REGISTRATION RIGHTS AGREEMENT
Exhibit
2.03
This
Registration Rights Agreement (this "Agreement") is made
and entered into as of November 21, 2007, by and among BluePhoenix Solutions
Ltd., an Israeli company (the "Company"), and the
purchasers listed on Schedule I hereto
(the "Purchasers").
This
Agreement is being entered into pursuant to the Securities Purchase Agreement
dated as of the date hereof among the Company and the Purchasers (the "Purchase
Agreement").
The
Company and the Purchasers hereby agree as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Advice"
shall have
meaning set forth in Section 3(m).
"Affiliate"
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling"
and
"controlled"
have meanings correlative to the foregoing.
"Board"
shall have
meaning set forth in Section 3(n).
"Business
Day" means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the state of New York or Israel generally
are authorized or required by law or other government actions to
close.
"Closing
Date" means
the date of the closing of the purchase and sale of the Shares and Warrants
pursuant to the Purchase Agreement.
"Effectiveness
Date"
means with respect to the Registration Statement the earlier of (A) the
ninetieth (90th)
day
following the date hereof (or in the event the Registration Statement receives
a
review by the Commission, the one hundred thirty fifth (135th)
day
following the date hereof) or (B) the date which is within five
(5)
Business Days after the date on which the SEC informs the Company (i) that
the
SEC will not review the Registration Statement or (ii) that
the Company may request the
acceleration of the effectiveness of the Registration Statement and the Company
makes such request; provided that,
if the Effectiveness Date falls
on
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a
Saturday,
Sunday or any other
day which shall be a legal holiday or a day on which the SEC is authorized
or
required by law or other government actions to close, the Effectiveness Date
shall be the following Business Day.
"Effectiveness
Period"
shall have the meaning set forth in Section 2.
"Event"
shall have the
meaning set forth in Section 7(c).
"Event
Date" shall
have the meaning set forth in Section 7(c).
"Exchange
Act" means
the Securities Exchange Act of 1934, as amended.
"Filing
Date" means
the forty-fifth (45th)
day
following the date hereof;
provided that,
if the Filing Date falls on a
Saturday, Sunday or any other day which shall be a legal holiday or
a day
on which the SEC is authorized or required by law or other government actions
to
close, the Filing Date shall be the following Business Day.
"Holder"
or "Holders" means the
holder or holders, as the case may be, from time to time of Registrable
Securities.
"Indemnified
Party"
shall have the meaning set forth in Section 5(c).
"Indemnifying
Party"
shall have the meaning set forth in Section 5(c).
"Losses"
shall have
the meaning set forth in Section 5(a).
"Ordinary
Shares"
means the ordinary shares of the Company, par value NIS 0.01 per
share.
"Person"
means an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity
of
any kind.
"Proceeding"
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
"Prospectus"
means the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
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"Registrable
Securities" means (i) the Shares issued pursuant to the Purchase
Agreement and (ii) the Ordinary Shares issuable upon exercise of the
Warrants.
"Registration
Statement" means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case)
the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration
statement.
"Rule
144" means Rule
144 promulgated by the SEC pursuant to the Securities Act, as such Rule may
be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC having substantially the same effect as such Rule.
"Rule
416" means Rule
416 promulgated by the SEC pursuant to the Securities Act, as such Rule may
be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC having substantially the same effect as such Rule.
"Rule
424" means Rule
424 promulgated by the SEC pursuant to the Securities Act, as such Rule may
be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC having substantially the same effect as such Rule.
"SEC"
means the
Securities and Exchange Commission.
"Securities
Act" means
the Securities Act of 1933, as amended.
"Special
Counsel"
means ________________________, for which the Holders will be reimbursed by
the
Company pursuant to Section 4.
“Warrants”
means
the
warrants to purchase Ordinary Shares issued to the Purchasers pursuant to the
Purchase Agreement.
2.
Resale
Registration.
