EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 30th day
of September, 2002 (this "Agreement"), is made by and between EUROTECH, LTD., a
District of Columbia corporation, with headquarters located at10306 Xxxxx Xxxxx,
Xxxxxxx, XX 00000 (the "Company"), and XXXXXXXX LLC, a Cayman Islands entity,
(the "Initial Investor")
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of February 1, 2002, between the Initial
Investor and the Company (the "Securities Purchase Agreement"), the Company has
agreed to issue and sell to the Initial Investor the Series A 3% Convertible
Preferred Stock; and
WHEREAS, upon the terms and subject to the conditions of the
Securities Exchange and Purchase Agreement, dated as of September 30, 2002,
between the Initial Investor and the Company (the "Exchange Agreement;"
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement and the Exchange Agreement), the
Company has agreed to issue and sell to the Initial Investor the Series B
Convertible Preferred Stock (the Series A Convertible Preferred Stock and Series
B Convertible Preferred Stock are sometimes referred to collectively as the
"Preferred Stock"); and
WHEREAS, the Preferred Stock is convertible into shares of
Common Stock (the "Initial Shares"; which term, for purposes of this Agreement,
shall include shares of Common Stock of the Company issuable in lieu of accrued
dividends on the Preferred Stock) upon the terms and subject to the conditions
contained in the respective Certificates of Designation, the Exchange Agreement,
and the Securities Purchase Agreement; and
WHEREAS, to induce the Initial Investor to execute and deliver
the Securities Purchase Agreement and the Exchange 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 "Securities Act"), with respect to the Shares;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
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(a) "Effective Date" means the date the SEC declares a
Registration Statement covering Registrable Securities and otherwise meeting the
conditions contemplated hereby to be effective.
(b) "Held Shares Value" means, for Registrable Securities
acquired by the Investor upon a conversion of Preferred Stock within the thirty
(30) days preceding the Restricted Sale Date, but not yet sold by the
Investor,the product of (a)the Initial Shares required to be issued in respect
of such Initial Shares and (b) the Closing Price of the Company"s Common Stock
on the day prior to each Computation Date PROVIDED, HOWEVER, that if the
Investor effected more than one such conversion during such thirty (30) day
period and sold less than all of such shares, the sold shares shall be deemed to
be derived first from the conversions in the sequence of such conversions (that
is, for example, until the number of shares from the first of such conversions
have been sold, all shares shall be deemed to be from the first conversion;
thereafter, from the second conversion until all such shares are sold).
(c) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof and who holds Preferred Stock or
Registrable Securities.
(d) "Periodic Amount Shares" means shares of Common Stock
issuable in payment of any Periodic Amount due, as provided in Section 2(b)
below.
(e) "Potential Material Event" means any of the following: (i)
the possession by the Company of material information not ripe for disclosure in
a registration statement, which shall be evidenced by a determination in good
faith by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of the Company or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a registration statement
at such time; in each case where such determination shall be accompanied by a
good faith determination by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion of
such information.
(f) "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 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").
(g) "Registrable Securities" means the Initial Shares .
(h) "Registration Statement" means a registration statement of
the Company under the Securities Act covering Registrable Securities on Form
S-3, if the Company is then eligible to file using such form, and if not
eligible, on Form S-3 or other appropriate form.
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(i) "Required Effective Date" means the relevant Initial
Required Effective Date or Increased Required Effective Date (as those terms are
defined below).
(j) "Restricted Sale Date" means the first date, other than a
date during a Permitted Suspension Period (as defined below), on which the
Investor is restricted from making sales of Registrable Securities covered by
any previously effective Registration Statement.
(k) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Transaction Documents
or in the Rules of the SEC.
2. REGISTRATION.
(a) MANDATORY REGISTRATION.
