REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of
March 3, 2000, between TELULAR CORPORATION, a Delaware corporation with
offices at 000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxx Xxxxx, XX 00000 (the
"Company"), HALIFAX FUND, L.P. a Cayman Islands limited partnership with
offices c/o The Palladin Group, 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000 ("Halifax"), XXXXXXX ASSOCIATES, L.P., a Delaware limited
partnership with an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Xxxxxxx"), and WESTGATE INTERNATIONAL, L.P., a Cayman Islands limited
partnership with an office c/o Stonington Management Corporation, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Westgate"). Each of Halifax,
Xxxxxxx and Westgate are referred to hereinafter individually as an
"Investor" and collectively as the "Investors".
W I T N E S S E T H:
WHEREAS, pursuant to that certain Common Stock Investment Agreement,
dated the date hereof, among the Company and the Investors (the "Purchase
Agreement"), the Company has agreed to sell and issue to the Investors,
and the Investors have agreed to purchase from the Company, inter alia,
an aggregate of 444,445 shares (the "Initial Shares") of the Company's
common stock, $.01 par value ("Common Stock"), and certain warrants, all
as more fully specified and subject to the terms and conditions set forth
in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Purchase Agreement and this Agreement, the Company and the Investors
agree as follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to
such terms in the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
"Holder" and "Holders" shall include the Investors and any
transferee or transferees of the Purchased Shares or Registrable
Securities which have not been sold to the public to whom the
registration rights conferred by this Agreement have been transferred in
compliance with this Agreement and the Purchase Agreement.
The terms "register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement
in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"Purchased Shares" means the Initial Shares, Warrant Shares and
Additional Shares actually acquired by Holders.
"Registrable Securities" shall mean: (i) the Initial Shares;
(ii) the Warrant Shares; (iii) the Additional Shares; (iv) securities
issued or issuable upon any stock split, stock dividend, recapitalization
or similar event with respect to the foregoing; and (v) any other
security issued as a dividend or other distribution with respect to, in
exchange for or in replacement of the securities referred to in the
preceding clauses; provided such securities will cease to be Registrable
Securities for purposes of this Agreement if and to the extent they
become freely saleable by the Holders pursuant to Rule 144.
"Registration Expenses" shall mean all expenses to be incurred by
the Company in connection with each Holder's registration rights under
this Agreement, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, reasonable fees and disbursements of
counsel to Holders (using a single counsel selected by a majority in
interest of the Holders) for a "due diligence" examination of the Company
and review of the Registration Statement and related documents, and the
expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"Registration Statement" shall have the meaning set forth in Section
2(a)(i) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to
the Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees
and disbursements of counsel for Holders not included within
"Registration Expenses._
2. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable
blue sky or other state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act) as would permit
or facilitate the sale or distribution of all the Registrable Securities
in the manner (including manner of sale) and in all states reasonably
requested by any Holder. Such best efforts by the Company shall include,
without limitation, the following:
(a) The Company shall, as expeditiously as possible after
the Closing Date:
(i) But in any event within thirty (30) calendar days
after the Closing, prepare and file a registration statement
with the Commission pursuant to Rule 415 under the Securities
Act on Form S-3 under the Securities Act (or in the event that
the Company is ineligible to use such form, such other form as
the Company is eligible to use under the Securities Act)
covering resales by the Holders of the Registrable Securities
("Registration Statement"). If the Company issues Fill-up
Warrants (as defined in the Purchase Agreement), the Warrant
Shares underlying such Fill-up Warrants shall be included in
such Registration Statement. Thereafter the Company shall use
its best efforts to cause such Registration Statement and other
filings to be declared effective as soon as possible, and in
any event prior to 90 days following the Closing Date. Without
limiting the foregoing, the Company will promptly respond to
all SEC comments, inquiries and requests, and shall request
acceleration of effectiveness at the earliest possible date.
The Company shall provide the Holders and their counsel
reasonable opportunity to review any such Registration
Statement or amendment or supplement thereto prior to filing.
(ii) 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 Act with respect
to the disposition of all securities covered by such
Registration Statement and promptly notify the Holders of the
filing and effectiveness of such Registration Statement and any
amendments or supplements.
