REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 28, 1999
BY AND BETWEEN
AZUREL LTD.
AND
XXXXX HOLDINGS, INC.
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 28, 1999, by and between AZUREL LTD. a corporation
organized and existing under and by virtue of the laws of the State of Delaware
(the "Company"); and XXXXX HOLDINGS, INC., a corporation organized and existing
under and by virtue of the laws of the State of Delaware (the "Investor").
This Agreement is made pursuant to SECTION 1.3 of the Credit Agreement
dated as of May 28, 1999, by and between the Company and the Investor (the
"Credit Agreement"). The Company has agreed to provide the Investor the
registration rights with respect to the Registerable Securities, as defined and
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the advance of funds under the Credit Agreement. Unless otherwise
separately defined herein, all capitalized terms used in this Agreement shall
have the meanings ascribed to them as set forth in the Warrant, dated May 28,
1999, made by the Company in favor of the Investor (the "Warrant").
The parties hereby agree as follows:
1. SECURITIES SUBJECT TO THIS AGREEMENT
(a) DEFINITIONS. The term "Registerable Securities" means the Warrant Stock
as defined in the Warrant. The term "1933 Act" means the securities Act of 1933,
as amended. The term "1934 Act" means the Securities Exchange Act of 1934, as
amended. 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 effectiveness of such registration statement or document.
(b) RESTRICTED SECURITIES. The Warrant Stock are "restricted securities",
as that term is defined in Rule 144 promulgated under the 1933 Act (the
"Restricted Securities"). For the
purposes of this Agreement, any Registerable Security will cease to be a
Restricted Security when (i) a registration statement covering such Restricted
Security has been declared effective by the United States Securities and
Exchange Commission (the "Commission"), and the Restricted Security has been
disposed of pursuant to such effective registration statement; (ii) it can be
distributed to the public pursuant to Rule 144 (or any similar provision then in
force) under the 1933 Act; or (iii) it is exchanged (without additional cost,
expense or tax liability to the Investor) for an identical or substantially
identical security which is or has been registered under the 1933 Act or may be
sold and disposed of without an effective registration statement under the 1933
Act.
(c) REGISTERABLE SECURITIES. As to any particular Registerable Security,
such security will cease to be a Registerable Security when it ceases to be a
Restricted Security.
(d) HOLDERS OF REGISTERABLE SECURITIES. A Person is deemed to be a holder
of Registerable Securities whenever such Person owns Registerable Securities or
has a right to acquire such Registerable Securities, whether or not such
acquisition has actually been effected; PROVIDED, that in no event will any
Registerable Security be deemed to be owned by more than one Person.
(e) STOCK SPLITS, DIVIDENDS, ETC. The provisions of this Agreement shall
apply to any shares or other securities resulting from any stock split or
reverse split, stock dividend, reclassification of the capital stock of the
Company, consolidation or reorganization of the Company, and any shares or other
securities of the Company or of any successor company which may be received by
the Investor by virtue of its ownership of Registerable Securities.
2. REQUIRED REGISTRATION
(a) DEMAND REGISTRATION. The Company agrees to file within 30 days of the
written request of Investor one "shelf" registration statement on any
appropriate form pursuant to Rule 415 under the 1933 Act and/or any similar rule
that may be adopted by the SEC with respect to the Registerable Securities (the
"Shelf Registration"). The Company agrees to use its best efforts to have the
Shelf Registration declared effective as soon as reasonably practicable after
such filing, and to keep the Shelf Registration continuously effective (i) for a
period of three (3) years with respect to the Warrant Stock (or, if for any
reason the effectiveness of the Shelf Registration is suspended, such period
shall be extended by the aggregate number of days of each such suspension),
following the date on which the Shelf Registration is declared effective;
PROVIDED, HOWEVER, that the effectiveness of the Shelf Registration may be
terminated earlier with respect to any issue of securities if and to the extent
that none of the securities of such issue registered therein are Restricted
Securities or are outstanding.
The Company further agrees if necessary, to supplement or amend any Shelf
Registration, as required by the registration form utilized by the Company or by
the instructions applicable to such registration form or by the 1933 Act or the
rules and regulations thereunder, and the Company agrees to furnish to the
holders of Registerable Securities copies of any such supplement or amendment
prior to its being used and/or filed with the SEC. The Company
agrees to pay all of its Registration Expenses (as hereinafter defined) in
connection with the Shelf Registration, whether or not it becomes effective.
The holders of the Registerable Securities to be registered shall pay, PRO
RATA, all underwriting discounts and commissions or placement fees of any
investment banker or bankers and/or manager or managers used in connection with
the sale of their Registerable Securities pursuant to the Registration
Statement.
(b) PIGGY-BACK REGISTRATION
(i) In the event that the Company proposes to register any Common
Stock under the 1933 Act, other than (i) pursuant to a registration statement on
Forms S-4 or S-8 or any successor to such Forms and (ii) other than pursuant to
Section 2(a) above, for the purpose of the sale of Common Stock owned by any
present or future holder of Common Stock (other than the Company), or any other
obligation of the Company to register securities on Form X-0, X-0 or S-3, or any
successor to such Forms, the Company shall mail or deliver to all holders of
Registerable Securities, at least 10 days prior to the filing with the SEC of
the registration statement covering such Common Stock, a written notice (a
"Registration Notice") of its intention so to register such Common Stock.
