrants in full to prevent dilution
resulting from stock splits, stock dividends or similar events, or by reason of
changes in the Exercise Price (as defined in the Warrant) in accordance with the
terms of the Warrant.
(b) The Company shall use all commercial efforts to cause the
Registration Statement to become effective as soon as practicable following the
filing thereof, but in no event later than the Registration Deadline, and
maintain the effectiveness of the Registration Statement until the earlier to
occur of (i) the date on which all of the Registrable Securities have been sold
pursuant to the Registration Statement and (ii) the date on which all of the
remaining Registrable Securities (in the reasonable opinion of counsel to the
Purchaser) may be immediately sold to the public without registration and
without regard to the amount of Registrable Securities which may be sold by a
Holder thereof at a given time (the "Registration Period").
(c) If (A) the Registration Statement is not declared
effective by the Commission on or before the Registration Deadline, (B) after
the Registration Statement has been declared effective by the Commission, sales
of Registrable Securities cannot be made by a Holder under the Registration
Statement for any reason not within the exclusive control of such Holder (other
than such Registrable Securities as are then freely saleable pursuant to Rule
144(k) under the Securities Act), (C) the Common Stock is not included for
quotation on the Nasdaq National Market ("Nasdaq") or listed on the New York
Stock Exchange or other national securities exchange at any
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time after the Registration Deadline, the Company shall pay to such Holder an
amount equal to the lesser of (x) two percent (2%) per month and (y) the highest
rate permitted by applicable law, times the aggregate purchase price of the
Preferred Shares held by such Holder, accruing daily and compounded monthly,
from the Registration Deadline or, where the Registration Statement has become
effective, from the date on which the Registration Statement lapses or is
otherwise unavailable, until the date on which the Registration Statement is
declared effective or becomes available for sales of Registrable Securities, as
the case may be. For purposes hereof, the Registration Statement shall not be
deemed to be unavailable during any period, not to exceed an aggregate of thirty
(30) days for all such periods, with respect to which the Board of Directors of
the Corporation determines in good faith (A) that an amendment or supplement to
the Registration Statement or prospectus contained therein is necessary in order
to correct a material misstatement made therein or to include information the
absence of which would render the Registration Statement or such prospectus
materially misleading and (B) that the disclosure of such information at such
time would be detrimental to the business or prospects of the Company. The
amounts paid or payable by the Company hereunder shall be in addition to any
other remedies available to the Purchaser at law or in equity or pursuant to the
terms of any other Transaction Document. Payments of cash pursuant hereto shall
be made within five (5) days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than thirty
(30) days, payments shall be made at the end of each thirty-day period.
3. PIGGYBACK REGISTRATION.
If at any time prior to the expiration of the Registration
Period, (i) the Company proposes to register shares of Common Stock under the
Securities Act in connection with the public offering of such shares for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan or employee stock award or a registration
on Form S-4 under the Securities Act or any successor or similar form
registering stock issuable upon a reclassification, a business combination
involving an exchange of securities or an exchange offer for securities of the
issuer or another entity) (a "Proposed Registration") and (ii) a registration
statement covering the sale of all of the Registrable Securities is not then
effective and available for sales thereof by the Holders, the Company shall, at
such time, promptly give each Holder written notice of such Proposed
Registration. Each Holder shall have thirty (30) days from its receipt of such
notice to deliver to the Company a written request specifying the amount of
Registrable Securities that such Holder intends to sell and such Holder's
intended method of distribution. Upon receipt of such request, the Company shall
use its best efforts to cause all Registrable Securities which the Company has
been requested to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such Holder;
provided, however, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 3 without obligation to the
Holder. If, in connection with any underwritten public offering for the account
of the Company, the managing underwriter(s) thereof shall impose a limitation on
the number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distributions, then
the Company shall be obligated to include in such Registration Statement
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only such limited portion of the Registrable Securities with respect to which
each Holder has requested inclusion hereunder as such underwriter(s) shall
permit. Any exclusion of Registrable Securities shall be made pro rata among the
Holders seeking to include Registrable Securities in the Registration Statement,
in proportion to the number of Registrable Securities sought to be included by
such Holders; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of such
securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities; and provided, further, however, that,
after giving effect to the immediately preceding proviso, any exclusion of
Registrable Securities shall be made pro rata with holders of other securities
having the right to include such securities in the Registration Statement.
4. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including pursuant
to paragraphs 2(a) and 2(b) above, the Company shall:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with the
provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such Holder
or such Holder's intended method of distribution;
(b) in the event that the number of shares available under the
Registration Statement filed by the Company hereunder is insufficient during any
period of three consecutive trading days to cover 125% of the Registrable
Securities then issued or issuable, the Company shall promptly amend the
Registration Statement, or file a new Registration Statement, or both, so as to
cover 175% of such Registrable Securities, in any event as soon as practicable,
but not later than the tenth business day following the last day of such three
day period. Any Registration Statement filed pursuant to this Section 4 shall
state that, to the extent permitted by Rule 416 under the Securities Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Preferred
Shares or exercise of the Warrants in full. Unless and until such amendment or
new Registration Statement becomes effective, each Holder shall have the rights
described in Section 2(c) above;
(c) secure the designation and quotation of the Registrable
Securities on the Nasdaq National Market or the listing thereof on the New York
Stock Exchange or other national securities exchange;
(d) furnish to each Holder such number of copies of the
prospectus included in such Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of such Holder's Registrable Securities;
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(e) use all commercially reasonable efforts to register or
qualify the Registrable Securities under the securities or "blue sky" laws of
such jurisdictions within the United States as shall be reasonably requested
from time to time by a Holder, and do any and all other acts or things which may
be necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; 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 jurisdiction;
(f) in the event of an underwritten public offering of the
Registrable Securities, enter into and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to the
Company, with the managing underwriter of such offering;
(g) notify each Holder immediately upon the occurrence of any
event as a result of which the prospectus included in such Registration
Statement, as then in effect, contains an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and as promptly as practicable, prepare, file and furnish to each
Holder a reasonable number of copies of a supplement or an amendment to such
prospectus as may be necessary so that such prospectus does not contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(h) use all commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the effectiveness of such
Registration Statement and, if such an order is issued, to obtain the withdrawal
thereof at the earliest possible time and to notify each Holder of the issuance
of such order and the resolution thereof;
(i) furnish to each Holder, on the date that such Registration
Statement becomes effective, (x) an opinion, dated such date, of outside counsel
representing the Company (and reasonably acceptable to such Holder) addressed to
such Holder, regarding the effectiveness of the Registration Statement and the
absence of any stop order, and (y) in the case of an underwriting, (A) an
opinion, dated such date, of such outside counsel, in form and substance as is
customarily given to underwriters in an underwritten public offering, and (B) a
letter, dated such date, from the Company's independent certified public
accountants, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to each Holder;
(j) provide each Holder and its representatives the
opportunity to conduct a reasonable inquiry of the Company's financial and other
records during normal business hours and make available its officers, directors
and employees for questions regarding information which such Holder may
reasonably request in order to fulfill any due diligence obligation on its part;
and
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(k) permit counsel for each Holder (at such Holder's expense)
to review such Registration Statement and all amendments and supplements thereto
a reasonable period of time prior to the filing thereof with the Commission.
5. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Registrable Securities
pursuant to the Registration Statement, each Holder shall:
(a) furnish to the Company such information regarding itself
and the intended method of disposition of Registrable Securities as the Company
shall reasonably request in order to effect the registration thereof;
(b) upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(h), immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement until withdrawal of the stop order referred to in paragraph 4(h); and
(c) in the event of an underwritten offering of the
Registrable Securities, enter into a customary and reasonable underwriting
agreement and execute such other documents as the managing underwriter for such
offering may reasonably request.
6. INDEMNIFICATION.
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the officers, directors, employees,
agents and representatives of such Holder, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including legal or other expenses reasonably incurred in
connection with investigating or defending same, "Losses"), insofar as any such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will reimburse such Holder, and each such
officer, director, employee, agent, representative or controlling person for any
legal or other expenses as reasonably incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be obligated to
indemnify any person for any
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Loss to the extent that such Loss arises out of or is based upon and in
conformity with written information furnished by such person expressly for use
in such Registration Statement; and provided, further, that the Company shall
not be required to indemnify any person to the extent that any Loss results from
such person selling Registrable Securities (i) to a person to whom there was not
sent or given, at or prior to the written confirmation of the sale of such
shares, a copy of the prospectus, as most recently amended or supplemented, if
the Company has previously furnished or made available copies thereof or (ii)
during any period following written notice by the Company to such Holder of an
event described in Section 4(g) or 4(h).