(i) The Company shall prepare and file with the SEC, as soon
as possible after the Closing Date but no later than November 30, 2003 (the
"Required Filing Date"), either a Registration Statement or an amendment to an
existing Registration Statement, in either event registering for resale by the
Investor a sufficient number of shares of Common Stock for the Initial Investor
to sell the Registrable Securities, but in no event less than the number of
shares equal to one hundred twenty-five percent (125%) of the number of Initial
Shares into which the Preferred Stock and all accrued dividends thereon for
three (3) years from the issue date would be convertible at the time of filing
of such Registration Statement (assuming for such purposes that all Preferred
Stock had been issued, had been eligible to be converted, and had been
converted, into Initial Shares at the Alternative Conversion Price and that all
dividends thereon had accrued for 3 years, in each case in accordance with the
terms of the Securities Purchase Agreement, Exchange Agreement, and of the
Certificate of Designation of the Preferred Stock, whether or not such issuance,
eligibility, accrual of dividends or conversion had in fact occurred as of such
date). The Registration Statement (W) shall include only the Registrable
Securities and the Securities listed on Schedule 5 and (X) shall also state
that, in accordance with Rule 416 and 457 under the Securities Act, it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Preferred Stock, the issuance of shares
in payment of accrued Dividends, or the issuance of the Repricing Shares to
prevent dilution resulting from stock splits, or stock dividends. The Company
will use its reasonable best efforts to cause such Registration Statement to be
declared effective on a date (the "Initial Required Effective Date") which is no
later than the earlier of (Y) five (5) days after oral or written notice by the
SEC that it may be declared effective or (Z) January 31, 2003.
(ii) If at any time (an "Increased Registered Shares Date"),
the number of shares of Common Stock represented by the Registrable Shares,
issued or required to be issued as contemplated by the Transaction Documents,
exceeds eighty percent (80%) of the aggregate number of shares of Common Stock
then registered, the Company shall either
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(X) amend the relevant Registration Statement filed by the Company
pursuant to the preceding provisions of this Section 2, if such
Registration Statement has not been declared effective by the SEC at
that time, to register, in the aggregate, at least the number of shares
(the "Increased Shares Amount") equal to (A) the number of shares
theretofore issued on conversion of the Preferred Stock (including any
dividends paid on conversion by the issuance of Initial Shares), plus
(B) the number of shares theretofore issued as Repricing Shares, plus
(C) two hundred percent (200%) of the number of shares into which the
unconverted Preferred Stock and all dividends thereon through the third
anniversary of their respective issuances would be convertible at the
date of such filing (assuming for such purposes that all such Preferred
Stock had been issued, had been eligible to be converted, and had been
converted, into Initial Shares in accordance with their terms, whether
or not such issuance, eligibility, accrual of dividend, or conversion
had in fact occurred as of such date), or
(Y) if such Registration Statement has been declared effective by the
SEC at that time, file with the SEC an additional Registration
Statement (an "Additional Registration Statement") to register the
number of shares equal to the excess of the Increased Shares Amount
over the aggregate number of shares of Common Stock already registered.
The Company will use its reasonable best efforts to cause such Registration
Statement to be declared effective on a date (each, an "Increased Required
Effective Date") which is no later than (Q) with respect to a Registration
Statement under clause (X) of this subparagraph (ii), the Initial Required
Effective Date and (R) with respect to an Additional Registration Statement, the
earlier of (I) five (5) days after notice by the SEC that it may be declared
effective or (II) thirty (30) days after the Increased Registered Shares Date.
(b) PAYMENTS BY THE COMPANY.
(i) If the Registration Statement covering the Registrable
Securities is not filed in proper form with the SEC by the Required Filing Date,
the Company will make payment to the Initial Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(b).
(ii) If the Registration Statement covering the Registrable
Securities is not effective by the relevant Required Effective Date or if there
is a Restricted Sale Date, then the Company will make payments to the Initial
Investor in such amounts and at such times as shall be determined pursuant to
this Section 2(b).
(iii) The amount (the "Periodic Amount") to be paid by the
Company to the Initial Investor shall be determined as of each Computation Date
(as defined below) and such amount shall be equal to the Periodic Amount
Percentage (as defined below) of the stated value of Preferred Stock for the
period from the date following the relevant Required Filing Date or the Required
Effective
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Date or a Restricted Sale Date, as the case may be, to the first relevant
Computation Date, and thereafter to each subsequent Computation Date. The
"Periodic Amount Percentage" means (A) two percent (2%) of the stated value of
all Preferred Stock for the first Computation Date after the relevant Required
Filing Date, Required Effective Date or Restricted Sale Date, as the case may be
(prorated on a daily basis if such period is less than thirty [30] days); and
(B) three percent (3%) of the stated value of all Preferred Stock to each
Computation Date thereafter (prorated on a daily basis if such period is less
than thirty [30] days). Anything in the preceding provisions of this paragraph
(iii) to the contrary notwithstanding, after the relevant Effective Date, the
stated value shall be deemed to refer to the sum of (X) the stated value of all
Preferred Stock not yet converted and (Y) the Held Shares Value. By way of
illustration and not in limitation of the foregoing, if the Registration
Statement is filed on or before the Required Filing Date, but is not declared
effective until seventy-five (75) days after the Initial Required Registration
Date, the Periodic Amount will aggregate six and one-half percent (6.5%) of the
stated value of the Preferred Stock (2% for days 1-30, plus 3% for days 31-60,
plus 1.5% for days 61-75).