(ii) In the event that a Registration Notice shall have been so mailed
or delivered, each holder of Registerable Securities may elect to include in
such registration statement such percentage of its Registerable Securities as
equals the percentage derived by adding all of the shares of Common Stock
registered on behalf of each of the holders on whose behalf such registration
statement is being filed (excluding the holders of Registerable Securities) and
dividing such number by the total number of shares of Common Stock owned by such
holders (excluding the holders of Registerable Securities). To the extent that a
holder of Registerable Securities chooses to include such Registerable
Securities as it is entitled to include pursuant to the preceding sentence such
holder shall mail or deliver to the Company, a written notice (a "Supplemental
Notice") (A) specifying the number of shares of Registerable Securities proposed
to be sold or otherwise transferred by such holder, (B) describing the proposed
manner of sale or other transfer thereof under the Securities Act; PROVIDED,
HOWEVER, that such Supplemental Notice shall be so mailed or delivered by such
holder not more than 5 days after the date of delivery to such holder of a
Registration Notice.
3. HOLDBACK AGREEMENT; RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTERABLE
SECURITIES.
In connection with the piggyback registration statement referred to in
Section 2 above, to the extent not inconsistent with applicable law, each holder
of Registerable Securities whose securities are included in such registration
statement agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Company or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Act, during the 14 Business Days prior to,
and for such period of time following the effective date not to exceed a 9-month
period as the Company or any managing
underwriter of an offering of securities subject to such piggyback registration
may specify, if and to the extent timely notified of such restriction in writing
by the Company, in the case of a non-underwritten public offering, or by the
managing underwriter or underwriters, in the case of an underwritten public
offering, and the Company or such underwriter(s) provide a written opinion to
the effect that earlier sale of the Registerable Securities would materially,
adversely affect the Company's primary offering of securities.
4. REGISTRATION EXPENSES
Subject to the limitation on expenses provided in Section 2, all expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, all fees and
expenses associated with filings required to be made with the National
Association of Securities Dealers, Inc. ("NASD") and/or The NASDAQ Stock Market
("NASDAQ"), as may be required by the rules and regulations of the NASD or
NASDAQ, fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel in connection with blue sky
qualifications of the Registerable Securities), rating agency fees, printing
expenses (including expenses of printing certificates for the Registerable
Securities in a form eligible for deposit with the Depositary Trust Company and
of printing prospectuses if the printing of prospectuses is requested by a
holder of Registerable Securities), messenger and delivery expenses, internal
expenses (including, without limitation, all, salaries and expenses of their
officers and employees performing legal or accounting duties), fees and expenses
of counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), securities acts liability insurance (if the
Company elects to obtain such insurance), fees and expenses of other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses") will be borne by the Company; PROVIDED that in no event shall
Registration Expenses include any underwriting discounts, commissions or fees
attributable to the sale of the Registerable Securities.
5. FURTHER OBLIGATIONS OF THE COMPANY
(a) The Company shall, as soon as reasonably possible, use its best efforts
to register and qualify the Registrable Securities covered by any registration
statement described herein under such other securities or "blue sky" laws of
such jurisdictions as shall be reasonably requested by the Investor, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions unless the Company is already
subject to such service in such jurisdiction and except as may be required by
the 0000 Xxx.
(b) The Company shall as soon, as reasonably possible, furnish to the
Investor (or one broker or agent designated by the Investor) such numbers of
copies of a prospectus in conformity with the requirement of the 1933 Act, and
such other documents as the Investor may reasonably request in order to
facilitate the resale or other disposition of the Registerable Securities owned
by them.
(c) Prior to filing any registration statement pursuant to this Agreement,
the Company shall provide a draft of the registration statement to the Investor
and its counsel within 10 days prior to filing, and the Company shall use
commercially reasonable efforts to include the comments of the Investor and its
counsel in the registration statement.
6. INDEMNIFICATION: CONTRIBUTION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify each
holder of Registerable Securities, its general partners, general partners of the
general partner, limited partners, officers, directors, employees and agents and
each Person who controls such holder (within the meaning of the 1933 Act),
against all losses, damages, liabilities (joint or several) and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus,
or any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus or preliminary prospectus,
in light of the circumstances under which they are made) not misleading, except
insofar as the same are contained in any information with respect to such holder
furnished in writing to the Company by such holder expressly for use therein or
any violation by the Company of the 1933 Act, 1934 Act, or the rules promulgated
thereunder that does not result from conduct by the Persons indemnifiable by the
Company under this Section 6(a). The Company also agrees to reimburse each such
holder and each such officer, director, partner and controlling Person for any
legal or other expenses reasonably incurred by such holder or such officer,
director, partner or controlling person in connection with investigating or
defending any such loss, damage, liability or action to the extent that the same
are not incurred in connection with the proviso of the preceding sentence.