(b) To the extent permitted by law, each Holder, acting
severally and not jointly, shall indemnify and hold harmless the Company, the
officers, directors, employees, agents and representatives of the Company, and
each person, if any, who controls the Company within the meaning of the
Securities Act or the 1934 Act, against any Losses to the extent (and only to
the extent) that any such Losses arise out of or are based upon and in
conformity with written information furnished by such Holder expressly for use
in such Registration Statement; and such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this subsection 6(b) exceed the net purchase price of
securities sold by such Holder under the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses of one such counsel to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 6 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6 or
with respect to any other action.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 6 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree, severally
and not jointly, to contribute to the aggregate Losses to which the
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Company or such Holder may be subject in such proportion as is appropriate to
reflect the relative fault of the Company and such Holder in connection with the
statements or omissions which resulted in such Losses; provided, however, that
in no case shall such Holder be responsible for any amount in excess of the net
purchase price of securities sold by it under the Registration Statement.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company or by such
Holder. The Company and each Holder agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), 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 is not guilty of such fraudulent misrepresentation. For purposes of this
Section 6, each person who controls a Holder within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee, agent
or representative of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The obligations of the Company and each Holder under this
Section 6 shall survive the conversion or redemption, if any, of the Preferred
Shares, the exercise of the Warrant, the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this
Agreement, or otherwise.
7. REPORTS.
With a view to making available to each Holder the benefits of
Rule 144 under the Securities Act ("Rule 144") and any other similar rule or
regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company agrees
to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
1934 Act; and
(c) furnish to such Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule
144, the Securities Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
in availing such Holder of any rule or regulation of the Commission which
permits the selling of any such securities without registration.
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8. MISCELLANEOUS.
(a) Expenses of Registration. All expenses, other than
underwriting discounts and commissions and fees and expenses of counsel to each
Holder, incurred in connection with the registrations, filings or qualifications
described herein, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, the fees and disbursements of
counsel for the Company, and the fees and disbursements incurred in connection
with the opinion and letter described in paragraph 4(i) hereof, shall be borne
by the Company.
(b) Amendment; Waiver. Any provision of this Agreement may be
amended only pursuant to a written instrument executed by the Company and
Holders of two-thirds (2/3) of the outstanding Registrable Securities. Any
waiver of the provisions of this Agreement may be made only pursuant to a
written instrument executed by the party against whom enforcement is sought. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder, each future Holder, and the Company.
(c) Notices. Any notice, demand or request required or
permitted to be given by any party to any other party pursuant to the terms of
this Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 5:00 p.m., eastern time, on a business day or, if such day is not a
business day, on the next succeeding business day, (ii) on the next business day
after timely delivery to an overnight courier and (iii) on the third business
day after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
If to the Company:
WavePhore Inc.
0000 X. 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxx (with a copy to the General Counsel)
Fax: 000-000-0000
and if to any Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) Termination. This Agreement shall terminate on the earlier
to occur of (a) the end of the Registration Period and (b) the date on which all
of the Registrable Securities have been publicly distributed; but any such
termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification and contribution obligations under this
Agreement.
(e) Assignment. The rights of a Holder hereunder shall be
assigned automatically to any transferee of the Preferred Shares, the Warrant or
Registrable Securities from such Holder
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as long as: (i) the Company is, within a reasonable period of time following
such transfer, furnished with written notice of the name and address of such
transferee, (ii) the transferee agrees in writing with the Company to be bound
by all of the provisions hereof and (iii) such transfer is made in accordance
with the applicable requirements of the Securities Purchase Agreement or the
Warrant, as the case may be.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflict of laws provisions thereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
WAVEPHORE, INC.
By:
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Name: Xxxxx Xxxxxxxxxx
Title: EVP + COO
PURCHASER NAME:
--------------------------
By:
----------------------------
Name:
Title:
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