EXHIBIT 4.02
VIDEONICS, INC.
HOLDER RIGHTS AGREEMENT
THIS VIDEONICS, INC. HOLDER RIGHTS AGREEMENT (this "Agreement") is
entered into as of September 15, 1999 by and among Videonics, Inc., a California
corporation (the "Company"), and the Venture Banking Group, a division of
Cupertino National Bank ("Holder") pursuant to the LOAN AND SECURITY AGREEMENT
dated August 25, 1999 (the "Loan Agreement"). Collectively, the Holder and the
Company are referred to herein as the parties and they are the only parties
hereto.
1. Registration Rights.
1.01 Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Common Stock" means the Company's Common Stock.
(d) "Form S-3" means such form under the 1933 Act as in effect
on the date hereof or any registration form under the 1933 Act subsequently
adopted by the Securities and Exchange Commission ("SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(e) The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act, and the
declaration or ordering of the effectiveness of such registration statement or
document by the SEC.
(f) The term "Registrable Securities" means: (i) the Common
Stock of the Company issued or issuable upon exercise of the Warrant; and (ii)
any Common Stock of the Company issued (or issuable upon the exercise of the
Warrant) by way of a stock split, stock dividend, recapitalization, merger or
other distribution with respect to, or in exchange for, or in replacement of,
Common Stock issuable upon the exercise of the Warrant.
(g) The number of shares of "Registrable Securities then
outstanding" shall be the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable securities which are, Registrable Securities.
(h) "Equity securities" shall mean any of the Company's
securities.
(i) The Term "Warrant" means that certain warrant for 95,000
shares of the Company's common stock being issued to the Holder pursuant to the
Loan Agreement.
1.02 Form S-3 Registration. The Company will use its best commercial
efforts to effect a registration on Form S-3 (or any similar successor form) and
any related qualification or compliance with respect to all the Registrable
Securities owned by the Holder so that such registration will be effective on or
before March 15, 2000; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to this Section: (i) if the Company is not qualified as a registrant entitled to
use Form S-3 (or the applicable successor form); (ii) if the Company shall
furnish to the Holder a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than one hundred twenty (120) days after the
date of the certificate; provided, however, that the Company shall not utilize
this right more than once in any twelve (12) month period; or (iii) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
After filing the Form S-3, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
(b) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by it.
(c) Use its best commercial efforts to register and qualify
the securities covered by such registration statement under the securities laws
of such jurisdictions as shall be reasonably appropriate for the distribution of
the securities covered by the registration statement; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction, and further provided that (anything in this
Agreement to the contrary notwithstanding with respect to the bearing of
expenses) if any jurisdiction in which the securities shall be qualified shall
require that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by selling shareholders, then such
expenses shall be payable by the selling Holder, to the extent required by such
jurisdiction if such Holder does not elect to withdraw from the registration
after notice of such requirement.
(d) Notify the Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the happening of any event as a
result of which the prospectus included in such 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
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not misleading in light of the circumstances then existing. In such instance,
Company shall use its best efforts to cure any such statement or omission so as
to render such statement or omission not misleading.
1.03 Furnish Information. In connection with any action pursuant to
this Section 1, the Holder shall furnish to the Company such information
regarding itself, its Registrable Securities, and the intended method of
disposition of such securities as shall be required to effect the registration
of the Registrable Securities. In that connection, the Holder shall be required
to represent to the Company that all such information which is given is both
complete and accurate in all material respects when made.
1.04 Expenses of Registration.
(a) All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 1.02 shall be
borne by the Company. All Selling Expenses shall be borne by the Holder.
(b) Definitions: "Registration Expenses" shall mean all
expenses incurred by the Company in complying with Section 1.02 hereof,
including, without limitation, all registration, filing and qualification fees,
underwriters' expense allowances, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses. "Selling Expenses" shall
mean all underwriting discounts and selling commissions applicable to the sale
of the Registrable Securities in the registration, all fees and disbursements of
any special counsel (other than the Company's regular counsel) for the Holder.