On
or
prior to the Filing Date, the Company shall prepare and file with the SEC a
"resale" Registration Statement providing for the resale of all Registrable
Securities for an offering to be made on a continuous basis. The
Registration Statement shall be on Form F-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form F-3, in
which
case such registration shall be on another appropriate form in accordance
herewith and with the Securities Act and the rules promulgated
thereunder). Such Registration Statement shall cover to the extent
allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional Ordinary Shares
resulting from share splits, share dividends or similar transactions with
respect to the Registrable Securities. The Company shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act promptly after the filing
thereof, but in any event prior to the Effectiveness Date, and to keep such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of (i) the date
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when
all
Registrable Securities covered by such Registration Statement have been sold
or
(ii) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) (or any successor rule) or any other
provision under Rule 144 that permits the Holders to sell the Registrable
Securities without respect to any volume limitations or manner of sale
restrictions as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company's transfer agent to such effect (the
"Effectiveness
Period"). If at any time and for any reason, an additional
Registration Statement is required to be filed because at such time the actual
number of Ordinary Shares into which the outstanding Warrants are then
exercisable exceeds the number of shares of Registrable Securities remaining
unsold under the Registration Statement, the Company shall have thirty (30)
Business Days to file such additional Registration Statement, and the Company
shall use its best efforts to cause such additional Registration Statement
to be
declared effective by the Commission as soon as possible, but in no event later
than seventy-five (75) days after filing.
3.
Registration
Procedures.
In
connection with the Company's
registration obligations hereunder, the Company shall:
(a)
Prepare and file with the SEC, on or prior to the Filing Date, a Registration
Statement on Form F-3 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form F-3 such registration shall be on
another appropriate form in accordance herewith and the Securities Act and
the
rules promulgated thereunder) in accordance with the plan of distribution as
set
forth on Exhibit
A hereto and in accordance with applicable law, and cause the
Registration Statement to become effective and remain effective as provided
herein; provided, however,
that not
less than five (5) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders and any Special Counsel, copies of
all
such documents proposed to be filed, which documents will be subject to the
review of such Holders and such Special Counsel, and (ii) cause its officers
and
directors, counsel and independent certified public accountants to respond
to
such inquiries as shall be necessary, in the reasonable opinion of Special
Counsel, to conduct a reasonable review of such documents. The
Company shall not file the Registration Statement or any such Prospectus or
any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or any Special Counsel shall reasonably object in writing
within two (2) Business Days of their receipt thereof.
(b)
(i) Prepare and file with the SEC such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the SEC such
additional Registration Statements as necessary in order to register for resale
under the Securities Act all of the Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule
424
(or any similar provisions then in force) promulgated under the Securities
Act;
(iii) respond as promptly as reasonably possible to any comments received from
the SEC with respect to the Registration Statement or any amendment thereto
and
as promptly as reasonably possible
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provide
the Holders true and complete copies of all correspondence from and to the
SEC
relating to the Registration Statement; (iv) file the final prospectus pursuant
to Rule 424 of the Securities Act no later than 9:00 a.m. Eastern Time on the
Business Day following the date the Registration Statement is declared effective
by the SEC; and (v) comply in all material respects with the provisions of
the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
Effectiveness Period in accordance with the intended methods of disposition
by
the Holders thereof set forth in the Registration Statement as so amended or
in
such Prospectus as so supplemented. The Company shall provide notice to all
Holders of the effectiveness of a Registration Statement
simultaneously.
(c)
Notify the Holders of Registrable Securities and any Special Counsel as promptly
as reasonably possible (and, in the case of (i)(A) below, not less than three
(3) Business Days prior to such filing, and in the case of (iii) below, on
the
same day of receipt by the Company of such notice from the SEC) and (if
requested by any such Person) confirm such notice in writing no later than
two
(2) Business Days following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is filed;
(B) when the SEC notifies the Company whether there will be a "review" of such
Registration Statement and whenever the SEC comments in writing on such
Registration Statement and (C) with respect to the Registration Statement or
any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness or any other suspension or withdrawal of the
Registration Statement covering any or all of the Registrable Securities or
the
initiation or threatening of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of
the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any
Proceeding for such purpose; and (v) of the occurrence of any event that makes
any statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, such that they will
not be able to use the Prospectus to sell the Securities.
(d)
Use its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, as promptly as reasonably possible, (i) any order
suspending the effectiveness of the Registration Statement or (ii) any
suspension of the qualification (or exemption from qualification) of any of
the
Registrable Securities for sale
in
any jurisdiction.
(e)
If requested by the Holders of a majority in interest of the Registrable
Securities, (i) incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as the Company
reasonably agrees should be included therein and (ii) make all required filings
of such Prospectus supplement or such post-effective
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amendment
as soon as reasonably practicable after the Company has received notification
of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment.
(f) If
requested by any Holder, furnish to such Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person promptly after the filing of such
documents with the SEC.
