EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is entered into as of
February 28, 1997, by and between SyQuest International Singapore ("Sub"),
SYQUEST TECHNOLOGY, INC., a Delaware corporation that owns all of the issued and
outstanding capital stock of Sub ("Parent"), and A-Corn Enterprises Company,
Ltd, a Tawain corporation ("Purchaser"), with reference to the following facts:
A. Sub has failed to make payments to Purchaser when due for products
manufactured and delivered by Purchaser pursuant to the purchase orders and
related invoices (the "Purchase Orders") listed on Schedule A to this
Agreement in the aggregate amount of $1,712,509.19 (the "Purchaser Order
Amount").
B. In consideration of cancellation of the amounts owed to Purchaser equal to
the sum of the Purchase Order Amount, Parent will issue to Purchaser shares
of the Common Stock of Parent, to repay the amounts due to Purchaser with
such shares, valued at the last sale price (the "Closing Price") as
reported in the Nasdaq National Market on the last trading day preceding
the date of this Agreement (the "Closing Date"), but in no event shall
Parent be obligated to issue hereunder in excess of 550,000 of its Common
Stock.
C. Parent will execute and deliver to Purchaser that certain Registration
Rights Agreement dated as of the date hereof (the "Registration Rights
Agreement") in further consideration of the agreements of Purchaser herein.
In consideration of the premises and the mutual covenants and conditions
herein, the parties hereby agree as follows:
1. Purchase Order Amount. Sub acknowledges that Sub owes Purchaser the
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Purchase Order Amount shown on Schedule A attached hereto and
incorporated herein by reference, for products manufactured and
delivered by Purchaser to Sub in response to the Purchase Orders
issued by Sub to Purchaser, and that notwithstanding any payment or
credit term contained in the Purchase Orders, the Purchase Order
Amount is currently due and payable in full. If any such product
shipped to Sub is defective, Sub and Parent shall have the right to
return such product to and request delivery of substitute product from
Purchaser and if such substitute product is not delivered, the
Purchase Order Amount, to the extent not then paid or discharged
hereunder or otherwise, shall be reduced accordingly, or if the
Purchase Order Amount shall then have been paid or otherwise
discharged in full, the cost thereof shall forthwith be refunded by
Purchaser to Sub in cash.
2. Payment.
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(a) Issuance of Shares. Parent shall instruct its transfer agent to
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issue to Purchaser on the Closing Date the number of shares of
Parent's Common Stock equal to the quotient of the Purchase Order
Amount (as it shall then have been reduced under section 1)
divided by the Closing Price, rounded down to the nearest lower
whole number of shares, but in no event shall Parent be required
to issue hereunder in excess of 550,000 shares of its Common
Stock. Such shares are hereinafter called the "Shares".
(b) Payment of Balance. If Parent is unable to issue the full number
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of Shares necessary to repay the Purchase Order Amount due to the
limit on the number of Shares provided in section 2(a), Parent
shall pay the balance due (the "Balance"), to Purchaser as
follows:
(i) If the Balance is not more than $50,000, the full amount
of the Balance shall be paid by Sub to Purchaser within
ten (10) days of the Closing Date, by check or wire
transfer;
(ii) If the Balance is more than $50,000 but not more than
$100,000, the Balance shall be paid by Sub by check or
wire transfer to Purchaser in three equal installments of
principal and interest (at the annual rate of ten
percent), one such installment to be paid on each of ten
(10) days after the Closing Date, the 90th day after the
Closing Date, and the 150th day after the Closing Date;
and
(iii) If the Balance is more than $100,000, the Balance shall be
paid by Sub to Purchaser (with interest at the annual rate
of ten percent) over a period of not less than twelve
months, with the payment schedule to be determined by
mutual agreement of Parent and Purchaser.
(c) Extinguishment of Indebtedness. On the Closing Date, Parent and
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Sub shall be deemed to have paid and discharged all or a portion
of the Purchase Order Amount equal to the product of the number
of Shares multiplied by the Closing Price. Purchaser agrees
that, except to the extent of the unpaid Balance, if any, Parent
and Sub shall be deemed to have paid and discharged the Purchase
Order Amount in full on the Closing Date. If, after the Closing
Date, any Balance remains unpaid, Parent and Sub shall be deemed
to have paid and discharged the Purchase Order Amount in full on
payment of the final installment of the Balance.