(iii) Furnish to each Holder such numbers of copies of
a current prospectus conforming with the requirements of the
Act, copies of the Registration Statement, any amendment or
supplement thereto and any documents incorporated by reference
therein and such other documents as such Holder may reasonably
require in order to facilitate the disposition of Registrable
Securities owned by such Holder.
(iv) Register and qualify the securities covered by
such Registration Statement under the securities or "Blue Sky"
laws of all domestic jurisdictions.
(v) Notify each Holder immediately of the happening of
any event (but not the substance or details of any such events
unless specifically requested by a Holder) as a result of which
the prospectus (including any supplements thereto or thereof)
included in such Registration Statement, as then in effect,
includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to
promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by
the Commission or any state securities commission or agency of
any stop order suspending the effectiveness of the Registration
Statement or the threat or initiation of any proceedings for
that purpose. The Company shall use its best efforts to
prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest
possible time.
(vii) Permit counsel to the Holders to review the
Registration Statement and all amendments and supplements
thereto within a reasonable period of time (but not less than
four (4) full trading days) prior to each filing, and shall not
file any document in a form to which such counsel reasonably
objects and will not request acceleration of the Registration
Statement without prior notice to such counsel.
(viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or
markets on which the Common Stock is then listed and prepare
and file any required filings with the Nasdaq National Market
System or any exchange or market where the Common Shares are
traded.
(ix) Take all steps necessary to enable Holders to
avail themselves of the prospectus delivery mechanism set forth
in Rule 153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events
that may arise that the parties consider will interfere with the full
enjoyment by the Investors of their rights under this Agreement and the
Purchase Agreement (the "Interfering Events"), and (II) certain remedies
applicable in each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe
the Interfering Events, provide a remedy to the Investors if an
Interfering Event occurs and provide that the Investors may require that
the Company repurchase outstanding Purchased Shares at a specified price
if certain Interfering Events are not timely cured.
Paragraph (v) provides, inter alia, that if default
adjustments required as the remedy in the case of certain of the
Interfering Events are not provided when due, the Company may be required
by the Investors to redeem outstanding Purchased Shares at a specified
price.
Paragraph (vi) provides, inter alia, that the Investors
have the right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to
serve only as an introduction to this Section 2(b), are for convenience
only, and are not to be considered in applying, construing or
interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
(A) In the event that such Registration Statement has
not been declared effective within 90 days from the
Closing Date, then the Company shall pay each Holder a
Monthly Delay Payment (as defined below) for each 30 day
period (or portion thereof) that effectiveness of the
Registration Statement is delayed. In addition to the
foregoing, if the Registration Statement has not been
declared effective within 120 days after the Closing Date,
then each Holder shall have the right but not the
obligation to sell to the Company, and the Company shall
have the obligation to purchase for immediately available
funds, at any time after the 120th day after the Closing
Date, any or all of its Purchased Shares for a per share
consideration (the "Mandatory Repurchase Price") equal to
120% of the original purchase price of each Purchased
Share being sold to the Company.
(B) As used in this Agreement, a "Monthly Delay
Payment" shall be a five year Warrant in substantially the
form of Annex A to the Purchase Agreement, but having an
economic value to the Holders at issuance equal to 1% of
the Purchase Price of the Purchased Shares held by a
Holder for the initial 30 day period (or portion thereof)
that the specified condition in this Section 2(b) has not
been fulfilled or the specified deficiency has not been
remedied, and 1 1/2% of the Purchase Price of the Purchased
Shares held by a Holder for each subsequent such 30 day
period (or portion thereof). Payment of the Monthly Delay
Payments and Mandatory Repurchase Price shall be due and
payable from the Company to such Holder within five (5)
business days of demand therefor. Without limiting the
foregoing, if cash payment of the Mandatory Repurchase
Price is not made within such 5 business day period, the
Holder may revoke and withdraw in whole or in part its
election to cause the Company to make such mandatory
purchase at any time prior to its receipt of such cash,
without prejudice to its ability to elect to receive the
Mandatory Repurchase Price in the future.
(ii) No Listing; Premium Price Redemption for Delisting
of Class of Shares.