(g) Promptly
deliver to each Holder and any Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior
to
any public offering of Registrable Securities, use its commercially reasonable
efforts to register or qualify or cooperate with the selling Holders and any
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i)
Cooperate with the Holders to facilitate the timely preparation and delivery
of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Purchase Agreement and applicable federal and state securities laws, shall
be
free of all restrictive legends, and to enable such Registrable Securities
to be
in such denominations and registered in such names as any Holder may request
in
connection with any sale of Registrable Securities.
(j)
Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly
as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to
the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
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(k)
Use its commercially reasonable efforts to cause all Registrable Securities
to
be listed or quoted on the Nasdaq Global Market or any other securities
exchange, quotation system or market, if any, on which similar securities issued
by the Company are then listed or traded as and when required pursuant to the
Purchase Agreement.
(l)
Comply in all material respects with all applicable rules and regulations of
the
SEC and make generally available to its security holders all documents filed
or
required to be filed with the SEC.
(m)
The Company may require each selling Holder to furnish to the Company a
certified statement as to the number of Ordinary Shares beneficially owned
by
such Holder and, if required by the Commission, the natural persons thereof
that
have voting and dispositive control over the shares. During any periods that
the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails
to
furnish such information within three Trading Days of the Company’s request, any
liquidated damages that are accruing at such time as to such Holder only shall
be tolled and any Event that may otherwise occur solely because of such delay
shall be suspended as to such Holder only, until such information is delivered
to the Company.
If
the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each
Holder covenants and agrees that it will not sell any Registrable Securities
under the Registration Statement until the Company has electronically filed
the
Prospectus as then amended or supplemented as contemplated in Section 3(g)
and
notice from the Company that the Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c).
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(n), such Holder
will forthwith discontinue disposition of such Registrable Securities under
the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated
by
Section 3(j), or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
(n)
If (i) there is material non-public information regarding the Company which
the
Company's Board of Directors (the "Board") determines
not to be in the Company's best interest to disclose and which the Company
is
not otherwise required to disclose, (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition
of
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assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or other similar transaction) available to the Company which the
Board determines not to be in the Company's best interest to disclose, or (iii)
the Company is required to file a post-effective amendment to the Registration
Statement to incorporate the Company’s annual reports and audited financial
statements on Forms 20-F, then the Company may (x) postpone or suspend filing
of
a registration statement for a period not to exceed sixty (60) consecutive
days
or (y) postpone or suspend effectiveness of a registration statement for a
period not to exceed forty-five (45) consecutive days; provided that the Company
may not postpone or suspend effectiveness of a registration statement under
this
Section 3(n) for more than seventy-five (75) days in the aggregate during any
three hundred sixty (360) day period.
4.
Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in this Section 4, shall
be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i)
all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the Nasdaq Global Market
and each other securities exchange or market on which Registrable Securities
are
required hereunder to be quoted or listed, if any (B) with respect to filing
fees required to be paid to the Financial Industry Regulatory Authority, Inc.
and (C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection
with
Blue Sky qualifications of the Registrable Securities and determination of
the
eligibility of the Registrable Securities for investment under the laws of
such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses
of
printing certificates for Registrable Securities), (iii) messenger, telephone
and delivery expenses of the Company, (iv) fees and disbursements of counsel
for
the Company and Special Counsel for the Holders, in the case of the Special
Counsel, up to a maximum amount of $5,000, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company's independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated
by
this Agreement (including, without limitation, all salaries and expenses of
its
officers and employees performing legal or accounting duties), the expense
of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required
hereunder. The Company shall not be responsible for any discounts,
commissions, transfer taxes or other similar fees or other expenses incurred
by
the Holders in connection with the sale or registration of the Registrable
Securities.
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5.
Indemnification.
(a)
Indemnification
by the
Company. The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, managers, partners, members, shareholders, agents, brokers,
investment advisors and employees of each of them, each Person who controls
any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable
law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and attorneys'
fees) and expenses (collectively, "Losses") (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising out of or relating to any violation
of securities laws by the Company or untrue or alleged untrue statement of
a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based upon information regarding such Holder
or such other Indemnified Party furnished in writing to the Company by such
Holder expressly for use therein. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding
of
which the Company is aware in connection with the transactions contemplated
by
this Agreement. Notwithstanding anything to the contrary contained herein,
the
Company shall be liable under this Section 5(a) for only that amount as does
not
exceed the Purchase Price.