3. Limitation on Disposition. Purchaser shall not sell, assign or
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otherwise transfer any Shares received hereunder until such time as the Shares
become registered pursuant to an
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effective registration statement. Once the Shares received hereunder are
registered pursuant to an effective registration statement, Purchaser shall not
sell, assign or otherwise transfer more than fifteen percent (15%) per month of
such Shares originally recieved hereunder.
4. Representations and Warranties of Parent and Sub. Parent and Sub
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hereby represent and warrant to Purchaser as follows:
(a) Corporate Existence and Power. Parent is a corporation duly
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organized and existing, and in good standing, under the laws of
the State of Delaware and has all requisite corporate power to
execute and deliver this Agreement and the Registration Rights
Agreement, to issue the Shares pursuant hereto and otherwise to
carry out and perform its obligations under the terms of this
Agreement. To the best knowledge of the current executive
officers of Parent, without having conducted an investigation of
the records of Parent or Sub, Sub is a corporation duly organized
and existing under the laws of Singapore and in good standing
under such laws, and Sub has all requisite corporate power to
execute and deliver this Agreement and otherwise to carry out and
perform its obligations under this Agreement.
(b) Corporate Action; Enforceability. All corporate action on the
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part of Parent necessary for the execution, delivery and
performance of this Agreement and the Registration Rights
Agreement and the issuance of Shares pursuant hereto has been
taken, and this Agreement and the Registration Rights Agreement
constitute valid and binding obligations of Parent enforceable
against Parent in accordance with their respective terms. To the
best knowledge of the current executive officers of Parent,
without having conducted an investigation of the records of
Parent or Sub, all corporate action on the part of Sub necessary
for the execution, delivery and performance by Sub of this
Agreement has been taken, and this Agreement constitutes valid
and binding obligations of Sub enforceable against Sub in
accordance with its terms.
(c) Valid Issuance. The Shares, when issued in compliance with this
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Agreement, will be validly issued, fully paid, nonassessable and
free of any restrictions on transfer other than pursuant to
applicable state, federal and foreign securities laws.
(d) SEC Documents. Parent has furnished to Purchaser true and
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complete copies of its Annual Report on Form 10-K for the fiscal
year ended September 30, 1996, as amended on Form 10-K/A, its
Quarterly Reports on Form 10-Q for the quarters ended December
31, 1996, its Current Reports on Form 8-K, and its Form S-3 filed
on January 6, 1997, in each case as filed with the Securities and
Exchange Commission (the "SEC").
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Such Reports are hereinafter collectively called the "Reports".
To the best knowledge of the current executive officers of
Parent, without having conducted an investigation of the records
of Parent or Sub, as of their respective filing dates (except as
thereafter amended), the Reports complied in all material
respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(e) No Contravention. To the best knowledge of the current executive
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officers of Parent, without having conducted an investigation of
the records of Parent or Sub, neither the execution and delivery
of this Agreement by Parent or Sub nor the consummation of the
transactions contemplated hereby will (i) conflict with, or
result in any breach or violation of, any provision of the
certificate of incorporation or by-laws of Parent or Sub; (ii)
constitute, with or without notice or the passage of time or
both, a material breach, violation or default under any order,
writ, injunction, decree, law, statute, rule or regulation,
governmental permit or license of Parent or Sub or to which
either of their properties is subject; or (iii) except as
provided in the Registration Rights Agreement, require any
consent, approval or authorization of, notification to, or filing
with, any court, governmental agency or regulatory or
administrative authority on the part of Parent or Sub, except for
filings under the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act and the Nasdaq National
Market rules.
(f) Exemption from Registration. Assuming the accuracy and
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completeness of the representations and warranties in section 4,
the offer, sale and issuance of the Shares as contemplated by
this Agreement are exempt from the registration requirements of
the Securities Act.