1.05 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Holder, the officers, directors and partners of the
Holder, any underwriter (as defined in the 0000 Xxx) for the Holder and each
person, if any, who controls the Holder or underwriter within the meaning of the
1933 Act or the 1934 Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the 1933 Act, the 1934
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto; (ii) 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; or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the 1933 Act, the 1934 Act or any state securities
law; and the Company will reimburse the Holder, officer, director or partner,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
Company's indemnity contained in this Section 1.05(a) shall not apply to
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amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished in writing and expressly stated
for use in connection with such registration by the Holder, or the Holder's
officers, directors or partners, underwriter, or controlling person. The Company
shall not be required to indemnify any person against any liability arising (i)
from any untrue or misleading statement or omission contained in any preliminary
prospectus if such deficiency is corrected in the final prospectus or (ii) out
of the failure of any person to deliver a prospectus as required by the 1933
Act. The indemnity provided for in this Section 1.05(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of such
seller, underwriter, participating person or controlling person and shall
survive transfer of such securities by such seller.
(b) To the extent permitted by law, the selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the 1933 Act, any underwriter (within
the meaning of the 0000 Xxx) for the Company, any person who controls such
underwriter, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
1933 Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Holder expressly stated in a writing for
use in connection with such registration; and the Holder will reimburse any
legal or other expenses, as incurred, where same are reasonably incurred by any
person intended to be indemnified pursuant to this Section 1.05(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 1.05(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the liability of the Holder under this
Section 1.05(b) shall be limited to an amount equal to the proceeds from the
public offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.05 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.05, notify the
indemnifying party in writing of the commencement thereof, and the indemnifying
party shall have the right to participate in and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the reasonable fees and expenses to be paid by the
indemnifying party if the indemnified party reasonably determines that
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to notify an indemnifying party within a
reasonable time of the commencement of any
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such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 1.05, but the omission so to notify the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.05.
(d) In order to provide for just and equitable contribution to
joint liability under the 1933 Act in any case in which either (i) any
indemnified party makes a claim under this Section 1.05 or any controlling
person of such indemnified party makes such a claim but is judicially determined
(by entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 1.05 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of any such person
seeking indemnity under the terms of this Section 1.05; then, and in each such
case, the Company and such person will contribute to the aggregate losses,
claims, damages, or liabilities to which they may be subject (after contribution
from others) in such proportion so that such person is responsible for the
portion represented by the percentage that the public offering price of the
Registrable Securities offered by the registration statement bears to the public
offering price of all securities offered by such registration statement, and the
Company is responsible for the remaining portion; provided, however, that, in
any such case, (A) no such person shall be required to contribute any amount in
excess of the amount of the proceeds received by it in such offering; and (B) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
1.06 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holder the benefits of Rule 144 promulgated under the
1933 Act and any other rule or regulation of the SEC that may at any time permit
the Holder to sell securities of the Company to the public without registration,
the Company agrees to:
(a) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144, at all times;
(b) use its best efforts to 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; and
(c) furnish to the Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request: (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act (at any time after it has become subject to such
reporting requirements), or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time after it so qualifies); (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such other information
as may be reasonably requested in order to permit the Holder to avail itself of
any rule or regulation of the SEC or any state securities authority which
permits the selling of any such securities without registration or pursuant to
such form.
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2. General Provisions.
2.01 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby, and to effect the intent and purpose of this Agreement.
2.02 Rights Cumulative. Each and all of the various rights, powers and
remedies of the parties hereto shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
2.03 Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
2.04 Notices. All notices, consents or demands of any kind which any
party to this Agreement may be required or may desire to serve on any other
party hereto in connection with this Agreement shall be in writing and may be
delivered by personal service or overnight delivery, by telex or facsimile
transfer addressed to the address on the signature page of this Agreement.