(b) INDEMNIFICATION BY HOLDERS OF REGISTERABLE SECURITIES. In connection
with any registration statement in which a holder of Registerable Securities is
participating, each such holder will furnish to the Company in writing, such
information and affidavits with respect to such holder as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and agrees to indemnify, to the extent permitted by law, the Company,
the directors, officers, employees and agents and each Person who controls the
Company (within the meaning of the Act), and any investment advisor thereof or
agent therefor against any losses, damages, liabilities and expenses resulting
from any untrue statement of a material fact or any omission of a material fact
required to be stated in the registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, to the extent, but only to the extent,
that such untrue statement or omission is contained in or failed to be contained
in any information or affidavit with respect to such holder so furnished in
writing by such holder specifically for inclusion therein or resulting from the
violation of applicable securities laws by such holder or its agents in
connection with the sale of the Registerable Securities.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding against such person or
investigation thereof made in writing for which such person will claim
indemnification or contribution pursuant to this Agreement and, unless in the
reasonable judgment of counsel to such indemnified party a conflict of interest
may exist between such indemnified party and the indemnifying party with respect
to such claim which would not permit the same counsel to represent the
indemnifying and indemnified parties, permit the indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to such
indemnified party. If the indemnifying party is not entitled to, or elects not
to, assume the defense of a claim (including as the result of a conflict of
interest which, in the reasonable judgment of counsel to such indemnified party,
does not permit the same counsel to represent the indemnified and indemnifying
parties), it will not be obligated to pay the fees and expenses of more than one
counsel with respect to such claim other than counsel to the indemnifying party.
No indemnifying party will be required to consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation. The
indemnifying party will not be subject to any liability for any settlement made
without its consent. The failure of any indemnified party to give such notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Agreement unless, and only to the extent that, the failure of the
indemnified party to give such notice is (i) deliberate and wilful and (ii)
results in actual harm to the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this Section 6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, damages, liabilities or expenses referred to therein by
reason other than that set forth in the exception in the first sentence of
Section 6(a) hereof and Section 6(b) hereof, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions or inactions which resulted in such losses, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by PRO RATA
allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 6, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 6(a) and (b) without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided for in
this Section 6(d).
In the event that any provision of an indemnification clause in an
underwriting agreement executed by or on behalf of a holder of Registerable
Securities differs from a provision in this Section 6, such provision in the
underwriting agreement shall determine such holder's rights in respect thereof.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
The Investor may not participate in any underwritten registration with
respect to the Registerable Securities unless it (a) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements (including applicable "lock-up" arrangements described in Section 3
of this Agreement) and (b) agrees to pay its pro rata portion of all
underwriting discounts, commissions and fees.
8. RULE 144
The Company covenants that it will file the reports required to be filed by
it under the 1933 Act and the 1934 Act and the rules and regulations adopted by
the SEC thereunder (or, if it is not required to file such reports, it will make
publicly available such information including information required by Rule
15c2-11 promulgated under the 1934 Act as will enable the holders of
Registerable Securities to sell any Registerable Securities held by them without
registration as described in this Section 7); and it will take such further
action as any holder of Registerable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registerable
Securities without registration under the 1933 Act within the limitation of the
exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon the reasonable request of any holder of Registerable
Securities, the Company will deliver to such holder a written statement as to
filings made by the Company with the SEC.
9. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the
written consent of holders of at least a majority of the then outstanding
Registerable Securities affected by such amendment, modification, supplement,
waiver or departure.
(b) NOTICES. All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, facsimile (with confirmation back),
nationally recognized overnight courier, or registered first-class mail:
(i) if to a holder of Registerable Securities, at the most current
address, and with a copy to be sent to each additional address given by
such holder to the Company, in writing, with a copy to each of such
holder's (i) litigation counsel and (ii) securities counsel which current
information is as follows:
With a copy to:
Xxxxx Holdings, Inc.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 00
Xxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx, President
Nixon, Hargrave, Devans & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telephone #: 000-000-0000
Facsimile: 212-940-3111
(ii) if to the Company at:
Azurel Ltd.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, Chairman
With a copy to:
Xxxxxxx Savage & Xxxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone #: (000) 000-0000
Facsimile #: (000) 000-0000
All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered, upon receipt if
delivered by facsimile, one-day
after delivery to overnight courier priority delivery, or five Business Days
after being deposited in the mail, postage prepaid, if mailed.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within that jurisdiction. The parties hereto agree to
submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to this Agreement.
(g) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the holders
of Registerable Securities shall be enforceable to the fullest extent permitted
by law.
(h) ENTIRE AGREEMENT. This Agreement, together with the Purchase Agreement
the Warrant and the Settlement Agreement, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement and the Purchase Agreement (including the
exhibits and schedules thereto) supersede all prior agreements, negotiations,
and understandings between the parties with respect to such subject matter.
(i) ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is successfully
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AZUREL, LTD
By: /S/ XXXXXX XXXXXX
THE INVESTOR:
XXXXX HOLDINGS, INC.
By: /S/ XXXXXXXXX XXXXXXXX
Name: Xxxxxxxxx Xxxxxxxx
Title: Executive Vice President