5. Representations and Warranties of Purchaser. Purchaser represents and
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warrants to Parent and Sub as follows:
(a) Authority. Purchaser has the full power and authority to execute
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and deliver this Agreement and the Registration Rights Agreement
and to perform its obligations hereunder and thereunder.
(b) Enforceability. This Agreement and the Registration Rights
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Agreement are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their respective
terms.
(c) Securities Laws Representations. Purchaser is acquiring the
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Shares for Purchaser's own account and not with a view to or for
sale in connection with any distribution. Purchaser has such
knowledge and experience in financial and business matters that
Purchaser is capable of evaluating the
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merits and risks of its investment in the Shares, is able to bear
the economic risk of such investment and is able to protect the
Purchaser's own interests in connection with this transaction.
Purchaser acknowledges having had access to such information
concerning Parent, Sub and their affiliates as Purchaser deems
necessary to enable Purchaser to make an informed decision
concerning an investment in the Shares. In entering into this
Agreement and consummating the transactions contemplated hereby,
Purchaser is relying solely on its own investigation of Parent,
Sub and their affiliates and their businesses, management,
financial condition, properties and prospects and the merits and
risks of such transactions. Purchaser is aware that the Shares
have not been registered under the Securities Act and the Shares
may not be transferred by Purchaser unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available. The Shares shall not be transferred
without registration under the Securities Act or an applicable
exemption therefrom. Purchaser is an accredited investor as that
term is defined in Rule 501(a) of Regulation D promulgated by the
SEC under the Securities Act. Purchaser acknowledges that until
the Shares are sold pursuant to registration under the Securities
Act or an available exemption therefrom, all certificates
representing Shares shall bear the following legend:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS, OR COMPLIANCE WITH RULE
144 PROMULGATED UNDER SUCH ACT AND EXEMPTION FROM ALL APPLICABLE
STATE SECURITIES LAWS, AS CONFIRMED BY THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY.
6. Additional Representation. Each of Parent and Sub jointly and
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severally represent and warrant to Purchaser and Purchaser represents
and warrants to Parent and Sub that it is the sole and lawful owner of
all right, title and interest in and to all of the claims related to
the Purchase Orders and that it has not heretofore voluntarily, by
operation of law or otherwise, assigned or transferred or purported to
assign or transfer to any person whomsoever any such claim.
7. Closing.
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(a) The issuance of the Shares shall take place as of the date
hereof, and shall be consummated by mail or otherwise in
accordance with arrangements
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reasonably acceptable to Parent and Purchaser. Within ten (10)
days of the Closing Date, Parent shall deliver to Purchaser a
certificate representing the Shares and a check for all or part
of the Balance, if any, to be paid on the Closing Date pursuant
to section 2(b) above, in payment, discharge and cancellation of
indebtedness equal to part or all of the Purchase Order Amount as
provided in section 2(c).
8. General Provisions.
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(a) Successors. This Agreement shall bind and inure to the benefit
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of the parties hereto and their respective successors and
assigns.
(b) Governing Law. Any action or proceeding to interpret, construe
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or enforce this Agreement may be instituted and prosecuted only
in a state court located in Alameda County, State of California,
or, if requisite jurisdiction exists, in the United States
District Court for the Northern District of California. This
Agreement shall be governed by and interpreted and construed in
accordance with the laws of the State of California.
(c) Entire Agreement. This Agreement and Registration Rights
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Agreement constitute the entire agreement of the parties and
supersede all prior or contemporaneous agreements,
communications, negotiations and understandings, written or oral,
between the parties, regarding the subject matter hereof and
thereof.
(d) Waiver, Modification, or Amendment. No waiver, modification or
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amendment of this Agreement shall be enforceable unless in
writing and executed by the party against whom such waiver,
modification or amendment is claimed.
(e) Severability. If any provision of this Agreement is held to be
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illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining provisions shall not be affected
or impaired.
(f) Attorneys' Fees. In the event of litigation or other proceedings
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in connection with or related to this Agreement, the prevailing
party in such litigation or proceedings shall be entitled to
reimbursement from the opposing party of all reasonable expenses,
including, without limitation, reasonable attorneys' fees and
expenses and expenses of investigation in connection with such
litigation or proceedings.