(iv) Each Periodic Amount will be payable by the Company,
except as provided in the other provisions of this subparagraph (iv), in cash or
other immediately available funds to the Investor (1) on the day after the
Required Filing Date, the Required Effective Date or a Restricted Sale Date, as
the case may be, and (2) on the earlier of (A) each thirtieth day thereafter,
(B) the third business day after the date the Registration Statement is filed or
is declared effective, or (C) the third business day after the Registration
Statement has its restrictions removed after the relevant Effective Date, in
each case without requiring demand therefor by the Investor. Notwithstanding the
provisions of the first sentence of this subparagraph (iv), at the option of the
Company, if, but only if the Registration Statement is then currently effective,
the Company will have the option until 90 days after Required Effective Date, to
pay all or any portion of the Periodic Amount by the issuance of additional
shares of Common Stock to the Investor ("Periodic Amount Shares") in an amount
equal to the Periodic Amount being paid thereby divided by the then applicable
Conversion Price.
(v) The parties acknowledge that the damages which may be
incurred by the Investor if the Registration Statement is not filed by the
Required Filing Date or the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended or the shares of the Company's stock are not listed on the Principal
Market, may be difficult to ascertain. The parties agree that the Periodic
Amounts represent a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of such damages.
(vi) [RESERVED]
(vii) "Computation Date" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date, any relevant
Required Effective Date or a Restricted Sale Date, as the case may be, or (2)
the date after the Required Filing Date, such Required Effective Date or
Restricted Sale Date on which the Registration Statement is filed (with respect
to payments
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due as contemplated by Section 2(b)(i) hereof) or is declared effective or has
its restrictions removed or the shares of the Company's stock are listed on the
Principal Market(with respect to payments due as contemplated by Section
2(b)(ii) hereof), as the case may be, and (B) each date which is the earlier of
(1) thirty (30) days after the previous Computation Date or (2) the date after
the previous Computation Date on which the Registration Statement is filed (with
respect to payments due as contemplated by Section 2(b)(i) hereof) or is
declared effective or has its restrictions removed or the shares of the
Company's stock are listed on the Principal Market(with respect to payments due
as contemplated by Section 2(b)(ii) hereof), as the case may be.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall do each of the
following.
(a) Prepare promptly, and file with the SEC by the Required
Filing Date a Registration Statement with respect to not less than the number of
Registrable Securities provided in Section 2(a) above, and thereafter use its
reasonable best efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earliest of (i) the date that is two
(2) years after the last day of the calendar month following the month in which
Final Repricing Period occurs, (ii) the date when the Investor may sell all
Registrable Securities under Rule 144(k) without volume or other restrictions or
limits, or (iii) the date the Investor no longer own any of the Registrable
Securities, which Registration Statement (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;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities 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;
(c) Permit a single firm of counsel designated by the Initial
Investor to review the Registration Statement and all amendments and supplements
thereto a reasonable period of time (but not less than three (3) business days)
prior to their filing with the SEC, and not file any document in a form to which
such counsel reasonably objects.
(d) Notify each Investor, and such Investor's legal counsel
identified to the Company (which, until further notice, shall be deemed to be
Xxxxxxx & Xxxxxx, Attn: Xxxxxx Xxxxxxx, Esq.; "Investor's Counsel") (and, in the
case of (i)(A) below, not less than five (5) days prior to such filing)
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and (if requested by any such Person) confirm such notice in writing no later
than one (1) business day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC respect of a Registration Statement (copies or, in
the case of oral comments, summaries of such comments shall be promptly
furnished by the Company to the Investor); and (D) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated hereby ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (vi) of the
occurrence of any event that to the best knowledge of the Company makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In addition, the
Company shall furnish the Investor with copies of all intended written responses
to the comments contemplated in clause (C) of this Section 3(d) not later than
one (1) business day in advance of the filing of such responses with the SEC so
that the Investor shall have the opportunity to comment thereon.