Service of any such notice or demand shall be deemed complete on the date of
actual delivery or at the expiration of the fourth (4th) business day after the
date sent, whichever is earlier in time. Any party hereto may from time to time
by notice in writing served upon the others as aforesaid, designate a different
mailing address or a different person to which such notices or demands are
thereafter to be addressed or delivered. Facsimile transmissions shall be
followed up by personal or overnight delivery and shall not be effective unless
receipt confirmation has been acknowledged.
2.05 Captions. Captions are provided herein for convenience only and
they form no part of this Agreement and are not to serve as a basis for
interpretation or construction of this Agreement, nor as evidence of the
intention of the parties hereto.
2.06 Severability. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement shall not
affect the validity or enforceability of any other of its provisions. If one or
more provisions hereof shall be so declared invalid or unenforceable, the
remaining provisions shall remain in full force and effect and shall be
construed in the broadest possible manner to effectuate the purposes hereof. The
parties further agree to replace such void or unenforceable provisions of this
Agreement with valid and enforceable provisions which will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provisions.
2.07 Attorneys' Fees. In any action at law or in equity to enforce any
of the provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the
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court in a final judgment or decree, shall pay the successful party all
reasonable costs, expenses and attorneys' fees incurred by the successful party
(including, without limitation, costs, expenses and fees on any appeal) with
respect to such action.
2.08 Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, and when executed,
separately or together, shall constitute a single original instrument, effective
in the same manner as if the parties hereto had executed one and the same
instrument.
2.09 Waiver. Any party hereto may, as to itself, by a writing signed by
an authorized representative of such party: (i) extend the time for the
performance of any of the obligations of another party; (ii) waive any
inaccuracies in representations and warranties made by another party contained
in this Agreement or in any documents delivered pursuant hereto; (iii) waive
compliance by another party with any of the covenants contained in this
Agreement or the performance of any obligations of such other party; or (iv)
waive the fulfillment of any condition that is precedent to the performance by
such party of any of its obligations under this Agreement. No waiver of any
term, provision or condition of this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be, or be construed as, a
further or continuing waiver of any such term, provision or condition or as a
waiver of any other term, provision or condition of this Agreement.
2.10 Entire Agreement. This Agreement (together with its Exhibits and
the other documents referred to herein) is intended by the parties hereto to be
the final expression of their agreement and constitutes and embodies the entire
agreement and understanding of the parties with regard to the subject matter
hereof and is a complete and exclusive statement of the terms and conditions
thereof, and shall supersede any and all prior correspondence, conversations,
negotiations, agreements or understandings relating to the same subject.
2.11 Choice of Law. It is the intention of the parties that the
internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms and the interpretation of the rights and duties of the parties.
2.12 Binding on Heirs, Successors and Assigns; Assignment of Specific
Rights.
(a) This Agreement and all of its terms, conditions and
covenants are intended to be fully effective and binding, to the extent
permitted by law, on the heirs, executors, administrators, successors and
permitted assigns of the parties hereto.
(b) The rights held by the Holder under Section 1 of this
Agreement shall not be assignable.
2.13 Survival. The respective representations and warranties given by
each of the parties, as contained herein shall survive without regard to any
investigation made by any party. All statements as to factual matters contained
in any certificates, exhibits or other instruments delivered by or on behalf of
any party pursuant to the terms hereto or in connection with the transactions
contemplated hereby shall be deemed, for all purposes, to constitute
representations
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and warranties by such party under the terms of this Agreement given as of the
date of such certificate or instrument.
2.14 Amendment. Any provision of this Agreement may be amended or the
observance thereof may be waived upon the written consent of the Company and the
Holder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
with the intent and agreement that the same shall be effective as of the day and
year first above written.
THE COMPANY: Videonics, Inc.
By: /s/ Xxxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx
---------------------------------
Title: V.P. Finance and CFO
--------------------------------
Address: ___________________________
___________________________
HOLDER: Venture Banking Group
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
---------------------------------
Title: Commercial Loan Officer
--------------------------------
Address: ___________________________
___________________________
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