(b)
Indemnification
by
Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents and employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses(as determined
by
a court of competent jurisdiction in a final judgment not subject to appeal
or
review), as incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, 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 any information so furnished in writing by such Holder
or other Indemnifying Party to the Company specifically for inclusion in the
Registration Statement or such Prospectus. Notwithstanding anything
to the contrary contained herein, each Holder shall be liable under this Section
5(b) for only that amount as does not exceed the net proceeds to such Holder
as
a result of the sale of Registrable Securities pursuant to such Registration
Statement.
(c)
Conduct of
Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified
Party"),
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such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the "Indemnifying
Party) in writing, and the Indemnifying Party shall be entitled to assume
the defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Party and the payment of all fees and expenses incurred
in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is a party
and indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in
a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) Business Days of written notice thereof
to
the Indemnifying Party (regardless of whether it is ultimately determined that
an Indemnified Party is not entitled to indemnification hereunder; provided,
that the Indemnified Party shall reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d)
Contribution. If
a claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each 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, in such proportion
as is appropriate to reflect the relative fault, as applicable, of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or
-10-
omissions
that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party 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 of a material fact, has
been
taken or made by, or relates to information supplied by, such Indemnifying
Party
or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms. In no event shall any
selling Holder be required to contribute an amount under this Section 5(d)
in
excess of the net proceeds received by such Holder upon sale of such Holder’s
Registrable Securities pursuant to the Registration Statement giving rise to
such contribution obligation.
The
parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation that
does
not take into account 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 Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The
indemnity and contribution
agreements contained in this Section are in addition to any liability that
the
Indemnifying Parties may have to the Indemnified Parties pursuant to the
law.
6.
Intentionally
Omitted.
7.
Miscellaneous.
(a)
No Inconsistent
Agreements. Neither the Company nor any of its subsidiaries
has, as of the date hereof entered into and currently in effect, nor shall
the
Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority of the
then
outstanding Registrable Securities, the Company shall not grant to any Person
the right to request the Company to register any securities of the Company
under
the Securities Act unless the rights so granted are subject in all respects
to
the prior rights in full of the Holders set forth herein, and are not otherwise
in conflict with the provisions of this Agreement.
(b)
Piggyback on
Registrations. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the
-11-
Company
in the Registration Statement, and the Company shall not after the date hereof
enter into any agreement providing registration right to any of its
securityholders, unless the right so granted is subject in all respects to
the
prior rights in full of the Holders set forth herein, and is not otherwise
in
conflict with the provisions of this Agreement.
(c)
Failure to File
Registration Statement and Other Events. The Company and the
Purchasers agree that the Holders will suffer damages if the Registration
Statement is not filed on or prior to the Filing Date and not declared effective
by the SEC on or prior to the Effectiveness Date and maintained in the manner
contemplated herein during the Effectiveness Period or if certain other events
occur. The Company and the Holders further agree that it would not be
feasible to ascertain the extent of such damages with
precision. Accordingly, if the Initial Registration Statement is not
filed on or prior to its Filing Date (if the Company files the Initial
Registration Statement without affording the Holders the opportunity to review
and comment on the same as required by Section 3(a) herein, the Company shall
be
deemed to have not satisfied this clause (i)), or (ii) the Company fails to
file
with the Commission a request for acceleration of a Registration Statement
in
accordance with Rule 461 promulgated by the Commission pursuant to the
Securities Act, within five Trading Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that
such Registration Statement will not be “reviewed” or will not be subject to
further review, or (iii) prior to the effective date of a Registration
Statement, the Company fails to file a pre-effective amendment and otherwise
respond in writing to comments made by the Commission in respect of such
Registration Statement within 20 calendar days after the receipt of comments
by
or notice from the Commission that such amendment is required in order for
such
Registration Statement to be declared effective, or (iv) all of the Registrable
Securities are not registered for resale pursuant to one or more effective
Registration Statements on or before the Effectiveness Date, or (v) after the
effective date of a Registration Statement, such Registration Statement ceases
for any reason to remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are otherwise not
permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than 20 consecutive calendar days or more than an aggregate
of 30 calendar days (which need not be consecutive calendar days) during any
12-month period (any such failure or breach being referred to as an "Event," and the
date
on which such Event occurs, being referred to as "Event Date"), the
Company shall pay an amount as liquidated damages to each Holder, payable in
cash, equal to one percent (1.0%) of the amount of the Holder’s initial
investment in the Shares for each calendar month thereafter (or pro-rata for
a
portion thereof) thereafter from the Event Date until the applicable Event
is
cured; provided, however,
that in no
event shall the amount of liquidated damages payable at any time and from time
to time to any Holder pursuant to this Section 7(c) exceed an aggregate of
twelve percent (12%) of the amount of the Holder’s initial investment in the
Shares. Liquidated damages payable by the Company pursuant to this
Section 7(c) shall be payable on the first (1st)
Business Day of each thirty (30) day period following the Event
Date. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date payable,
the
Company will pay interest thereon at a rate of 10% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such partial liquidated damages are due until
such
amounts, plus all such interest thereon, are paid in
full. Notwithstanding anything to the contrary in this paragraph (c),
the
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liquidated
damages described in this paragraph (c) shall, with respect to any Holder,
cease
to accrue and shall not be payable from the date such Holder can sell the
Registrable Securities without restriction pursuant to Rule 144(k) (or any
successor rule) or any other provision under Rule 144 that permits such Holder
to sell the Registrable Securities without respect to any volume limitations
or
manner of sale restrictions.