(A) In the event that the Company fails, refuses or
for any other reason is unable to cause the Registrable
Securities covered by the Registration Statement to be
listed with Nasdaq National Market System or another
Approved Market at all times during the period ("Listing
Period") from the 90th day following the Closing Date
until the fifth (5th) anniversary of the Closing Date,
then each Holder shall have the right from time to time to
sell to the Company, and the Company shall have the
obligation to purchase for immediately available funds,
any or all of its Purchased Shares at the Mandatory
Repurchase Price. In the event that the Company is
statutorily prohibited from purchasing all Purchased
Shares submitted for repurchase, the Company shall only
be required (as long as such prohibition remains) to
purchase a pro rata amount from each Holder based on the
number of Purchased Shares submitted for repurchase by all
Holders. In any case where the Company fails to
repurchase any Purchased Shares as required, in addition
to any other remedies available to the Holders, the
Company shall provide to each Holder a Monthly Delay
Payment in respect of each Purchased Share not so
repurchased, for each 30-day period or portion thereof
during which such listing is not in effect. The
provisions of Section 2(b)(i)(B) shall apply to this
Section 2(b)(ii)(A).
(B) In the event that shares of Common Stock of the
Company are not listed on any of the Approved Markets at
all times following the Closing Date, or are otherwise
suspended from trading and remain unlisted or suspended
for three (3) consecutive days, or if the Registrable
Securities are not listed for three (3) consecutive days
following the Closing, then at the option of each Holder
and to the extent such Holder so elects, each Holder shall
have the right to sell to the Company the Purchased Shares
held by such Holder, in whole or in part, for the
Mandatory Repurchase Price on the terms set forth in
Section 2(b)(i)(B) above.
(iii) Blackout Periods. In the event any Holder's
ability to sell Registrable Securities under the Registration
Statement is suspended for more than an aggregate of thirty
(30) days in any twelve month period ("Suspension Grace
Period"), including without limitation by reason of any
suspension or stop order with respect to the Registration
Statement or the fact that an event has occurred as a result of
which the prospectus (including any supplements thereto)
included in such Registration Statement then in effect includes
an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing (a "Blackout"), then the Company
shall provide to each Holder a Monthly Delay Payment for each
30 day period or portion thereof from and after the expiration
of the Suspension Grace Period, on the terms set forth in
Section 2(b)(i)(B) above. In addition, at any time following
the expiration of the Suspension Grace Period if the Blackout
continues for more than ten (10) additional consecutive days, a
Holder shall have the right to sell to the Company its
Purchased Shares in whole or in part for the Mandatory
Repurchase Price on the terms set forth in Section 2(b)(i)(B)
above.
(iv) Redemption for Exercise Deficiency. In the event
that the Company does not have a sufficient number of shares of
Common Stock available to satisfy the Company's obligations to
any Holder upon receipt of a notice of exercise of a Warrant or
Additional Investment Notice from an Investor, or is otherwise
unable or unwilling for any reason to issue Common Stock as
required by the Warrants or the Purchase Agreement (each, an
"Exercise Deficiency"), then:
(A) The Company shall provide to each Holder a
Monthly Delay Payment for each 30 day period or portion
thereof following the Exercise Deficiency, on the terms
set forth in Section 2(b)(i)(B) above.
(B) At any time five (5) days after the commencement
of the running of the first 30-day period described above
in clause (A) of this paragraph (iv), at the request of
any Holder, the Company promptly shall purchase from such
Holder, and on the terms set forth in Section 2(b)(i)(B)
above, the outstanding Warrants to the extent required to
be issued but not issuable, in each case as a result of
the Exercise Deficiency at a price equal to the excess of
the Mandatory Repurchase Price as applied to the
applicable Warrant Shares over the applicable aggregate
Warrant exercise price.
(v) Mandatory Repurchase Price for Defaults.
(A) The Company acknowledges that any failure,
refusal or inability by the Company to perform the
obligations described in the foregoing paragraphs (i)
through (iv) will cause the Holders to suffer damages in
an amount that will be difficult to ascertain, including
without limitation damages resulting from the loss of
liquidity in the Registrable Securities and the additional
investment risk in holding the Registrable Securities.