(g) Currency. All dollar amounts are expressed in U.S. Dollars.
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(h) Communications and Notices. All notices and other communications
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required or permitted hereunder shall be in writing in the
English language and shall be deemed duly delivered and received
when delivered personally, when transmitted by facsimile if
receipt is acknowledged by the addressee, two days after being
deposited for next-day or second-day delivery with an
internationally recognized overnight or two-day delivery service,
or four days after being deposited as first class mail with the
United States Postal Service, properly addressed as follows:
If to Parent or Sub: SyQuest Technology, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Purchaser: A-Corn Enterprises Company, Ltd.
4 Fl, 429 Kuang Fu S. Road
Taipei, Tawain
R.O.C.
Attention: X X Xxxx
Facsimile: 886-2-758-7695
Any party may change its address or facsimile number set forth
above by giving written notice thereof to the other party in the
manner prescribed herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as the day and the year first
set forth above.
SYQUEST TECHNOLOGY, INC.
By: XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: Vice-President, Financial
Services and Treasurer
SYQUEST INTERNATIONAL SINGAPORE
By: XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: Director
A-CORN ENTERPRISES COMPANY, LTD.
By: XXXX XXX
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Name: Xxxx Xxx
Title: Authorized Representive and
Signatory
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
February 28, 1997, by and among SyQuest Technology, Inc., a Delaware corporation
(the "Company"), and A-Corn Enterprises Company, Ltd, a Tawain corporation (the
"Buyer"), with reference to the following facts:
In connection with the Securities Purchase Agreement by and among the
Buyer, the Company and a subsidiary of the Company of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, on the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyer shares of the Company's Common Stock, par value $.001 per
share. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
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have the respective meanings respectively ascribed to them in the Securities
Purchase Agreement. As used in this Agreement, the following terms have the
following meanings:
1.1 "Investor" means the Buyer and any transferee or assignee thereof to
whom the Buyer transfers or assigns this Agreement and who agrees to become a
party to and be bound by this Agreement in accordance with section 9.
1.2 "Register", "registered", and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the "SEC").
1.3 "Registrable Securities" means the Shares.
1.4 "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed under the 1933 Act.
2. REGISTRATION.
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2.1 Mandatory Registration. The Company shall use its best reasonable
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efforts to prepare and, on or before one hundred-twenty (120) days after the
date of the issuance
of the Shares, file with the SEC a Registration Statement or Registration
Statements (as is necessary) on Form S-3 (or, if such form is unavailable for
such a registration, on such other form as is available for such a registration)
(any of which may contain a combined prospectus with other registrations by the
Company), covering the resale of the Registrable Securities.
2.2 Suspension or Termination of S-3 Registration Statement. The Company
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may suspend or terminate any Registration Statement filed pursuant to the
provisions of section 2.1 if the Company determines in good faith that the
continued effectiveness of such Registration Statement might (a) interfere with
or affect the negotiation or completion of any transaction that is being
contemplated by the Company, (b) involve continuing disclosure obligations that
might not be in the best interest of the Company's shareholders or (c) be
seriously detrimental to the Company; provided that (1) any such suspension or
termination extends for no more than ninety (90) days, (2) the Company
undertakes no more than two (2) such suspensions or terminations in any one
calendar year, (3) the Company re-establishes the effectiveness of such
Registration Statement promptly following the cessation of the cause for such
suspension or termination, but in no event later than the expiration of such 90-
day period and (4) the Registration Period (as hereinafter defined) set forth in
section 3.1(b) shall, if applicable, be extended by the period of each such
suspension or termination.