(d)
Amendments and
Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented,
and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders
of
67% of the Registrable Securities outstanding.
(e)
Notices. Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received), or (b) on the second business day (or third business day if
delivered internationally) following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such
communications shall be:
|
If
to the Company:
|
0
Xxxxxx Xxxxxx
Xxxxxxx 00000
Xxxxxx
Attention:
Xxxx Xxxxxx, General Counsel and Xxxxx Xxxxx, CFO
Tel.
No.: 000-0-0000000
Fax
No.: 000-0-0000000
|
|
with
copies (which shall not constitute notice) to:
|
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx, Esq.
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
|
If
to any Purchaser:
|
At
the address of such Holder set forth on such Holder’s signature page
attached to the Purchase Agreement, or as specified in writing by
such
Holder with copies to such Holder’s counsel as set forth on such signature
page or as specified in writing by such Holder.
|
-13-
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(f)
Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder. Each Purchaser may assign its rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
(g)
Assignment of
Registration Rights. The rights of each Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Person of all or a portion of the Warrants or
the
Registrable Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished
to
the Company within a reasonable time after such assignment, (ii) the Company
is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws, (iv) at or before
the time the Company receives the written notice contemplated by clause (ii)
of
this Section, the transferee or assignee agrees in writing with the Company
to
be bound by all of the provisions of this Agreement, and (v) such transfer
shall
have been made in accordance with the applicable requirements of the Purchase
Agreement. The rights to assignment shall apply to the Holders (and
to subsequent) successors and assigns.
(h)
Counterparts. This
Agreement may be executed in any number of 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 and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the
same
with the same force and effect as if such facsimile signature were the original
thereof.
(i)
Governing
Law; Jurisdiction. This Agreement
shall
be governed by and construed in accordance with the internal laws of the State
of New York, without giving effect to any of the conflicts of law principles
which would result in the application of the substantive law of another
jurisdiction. This Agreement shall not be interpreted or construed
with any presumption against the party causing this Agreement to be
drafted. The Company and the Holders agree that venue for any dispute
arising under this Agreement will lie exclusively in the state or federal courts
located in New York County, New York, and the parties irrevocably waive any
right to raise forum non
conveniens or any other argument that New York is not the proper
venue. The Company and the Holders irrevocably consent to personal
jurisdiction in the state and federal courts of the state of New
York. The Company and the Holders consent to process
-14-
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 Section 7(i) shall affect or limit
any right to serve process in any other manner permitted by law. The
parties hereby waive all rights to a trial by jury.
(j)
Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(k)
Severability.
If any term, provision, covenant or restriction of this Agreement is held to
be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention
of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(l)
Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(m) Shares
Held by the Company
and its Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its Affiliates (other than any
Holder or transferees or successors or assigns thereof if such Holder is deemed
to be an Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
(n) Independent
Nature of
Holders’ Obligations and Rights. The obligations of each Holder hereunder
are several and not joint with the obligations of any other Holder hereunder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action taken by
any
Holder pursuant hereto or thereto, shall be deemed to constitute the Holders
as
a partnership, an association, a joint venture or any other kind of entity,
or
create a presumption that the Holders are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not
be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-15-
IN
WITNESS WHEREOF, the parties hereto
have caused this Registration Rights Agreement to be duly executed by their
respective authorized persons as of the date first indicated above.