Accordingly, the parties agree, after consulting with
counsel, that it is appropriate to include in this
Agreement the foregoing provisions for Monthly Delay
Payments and mandatory redemptions in order to compensate
the Holders for such damages. The parties acknowledge and
agree that the Monthly Delay Payments and mandatory
redemptions set forth above represent the parties' good
faith effort to quantify such damages and, as such, agree
that the form and amount of such payments and mandatory
redemptions are reasonable and will not constitute a
penalty.
(B) In the event that the Company fails to pay any
Monthly Delay Payment within 5 business days of demand
therefor, each Holder shall have the right to sell to the
Company any or all of its Purchased Shares at the
Mandatory Repurchase Price on the terms set forth in
Section 2(b)(i)(B) above.
(vi) Cumulative Remedies. The Monthly Delay Payments
and mandatory redemptions provided for above are in addition to
and not in lieu or limitation of any other rights the Holders
may have at law, in equity or under the terms of the Purchase
Agreement, the Warrants and this Agreement, including without
limitation the right to monetary contract damages and specific
performance. Each Holder shall be entitled to specific
performance of any and all obligations of the Company in
connection with the registration rights of the Holders
hereunder without the necessity of posting a bond or surety.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by nationally or
regionally recognized investment bankers reasonably satisfactory to the
Company.
(d) The Company shall enter into such customary agreements
for secondary offerings (including a customary underwriting agreement
with the underwriter or underwriters, if any) and take all such other
reasonable actions reasonably requested by the Holders in connection
therewith in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the Registrable
Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters, if
any, opinions of independent counsel to the Company, on and
dated as of the effective day (or in the case of an
underwritten offering, dated the date of delivery of any
Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following
the end of each fiscal year thereafter, which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s), if any, and
their counsel and covering, without limitation, such matters as
the due authorization and issuance of the securities being
registered and compliance with securities laws by the Company
in connection with the authorization, issuance and registration
thereof and other matters that are customarily given to
underwriters in underwritten offerings, addressed to the
Holders and each underwriter, if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case
of an underwritten offering, at the time of delivery of any
Registrable Securities sold pursuant thereto), and at the
beginning of each fiscal year following a year during which the
Company's independent certified public accountants shall have
reviewed any of the Company's books or records, a "comfort"
letter from the Company's independent certified public
accountants addressed to the Holders and each underwriter, if
any, stating that such accountants are independent public
accountants within the meaning of the Securities Act and the
applicable published rules and regulations thereunder, and
otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the
independent certified public accountants delivered in
connection with secondary offerings; such accountants shall
have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being
reviewed so that each such letter shall remain current, correct
and complete throughout such fiscal year; and each such letter
and update thereof, if any, shall be reasonably satisfactory to
the Holders;
(iv) if an underwriting agreement is entered into, the
same shall include customary indemnification and contribution
provisions to and from the underwriters and procedures for
secondary underwritten offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable
Securities being sold or by the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement,
and any attorney or accountant retained by any Holder or underwriter, all
financial and other records customary for purposes of the Holders' due
diligence examination of the Company and review of any Registration
Statement, all SEC Documents (as defined in the Purchase Agreement) filed
subsequent to the Closing, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors and employees
to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with
such Registration Statement, provided that such parties agree to keep
such information confidential.
(f) Subject to Section 2(b) above, the Company may suspend
the use of any prospectus used in connection with the Registration
Statement only in the event, and for such period of time as, such a
suspension is required by the rules and regulations of the Commission.
The Company will use its best efforts to cause such suspension to
terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved Registrable Securities
within five (5) business days of any stockholders or directors meeting
formally authorizing same and shall use its best efforts to cause such
Registration Statement to become effective within thirty (30) days of
such stockholders meeting. If the Holders receive any Registrable
Securities that were not already included in a Registration Statement,
subsequent to the date such Registration Statement is declared effective,
and the Company is unable under the securities laws to add such
securities to the then effective Registration Statement, the Company
shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly
Registrable Securities. The Company shall use its best efforts to (i)
cause any such additional Registration Statement, when filed, to become
effective under the Securities Act, and (ii) keep such additional
Registration Statement effective during the period described in Section 5
below and cause such Registration Statement to become effective within 30
days of that date that the need to file the Registration Statement arose.
All of the registration rights and remedies under this Agreement shall
apply to the registration of such newly reserved shares and such new
Registrable Securities, including without limitation the provisions
providing for default payments and mandatory redemptions contained
herein.