2.3 Piggy-Back Registrations.
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(a) If at any time prior to the expiration of the Registration Period the
Company shall file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans or on any form that
does not permit secondary sales), the Company shall send to each Investor who is
entitled to registration rights under this section 2.3 written notice of such
determination and the Company shall use its best reasonable efforts to include
in such Registration Statement (and any qualification under "blue sky" laws or
other compliance), except as set forth in section 2.3(c) and in any underwriting
involved therein, all of the Registrable Securities specified in a written
request or requests made by such Investor and received by the Company within
(10) days after the written notice from the Company is mailed or delivered by
the Company. Such written request may specify all or part of an Investor's
Registrable Securities.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Investors as a part of the written notice given pursuant to section
2.3(a). In such event, the right of any Investor to registration pursuant to
this section 2.3 shall be conditioned upon such Investor's participation in such
underwriting and the inclusion of such Investor's Registrable Securities in the
underwriting to the extent provided herein. All Investors proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders of securities of the Company with registration
rights to participate therein (the "Other Stockholders") distributing their
securities through such underwriting) enter into any
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underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
(c) Notwithstanding any other provisions of this section 2.3, if the
representative of the underwriters advises the Company in writing that marketing
or other factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting. The
Company shall so advise all holders requesting registration, and the number of
shares that are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold for its own
account and thereafter allocated among the Investors and Other Stockholders
requesting inclusion of securities of the Company having registration rights
(the "Other Shares") pro rata on the basis of the number of shares of
Registrable Securities and Other Shares held by such Investors and Other
Stockholders; provided that the Company shall be entitled to exclude Registrable
Securities to the extent necessary to permit the inclusion of Other Shares of
Other Stockholders having registration rights pursuant to any agreement with the
Company entered into prior to the date hereof; and provided further that such
allocation shall not operate to reduce the aggregate number of Registrable
Securities and Other Shares to be included in such registration, and if any
Investor or Other Stockholder does not request inclusion of the maximum number
of Registrable Securities and Other Shares allocated to him, her or it pursuant
to the foregoing procedure, the remaining portion of his, her or its allocation
shall be reallocated among those requesting Investors and Other Stockholders
whose allocations do not satisfy their requests pro rata on the basis of the
number of Registrable Securities and Other Shares held by such Investors and
Other Stockholders, and this procedure shall be repeated until all of the
Registrable Securities and Other Shares that may be included in the registration
on behalf of the Investors and Other Stockholders shall have been so allocated.
The Company shall not limit the number of Registrable Securities to be included
in a registration pursuant to this Agreement in order to include securities held
by stockholders with no registration rights. If any person does not agree to the
terms of any such underwriting, such person shall be excluded therefrom by
written notice from the Company or the underwriter. Any Registrable Securities
or Other Shares excluded or withdrawn from such underwriting shall be withdrawn
from such registration. Nothing in this section 2.3 shall give Investors the
right to require the Company to commence such registration or complete it once
the process has commenced.
(d) No right to registration of Registrable Securities under this section
2.3 shall be construed to limit any registration required under section 2.1.
The obligations of the Company under this section 2.3 may be waived by Investors
holding a majority of the Registrable Securities.
2.4 Eligibility for Form S-3. The Company represents and warrants that it
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meets the requirements for the use of Form S-3 for registration of the sale by
the Buyer and any other Investor of the Registrable Securities, and the Company
shall file all reports required to be filed by the Company with the SEC in a
timely manner to maintain such eligibility for the use of Form S-3. If Form S-3
is not available for sale by the Investors of the Registrable
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Securities, upon request of the Investors the Company shall register the sale on
another appropriate form. The Company shall have a reasonable period of time to
complete such registration.
2.5 Market Stand-Off Agreement. The Investors agree, without consent of
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managing underwriter(s), not to effect any sale or distribution of Registrable
Securities (other than in connection with the Investors' own registration
pursuant to section 2.3), including a disposition pursuant to Rule 144 of the
1933 Act, during the period beginning ten (10) days prior to the Company's good
faith estimate of the filing of, and ending on the date ninety (90) days after
the effective date of, a Company - initiated registration; provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective.
3. REGISTRATION OBLIGATIONS.
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3.1 Registration Statements. The Company shall use its best reasonable
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efforts to cause such Registration Statement(s) relating to Registrable
Securities to become effective as soon as possible after the filing thereof and,
subject to the provisions of section 2.2, keep the Registration Statement(s)
effective pursuant to Rule 415 at all times until the earliest of (a) the date
as of which the Investors may sell all of the Registrable Securities without
registration pursuant to Rule 144 promulgated under the 1933 Act, (b) the second
anniversary of the date hereof (subject to extension in accordance with the
provisions of section 2.2), and (c) the date on which the Investors shall have
sold all the Registrable Securities (the "Registration Period"). Such
Registration Statement(s) (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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 light of the circumstances in which
they were made, not misleading.