(e) Furnish to Investor and such Investor's counsel, (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and the prospectus, each amendment or supplement
thereto, all correspondence to, with, or from the SEC, and (ii) such number of
copies of a prospectus, [including a preliminary prospectus], and all amendments
and supplements thereto and such other documents, as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor;
(f) Use all diligent efforts to (i) register and/or qualify
the Registrable Securities covered by the Registration Statement under such
other securities or blue sky laws of such jurisdictions as the Investor may
reasonably request and in which significant volumes of shares of Common Stock
are traded, (ii) 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 at all
times during the Registration Period, (iii) take
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such other actions as may be necessary to maintain such registrations and
qualification in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions: PROVIDED, HOWEVER, that
the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(f), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause more than nominal expense or burden to the Company or (E) make any change
in its charter or by-laws or any then existing contracts, which in each case the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders;
(g) As promptly as practicable after becoming aware thereof,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits 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, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;
(h) As promptly as practicable after becoming aware thereof,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop
order or other suspension of the effectiveness of the Registration Statement at
the earliest possible time;
(i) Notwithstanding the foregoing, if at any time or from time
to time after the date of effectiveness of the Registration Statement, the
Company notifies the Investor in writing of the existence of a Potential
Material Event, the Investor shall not offer or sell any Registrable Securities,
or engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until such Investor receives written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; PROVIDED, HOWEVER, that the
Company may not so suspend the right to such holders of Registrable Securities
for more than two, five (5) day periods in the aggregate during any 12-month
period ("Permitted Suspension Period") with at least a ten (10) business
day interval between such periods, during the periods the Registration Statement
is required to be in effect, and PROVIDED FURTHER that the Company shall, if
lawful to do so, provide the Investor with at least two (2) business days'
notice of the existence but not the substance) of a Potential Material Event.
(j) Use its reasonable efforts to secure and maintain the
listing of all the Registrable Securities covered by the Registration Statement
on the American Stock Exchange.
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(k) Provide a transfer agent for the Registrable Securities
(the "Transfer Agent") not later than the effective date of the Registration
Statement;
(l) Cooperate with the Investor to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts as the case
may be, as the Investor may reasonably request, and, within three (3) business
days after a Registration Statement which includes Registrable Securities is
ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel selected by the Company to deliver, to the Transfer Agent for the
Registrable Securities (with copies to the Investor whose Registrable Securities
are included in such Registration Statement) an appropriate instruction and
opinion of such counsel; and
(m) Comply with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date of
the Registration Statement, which statement shall cover said 12-month period, or
end shorter periods as is consistent with the requirements of Rule 158.
(n) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTOR. In connection with the
registration of the Registrable Securities, the Investor shall have the
following obligations:
(a) 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 a particular 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. At
least ten (10) 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 (the "Requested
Information") if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement. If at least two (2) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company
need not file the Registration Statement until receiving the response of such
Non-Responsive Investor;
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(b) 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 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; and
(c) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g)
or 3(h), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or 3(h).
5. EXPENSES OF REGISTRATION. (a) All reasonable expenses
(other than underwriting discounts and commissions of the Investor) incurred in
connection with registrations, filings or qualifications pursuant to Section 3,
but including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company and a fee for a single counsel for the Investor equal to $4,500 for
each Registration Statement covering the Registrable Securities and $2,000 for
each post-effective amendment to a Registration Statement, shall be borne by the
Company.
(b) Except as otherwise provided for in Schedule 5 hereto and
disclosed in the Exchange Agreement, the Company has not, as of the date hereof,
nor shall the Company, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Investor in this Agreement or otherwise conflicts with the
provisions hereof. Except as otherwise provided for in Schedule 5 neither the
Company nor any of its subsidiaries has previously entered into any agreement
granting any registration rights with respect to any of its securities to any
Person. Except as otherwise provided for in this Section 5, and without limiting
the generality of the foregoing, without the written consent of the Investor
holding a majority of the Registrable Securities, the Company shall not grant to
any person the right to request the Company to register any securities of the
Company under the Securities Act unless the rights so granted are subject in all
respects to the prior rights in full of the Investor set forth herein, and are
not otherwise in conflict or inconsistent with the provisions of this Agreement
and the other Transaction Documents.
6. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Party"), against any
losses, claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such
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Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-effective
amendment thereof, or any prospectus included therein: (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact 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 (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any state securities law or any rule or
regulation under the Securities Act, the Exchange Act or any state securities
law (the matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to clause (b) of this Section 6, the Company shall
reimburse the Investor, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not (I) apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Indemnified Party expressly for use 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(c) hereof; (II) be available to the extent such Claim is based on a failure of
the Investor to deliver or cause to be delivered the prospectus made available
by the Company; or (III) 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. Each Investor will indemnify
the Company and its officers, directors and agents (each, an <-1-147>Indemnified
Party<-1-148>) against any claims arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company, by or on behalf of such Investor, expressly for use in
connection with the preparation of the Registration Statement, or arising out of
or based upon a failure of the Investor to deliver or cause to be delivered the
prospectus made available by the Company, subject to such limitations and
conditions as are applicable to the indemnification provided by the Company to
this Section 6. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investor pursuant to
Section 9.
(b) 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 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 Party, as
the case may
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be. In case any such action is brought against any Indemnified Party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such Indemnified Party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action of its final conclusion. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and reasonable
out-of-pocket expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the Indemnified Party. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the 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 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, HOWEVER, that (a) no contribution shall be made under
circumstances where the indemnifying party 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 Securities Act) shall be entitled to
contribution from indemnifying party who was not guilty of such 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 EXCHANGE ACT. With a view to making available
to the Investor the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
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(c) furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange 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 solely if unavailable by Xxxxx, and (iii) such other information as
may be reasonably requested to permit the Investor to sell such securities
pursuant to Rule 144 without registration.
(d) The Company will, at the request of any Investor of
Registrable Securities, give its Transfer Agent irrevocable instructions
(supported by an opinion of Company counsel, if required or requested by the
Transfer Agent) to the effect that, upon the Transfer Agent's receipt from such
Investor of:
(i) a certificate (a "Rule 144 Certificate") certifying (A) that such
Investor has held the shares of Registrable Securities which the
Investor proposes to sell (the "Securities Being Sold") for a period of
not less than (1) year and (B) as to such other matters as may be
appropriate in accordance with Rule 144 under the Securities Act, and
(B) an opinion of counsel acceptable to the Company (for which purposes
it is agreed that the Initial Investor's Counsel shall be deemed
acceptable) that, based on the Rule 144 Certificate, Securities Being
Sold may be sold pursuant to the provisions of Rule 144, even in the
absence of an effective Registration Statement,
the Transfer Agent is to effect the transfer of the Securities Being Sold and
issue to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the
Investor, as the seller or transferor thereof, or the status, including any
relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Investor). If the Transfer Agent requires any additional
documentation at the time of the transfer, the Company shall deliver or cause to
be delivered all such reasonable additional documentation as may be necessary to
effectuate the issuance of an unlegended certificate.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investor to any transferee of the Registrable
Securities (or any unconverted Preferred Stock) only if: (a) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (b) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is,
subject to the terms of this Agreement and the other Transaction Documents,
restricted under the Securities Act and applicable state securities laws, and
(c) at or before the time the Company received the written notice contemplated
by clause (a) of this sentence, the transferee or assignee agrees in
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writing with the Company to be bound by all of the provisions contained herein.
In the event of any delay in filing or effectiveness of the Registration
Statement as a result of such assignment, the Company shall not be liable for
any damages arising from such delay, or the payments set forth in Section 2(b)
hereof arising from such delay.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of 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 Investor who
hold eighty (80%) percent of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
(a) 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 upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall
be given in the manner contemplated by the Securities Purchase Agreement, (i) if
to the Company or to the Initial Investor, to their respective address
contemplated by the Securities Purchase Agreement, and (ii) if to any other
Investor, at such address as such Investor shall have provided in writing to the
Company, or at such other address as each such party furnishes by notice given
in accordance with this Section 11(b).
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Initial Investor for any reasonable legal fees and disbursements
incurred by the Initial Investor in enforcement of or protection of any of its
rights under this Agreement.
(e) The Company and the Investor hereby waive a trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any
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matter arising out of or in connection with this Agreement or any of the other
Transaction Documents.
(f) 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 or the
validity or enforceability of this Agreement in any other jurisdiction.
(g) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(h) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(i) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(j) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(k) The Company acknowledges that any failure by the Company
to perform its obligations under Section 2(a) hereof, or any delay in such
performance could result in loss to the Investor, and the Company agrees that,
in addition to any other liability the Company may have by reason of such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay, unless the same is the result of force majeure.
Neither party shall be liable for consequential damages.
(l) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
COMPANY:
EUROTECH, LTD.
By: ____________________________________
Name: __________________________________
Title: _________________________________
XXXXXXXX LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
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SCHEDULE 5
REGISTRATION RIGHTS
-------------------
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