3. Expenses of Registration. All Registration Expenses in
connection with any registration, qualification or compliance with
registration pursuant to this Agreement shall be borne by the Company,
and all Selling Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best
efforts to remain qualified for registration on Form S-3 or any
comparable or successor form or forms, or in the event that the Company
is ineligible to use such form, such form as the Company is eligible to
use under the Securities Act.
5. Registration Period. In the case of the registration
effected by the Company pursuant to this Agreement, the Company will use
its best efforts to keep such registration effective until the earlier of
the fifth (5th) anniversary of the Closing Date or the date upon which
such Registrable Securities may be sold freely and without limitation by
the Holders under Rule 144(k) (provided that the Company's transfer agent
has accepted an irrevocable instruction from the Company to such effect,
a copy of which shall have been given and be reasonably acceptable to the
Holders and their counsel). As long as any Registrable Securities are
outstanding, the Company shall do all things necessary to make Rule 144
available to the Holders.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each
Holder, each of its officers, directors, agents and partners, and each
person controlling each of the foregoing, within the meaning of Section
15 of the Securities Act and the rules and regulations thereunder with
respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages, expenses (including the costs of
enforcing this provision) and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, or any violation by the
Company of the Securities Act or any state securities law or in either
case, any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance, and will reimburse
each Holder, each of its officers, directors, agents and partners, and
each person controlling each of the foregoing, each such underwriter and
each person who controls any such underwriter, for any legal and any
other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided
that the Company will not be liable in any such case to a Holder to the
extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission based upon written
information furnished to the Company by such Holder or the underwriter
(if any) therefor and stated to be specifically for use therein. The
indemnity agreement contained in this Section 6(a) 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 Company
(which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the
securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors, officers,
agents and partners, and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15
of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and
partners, and each person controlling such other Holder(s) against all
claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statement therein not
misleading in light of the circumstances under which they were made, and
will reimburse the Company and such other Holder(s) and their directors,
officers and partners, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating
and defending any such claim, loss, damage, liability or action, in each
case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for
use therein, and provided that the maximum amount for which such Holder
shall be liable under this indemnity shall not exceed the net proceeds
received by such Holder from the sale of the Registrable Securities
pursuant to the registration statement in question. The indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid
in settlement of any such claims, losses, damages or liabilities if such
settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification
under this Section 6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim in any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6 except to the
extent that the Indemnifying Party is materially and adversely affected
by such failure to provide notice. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, 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 to such claim or litigation. Each
Indemnified Party shall furnish such non-privileged information regarding
itself or the claim in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required in connection with
the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in
Section 6 herein is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein (other than
by reason of the exceptions provided therein), then each such
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, claims, damages or liabilities as between the
Company on the one hand and any Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company and of
such Holder in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on
the one hand and of any Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying
Party would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Holders or the underwriters were treated
as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraphs. The amount paid or payable by
an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraphs shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter
shall be required to contribute any amount in excess of the amount by
which (i) in the case of any Holder, the net proceeds received by such
Holder from the sale of Registrable Securities pursuant to the
registration statement in question or (ii) in the case of an underwriter,
the total price at which the Registrable Securities purchased by it and
distributed to the public were offered to the public exceeds, in any such
case, the amount of any damages that such Holder or underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements
contained in Sections 6 and 7 and the representations and warranties of
the Company referred to in Section 2(d)(i) shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement
or the Purchase Agreement or any underwriting agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by or on
behalf of the Company, and (iii) the consummation of the sale or
successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the
Company such information regarding such Holder and the distribution
and/or sale proposed by such Holder as the Company may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
The intended method or methods of disposition and/or sale (Plan of
Distribution) of such securities as so provided by such Investor shall be
included without alteration in the Registration Statement covering the
Registrable Securities and shall not be changed without written consent
of such Holder.
10. Replacement Certificates. The certificate(s) representing
the shares Common Stock held by any Investor (or then Holder) may be
exchanged by such Investor (or such Holder) at any time and from time to
time for certificates with different denominations representing an equal
aggregate number of shares or Common Stock, as reasonably requested by
such Investor (or such Holder) upon surrendering the same. No service
charge will be made for such registration or transfer or exchange.