3.2 Amendments and Supplements. The Company shall prepare and file with
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the SEC such amendments (including post-effective amendments) and supplements to
the Registration Statement(s) and the prospectus(es) used in connection with the
Registration Statement(s) as may be necessary to keep the Registration
Statement(s) effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement(s).
3.3 Prospectus Delivery. The Company shall furnish to each Investor whose
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Registrable Securities are included in the Registration Statement(s) and its
legal counsel (a) promptly after the same is prepared and publicly distributed,
filed with the SEC or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment or supplement thereto, and (b) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
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supplements thereto and such other documents as such Investor may reasonably
request to facilitate the disposition of the Registrable Securities owned by
such Investor.
3.4 Blue Sky Laws. The Company shall use reasonable efforts to (a)
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register and qualify the Registrable Securities covered by the Registration
Statement(s) under such other securities or "blue sky" laws of such
jurisdictions in the United States as the Investors who hold a majority of the
Registrable Securities being offered reasonably request (but in no event in more
than five states of the United States), (b) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (c) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (d)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided that the Company
shall not be required in connection therewith or as a condition thereto to (1)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this section 3.4, (2) subject itself to general
taxation in any such jurisdiction, (3) file a general consent to service of
process in any such jurisdiction, (4) provide any undertakings that cause more
than nominal expense or burden to the Company, or (5) make any change in its
certificate of incorporation or bylaws, which the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders.
3.5 Corrections. As promptly as practicable after becoming aware of such
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event, the Company shall notify each Investor selling Registrable Securities of
the happening of any event, of which the Company has knowledge, as a result of
which the prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state 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 or
incomplete, and use its best reasonable efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to
each Investor as such Investor may reasonably request.
3.6 Stop Orders. Except as otherwise permitted by this Agreement, the
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Company shall use its best reasonable efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, use its best reasonable efforts to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.
3.7 Selling Stockholders' Counsel. The Company shall permit a single firm
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of counsel, designated as selling stockholders' counsel by the Investors who
hold a majority of the Registrable Securities being sold and compensated by such
Investors, to review and comment on the Registration Statement(s) (and all
amendments and supplements thereto but only
5
if they directly relate to such Investors) a reasonable period prior to their
filing with the SEC, and shall not file any document in a form to which such
counsel reasonably objects. Failure to object in writing within three days shall
be deemed to be an approval of the Registration Statement (s).
3.8 Due Diligence. The Company shall make available for inspection by one
-------------
firm of attorneys and one firm of accountants or other agents retained by the
Investors at their expense (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by such Inspector to enable such Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information that any Inspector may reasonably request
for purposes of such due diligence; provided that each Inspector shall hold in
strict confidence and shall not make any disclosure (except to an Investor) or
use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, consistent with and implementing the
confidentiality obligations of this section 3.10. Each Investor agrees that it
shall, on learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow and cooperate with the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.
3.9 Listing. The Company shall use its best reasonable efforts either to
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(a) cause all the Registrable Securities covered by a Registration Statement to
be listed on each national securities exchange on which the Common Stock is then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (b) secure designation and quotation of all
the Registrable Securities covered by the Registration Statement on the Nasdaq
National Market or, if, despite the Company's best efforts to satisfy the
preceding clause (a) or (b), the Company is unsuccessful in satisfying the
preceding clause (a) or (b), to secure the inclusion for quotation on the Nasdaq
SmallCap Market or, on the Nasdaq Electronic Bulletin Board.
3.10 Certificates. The Company shall cooperate with the Investors who
------------
hold Registrable Securities being offered and, to the extent applicable, any
managing underwriter or underwriters, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there is no
managing underwriter
6
or underwriters, the Investors may reasonably request and registered in such
names as the managing underwriter or underwriters, if any, or the Investors may
request.
3.11 Other Action. The Company shall take all other reasonable actions
------------
necessary to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.