By:_____________________________________
Name:
Title:
PURCHASER:
By:_____________________________________ Name:
Title:
Schedule
I
Purchasers
|
|
Names
and Addresses
of
Purchasers
|
Investment
Amount and Number of
Shares
and Warrant
Shares Purchased
|
|
|
|
Exhibit
A
Plan
of
Distribution
The
selling security holders and any of
their pledgees, donees, assignees and successors-in-interest may, from time
to
time, sell any or all of their ordinary shares being offered under this
prospectus on any stock exchange, market or trading facility on which ordinary
shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling security holders may use any
one or more of the following methods when disposing of
shares:
|
·
|
ordinary
brokerage transactions
and transactions in which the broker-dealer solicits
purchasers;
|
|
·
|
block
trades in which the
broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
|
|
·
|
purchases
by a broker-dealer as
principal and resales by the broker-dealer for its
account;
|
|
·
|
an
exchange transaction in
accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated
transactions;
|
|
·
|
to
cover short sales made after the date that the registration statement
of
which this prospectus is a part is declared effective by the
SEC;
|
|
·
|
broker-dealers
may agree with the
selling security holders to sell a specified number of such shares
at a
stipulated price per share;
|
|
·
|
sales
on
any national securities
exchange or quotation service on which the sharesmay
be listed or quoted at the
time of sale;
|
|
·
|
sales
in
the over-the-counter
market;
|
|
·
|
in
transactions otherwise than on
such exchanges or services or in the over-the-counter
market;
|
|
·
|
through
put or call option
transactions, whether such options are listed on an options exchange
or
otherwise;
|
|
·
|
a
combination of any of these
methods of sale; and
|
|
·
|
any
other method permitted
pursuant to applicable law.
|
The
shares may also be sold under Rule
144 under the Securities Act of 1933, as amended (“Securities Act”), if
available, rather than under this prospectus. The selling security
holders have the sole and absolute discretion not to accept any purchase offer
or make any sale of shares if they deem the purchase price to be unsatisfactory
at any particular time.
The
selling security holders may pledge
their shares to their brokers under the margin provisions of customer
agreements. If a selling security holder defaults on a margin loan,
the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers
engaged by the selling
security holders may arrange for other broker-dealers to participate in sales.
Broker-dealers may receive commissions or discounts from the selling security
holders (or, if any broker-dealer acts as agent for the purchaser of shares,
from the purchaser) in amounts to be negotiated, which commissions as to a
particular broker or dealer may be in excess of customary commissions to the
extent permitted by applicable law.
If
sales of shares offered under this
prospectus are made to broker-dealers as principals, we would be required to
file a post-effective amendment to the registration statement of which this
prospectus is a part. In the post-effective amendment, we would be
required to disclose the names of any participating broker-dealers and the
compensation arrangements relating to such sales.
The
selling security holders and any
broker-dealers or agents that are involved in selling the shares offered under
this prospectus may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with these sales. Commissions received
by these broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Any broker-dealers or agents that are
deemed to be underwriters may not sell shares offered under this prospectus
unless and until we set forth the names of the underwriters and the material
details of their underwriting arrangements in a supplement to this prospectus
or, if required, in a replacement prospectus included in a post-effective
amendment to the registration statement of which this prospectus is a
part.
The
selling security holders and any
other persons participating in the sale or distribution of the shares offered
under this prospectus will be subject to applicable provisions of the Exchange
Act, and the rules and regulations under that act, including Regulation
M. These provisions may restrict activities of, and limit the timing
of purchases and sales of any of the shares by, the selling security holders
or
any other person. Furthermore, under Regulation M, persons engaged in
a distribution of securities are prohibited from simultaneously engaging in
market making and other activities with respect to those securities for a
specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these
limitations may affect the marketability of the shares.
If
any of the ordinary shares offered
for sale pursuant to this prospectus are transferred other than pursuant to
a
sale under this prospectus, then subsequent holders could not use this
prospectus until a post-effective amendment or prospectus supplement is filed,
naming such holders. We offer no assurance as to whether any of the
selling security holders will sell all or any portion of the shares offered
under this prospectus.
We
have
agreed to pay all fees and expenses we incur incident to the registration of
the
shares being offered under this prospectus. However, each selling
security holder and purchaser is responsible for paying any discounts,
commissions and similar selling expenses they incur.
We
and
the selling security holders have agreed to indemnify one another against
certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.