11. Transfer or Assignment. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. Without limiting
the foregoing, if the Company merges with and into another corporation in
a transaction in which the Common Stock holders of the Company receives
shares of another publicly traded company, the publicly traded company
issuing such shares will assume the Company's obligations under this
Agreement as a condition of such merger. The rights granted to the
Investors by the Company under this Agreement to cause the Company to
register Registrable Securities may be transferred or assigned (in whole
or in part) to a permitted transferee or assignee of Registrable
Securities or Warrants, and all other rights granted to the Investors by
the Company hereunder may be transferred or assigned to any such
transferee or assignee; provided in each case that the Company must be
given written notice by the such Investor at the time of or within a
reasonable time after said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the securities
with respect to which such registration rights are being transferred or
assigned; and provided further that the transferee or assignee of such
rights agrees in writing to be bound by the registration provisions of
this Agreement.
12. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge
and agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions
to prevent or cure breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof without the
necessity of posting a bond or surety, this being in addition to any
other remedy to which any of them may be entitled by law or equity.
(b) Jurisdiction. EACH OF THE COMPANY AND EACH OF THE
INVESTORS (I) HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT, THE NEW YORK STATE COURTS AND OTHER
COURTS OF THE UNITED STATES SITTING IN NEW YORK COUNTY, NEW YORK FOR THE
PURPOSES OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND (II) HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND THE INVESTORS
CONSENT TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN
THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
(c) Notices. Any notice or other communication required
or permitted to be given hereunder shall be in writing by facsimile, mail
or personal delivery and shall be effective upon actual receipt of such
notice. The addresses for such communications shall be:
to the Company:
Telular Corporation
000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with copies to:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
to the Investors:
Halifax Fund, L.P.
c/o The Palladin Group, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxx
AND
Xxxxxxx Associates, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
AND
Westgate International, L.P.
c/o Stonington Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
Any party hereto may from time to time change its address for notices by
giving at least five days' written notice of such changed address to the
other parties hereto.
(d) Indemnity. Each party shall indemnify each other
party against any loss, cost or damages (including reasonable attorney's
fees) incurred as a result of such parties' breach of any representation,
warranty, covenant or agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter. The
representations and warranties and the agreements and covenants of the
Company and each Investor contained herein shall survive the Closing.
(f) Execution in Counterpart. This Agreement may be
executed in two or more counterparts, all of which shall be considered
one and the same agreement, it being understood that all parties need not
sign the same counterpart.
(g) Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of
the Investors without their consent, unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of
such requirement. The Company agrees to submit for reasonable review and
comment a copy of any public announcement regarding the matters covered
by this Agreement or any agreement or document executed herewith to the
Investors and any public announcement including the name of the Investors
to the Investors, prior to the publication of such announcements.
(h) Entire Agreement; Amendment. This Agreement, together
with the Purchase Agreement, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire
understanding and agreement of the parties, and may not be amended,
modified or terminated except by a written agreement signed by the
Company plus the Holders of two-thirds (2/3) of the Registrable
Securities (as if all are Warrants were exercised).
(i) Governing Law. THIS AGREEMENT AND THE VALIDITY AND
PERFORMANCE OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE
EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE COMPANY'S
ISSUANCE OF SECURITIES.
(j) Titles. The titles used in this Agreement are used
for convenience only and are not to be considered in construing or
interpreting this Agreement.
(k) Unconditional Obligation. The obligations of the
Company hereunder are unconditional and no alleged claim against the
Investors shall excuse the Company from its obligations hereunder
(without prejudice to the Company's right to commence an action against
the Investors to assert any such claims).
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
TELULAR CORPORATION
By:
Name:
Title:
INVESTORS:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.
Attorney-in-Fact
By: PALLADIN CAPITAL MANAGEMENT, LLC
General Partner
By:
Name:
Title:
XXXXXXX ASSOCIATES, L.P.
By:
Xxxxxx Xxxxxxxxx
Title:
By: WESTGATE INTERNATIONAL, L.P.
By: MARTLEY INTERNATIONAL, INC.
As Attorney-in-Fact
By:
Xxxxxx Xxxxxxxxx
Vice President