4. OTHER OBLIGATIONS OF THE INVESTORS.
----------------------------------
4.1 Investor Information. At least five days prior to the first
--------------------
anticipated filing date of the Registration Statement, the Company shall notify
each Investor of the information the Company requires from each such Investor
that elects to have any of such Investor's Registrable Securities included in
the Registration Statement. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of an Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.
4.2 Cooperation. Each Investor by such Investor's acceptance of the
-----------
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement(s) hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
4.3 Corrections. Each Investor agrees that, on receipt of any notice from
-----------
the Company of the happening of any event of the kind described in section 2.2,
3.5 or 3.6, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by section 3.5 or 3.6 and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
4.4 Underwriting Arrangements. No Investor may participate in any
-------------------------
underwritten registration hereunder unless such Investor (a) agrees to sell such
Investor's Registrable Securities on the basis provided in any underwriting
arrangements, (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (c) agrees to pay its pro
rata share of all underwriting discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel and other advisers for any Investor (collectively,
"Selling Expenses").
7
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than Selling
------------------------
Expenses, incurred in connection with registrations, filings or qualifications
pursuant to sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company, shall be borne by the Company.
6. INDEMNIFICATION. If any Registrable Securities are included in a
---------------
Registration Statement under this Agreement:
6.1 By the Company. To the extent permitted by law, the Company will
--------------
indemnify, hold harmless and defend each Investor, each director and officer of
and person, if any, who controls such Investor within the meaning of the 1933
Act or the 1934 Act, and each underwriter (as defined in the 0000 Xxx) for the
Investors, and each director and officer of, and each person, if any, who
controls, such underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) (collectively, "Claims") to which any
of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
on: (a) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading, (b) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (c) any violation or alleged violation caused by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the preceding clauses (a), (b) and (c)
being, collectively, "Violations"). Subject to the restrictions in section 6.4
with respect to the number of legal counsel, the Company shall reimburse each
Indemnified Person promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by such
Indemnified Person in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary herein, the indemnification agreement
in this section 6.1: (1) shall not apply to a Claim arising out of or based on a
Violation that occurs in reliance on and in conformity with information
furnished in writing to the Company by, or caused by, any Indemnified Person or
underwriter for such Indemnified Person in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to section
3.3; (2) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to section 3.3; (3) shall
8
not be available to the extent that such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company; and (4) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to section 9.
6.2 By the Investors. In connection with any Registration Statement in
----------------
which an Investor is participating, each such Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in section 6.1, the Company, each of its directors, each of its officers who
signs the Registration Statement, each person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act, any underwriter and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim arises out of or is based on any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance on and in conformity with written information furnished to the Company
by such Investor expressly for use in connection with such Registration
Statement or to the extent such Claim is based on any violation or alleged
violation by the Investor of the 1933 Act, 1934 Act or any other law; and such
Investor will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided that the
indemnity agreement in this section 6.2 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld; and
provided further that the Investor shall be liable under this section 6.2 for
only such amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
section 9. Notwithstanding anything to the contrary herein, the indemnification
agreement in this section 6.2 with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
6.3 By Others. The Company shall be entitled to receive indemnities from
---------
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
6.4 Procedures. Promptly after receipt by an Indemnified Person or
----------
Indemnified Party under this section 6 of notice of the commencement of any
action (including
9
any governmental action), such Indemnified Person or Indemnified Party shall, 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 the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided
that an Indemnified Person or Indemnified Party shall have the right to retain
its own counsel with the fees and expenses to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the Investors, and
such legal counsel shall be selected by the Investors holding a majority of the
Registrable Securities included in the Registration Statement to which the Claim
relates. The failure to deliver written notice to the indemnifying party within
a reasonable time after the threat or commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent that any indemnification by an
------------
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under section 6 to the fullest extent permitted by
law; provided that (a) no contribution shall be made under circumstances where
the maker would not have been liable for indemnification under the fault
standards set forth in section 6, (b) no seller of Registrable Securities guilty
of fraudulent misrepresentation (within the meaning of section 11(f) of the 0000
Xxx) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation, and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
--------------------------
Investors the benefits of Rule 144 under the 1933 Act or any other similar rule
or regulation of the SEC that may at any time permit the investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
8.1 Information. Make and keep public information available, as those
-----------
terms are understood and defined in Rule 144;
8.2 Reports. File with the SEC in a timely manner all reports and other
-------
documents required of the Company under the 1933 Act and the 1934 Act so long as
the
10
Company remains subject to such requirements, and the filing of such reports and
other documents is required for the applicable provisions of Rule 144; and
8.3 Confirmation. Furnish to each Investor so long as such Investor owns
------------
Registrable Securities, promptly on request, (a) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (b) 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 (c) such other information as may be reasonably requested to permit
the investors to sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
---------------------------------
register securities granted to an Investor by the Company pursuant to section 2
may not be transferred or assigned by an Investor except in a private sale to a
transferee or assignee of not less than 100,000 shares of the Registrable
Securities and: (a) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being transferred
or assigned, (c) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws, (d) at or before the time the
Company receives the written notice contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company to become a party
to and be bound by this Agreement, (e) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, (f) such transferee shall be an "accredited investor" as that term
defined in Rule 501 of Regulation D under the 1933 Act, and (g) if the
assignment occurs after the date of effectiveness of the Registration Statement
required to be filed pursuant to section 2.1, the transferee or assignee agrees
to pay all reasonable expenses of amending or supplementing such Registration
Statement to reflect such assignment. Any such transferee or assignee shall be
deemed to be an Investor hereunder, in the place and stead of the transferring
or assigning Investor with respect to the Registrable Securities so transferred
and assigned, from and after the effective date of such permitted transfer,
assignment and assumption.
10. AMENDMENT OF REGISTRATION RIGHTS. This Agreement may be amended and
--------------------------------
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and Investors who hold a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this section 10
shall be binding on each Investor and the Company.
11. MISCELLANEOUS.
-------------
11.1 Holder. A person or entity is deemed to be a holder of Registrable
------
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act on the basis of
11
instructions, notices or elections received from the registered owner of such
Registrable Securities.
11.2 Notices. Any notices or other communications required or permitted
-------
to be given under this Agreement shall be sent by registered or certified mail,
return receipt requested, or delivered personally or by facsimile or courier and
shall be effective five days after being placed in the mail, if mailed, or on
receipt, if delivered personally or by courier or facsimile, in each case
properly addressed to the party to receive such notice. The addresses for such
communications shall be:
If to the Company:
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Legal Department
With copy to:
Shartsis, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Buyer, at the addresses on the signature page of this Agreement.
Each party shall provide notice to the other party of any change in
address.
11.3 Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws.
11.4 Severability. If any provision of this Agreement shall be invalid or
------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
11.5 Entire Agreement. This Agreement and the Securities Purchase
----------------
Agreement together constitute the entire agreement of the parties and supersede
all prior or contemporaneous negotiations, correspondence, understandings and
agreements, written or oral, regarding the subject matter hereof.
12
11.6 Successors and Assigns. Subject to section 9, this Agreement shall
----------------------
inure to the benefit of and bind the parties hereto and their respective
permitted successors and assigns.
11.7 Headings; References. The headings in this Agreement are for
--------------------
convenience of reference only and are not part of this Agreement. References to
sections herein refer to sections of this Agreement, except as otherwise
indicated. The singular includes the plural and vice versa, as the context may
require.
11.8 Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. If any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
additional original executed signature pages to be physically delivered to the
other party within five days of the execution and delivery hereof.
11.9 Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYER:
SYQUEST TECHNOLOGY, INC. A-CORN ENTERPRISES COMPANY, LTD.
By: /s/ XXXXXXX XXXXXXX By: /s/ XXXX XXX
--------------------------- -----------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxx Xxx
Its: Vice-President, Financial Its: Authorized Representive and
Services and Treasurer Signatory
Address:
A-Corn Enterprises Company, Ltd.
4 Fl, 429 Kuang Fu S. Road
Taipei, Tawain
R.O.C.
Attention: X X Xxxx
Facsimile: 886-2-758-7695
13
