EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into
as of March 29, 2002, by and among APEX INNOVATIONS, INC., a Delaware
corporation (the "Corporation"), and the stockholders of the Corporation
identified on EXHIBIT A attached hereto (collectively, the "Stockholders" and
each, a "Stockholder").
RECITALS
A. WHEREAS, the Corporation and the Stockholders have entered into that
certain Apex Innovations, Inc. Shareholder Agreement of even date herewith (the
"Shareholder Agreement"); and
B. WHEREAS, subject to the terms and conditions set forth herein and in
the Shareholder Agreement, the Corporation has agreed to grant the Stockholders
certain registration rights with respect to their shares (the "Shares") of
common stock, par value $.001 per share, of the Corporation (the "Common
Stock").
AGREEMENT
NOW, THEREFORE, in consideration of the promises, mutual covenants and
conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
SECTION 1. GENERAL.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the Commission
promulgated thereunder.
"REGISTER," "REGISTERED," "REGISTRATION" and "REGISTRATION
STATEMENT" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
"REGISTRABLE SHARES" means the Shares and any shares of the
Corporation's equity issued in respect thereof as a result of any stock split,
stock dividend, share exchange, merger, consolidation or similar
recapitalization; PROVIDED, HOWEVER, that Registrable Shares shall cease to be
Registrable Shares when (i) a Registration Statement covering all such
Registrable Shares shall have become effective under the Securities Act, and
such Registrable Shares shall have been disposed of in accordance with the
Registration Statement, (ii) all such Registrable Shares may be transferred
pursuant to Rule 144 under the Securities Act, as such rule may be amended from
time to time, or any successor rule or regulation ("Rule 144") in any single
calendar quarter, or (iii) such securities shall have ceased to be outstanding.
The Stockholders desiring to sell shares pursuant to Rule 144 shall provide such
Rule 144 representation letters in usual and customary form as may reasonably be
requested by the Corporation's counsel to provide such opinion.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Corporation in complying with Sections 2.2 and 2.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Corporation, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Corporation which
shall be paid in any event by the Corporation).
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations of the Commission
promulgated thereunder.
SECTION 2. REGISTRATION RIGHTS.
2.1 PIGGYBACK REGISTRATION.
(a) Whenever the Corporation shall propose to file a
Registration Statement under the Securities Act relating to the
public offering of Common Stock for sale for cash for its own
account, the Corporation shall give written notice to each of the
Stockholders at least forty-five (45) days prior to the anticipated
filing thereof, specifying the approximate date on which the
Corporation proposes to file such Registration Statement and the
intended method of distribution in connection therewith, and advising
each Stockholders of his or its right to have any or all of the
Registrable Shares then held by such Stockholder included among the
securities to be covered by such Registration Statement (the
"Piggyback Rights"), and such Stockholder's right to have any or all
of the Registrable Securities then held by such Stockholder included
among the securities to be covered by such Registration Statement
such that the Stockholder shall be entitled to receive, at his or its
option, proceeds from the sale of his or its Shares to the public
("Share Rights").
(b) Subject to Section 2.1(d) hereof, in the event that the
Stockholder has and shall elect to utilize its Piggyback Rights and
Share Rights, the Corporation shall include in the Registration
Statement the Registrable Securities identified by the Stockholder in
a written request (the "Piggyback Request") given to the Corporation
not later than fifteen (15) days prior to the proposed filing date of
the Registration Statement. The Registrable Securities identified on
the Piggyback Request shall be included in the Registration Statement
on the same terms and conditions as the other shares of Common Stock
included in the Registration Statement. The Corporation shall use its
commercially reasonable efforts to cause the Registration Statement
to be declared effective as soon as practicable after the filing.
Subject to the terms of this Agreement, the Corporation shall use
commercially reasonable efforts to cause the Registration Statement
to remain effective until the earlier of (i) the date on which all
Registrable Shares covered by the Registration Statement have been
sold to the public pursuant to the Registration Statement or (ii) 180
days after the
Registration Statement becomes effective; PROVIDED, HOWEVER, that the
reporting requirements of Rule 144(c) under the Securities Act have
been satisfied (the "Registration Effective Period").
(c) Notwithstanding anything in this Agreement to the
contrary, no Stockholder shall have Piggyback Rights or Share Rights
with respect to (i) a Registration relating solely to the sale of
securities to participants in a Corporation stock plan or a
transaction covered by Rule 145 under the Securities Act, (ii) a
registration in which the only stock being registered is Common Stock
issuable upon conversion of debt securities which are also being
registered, or (iii) any registration on any form which does not
include substantially the same information as would be required to be
included in a Registration Statement covering the sale of the
Registrable Shares.
(d) If the lead managing underwriter selected by the
Corporation for an underwritten offering for which Piggyback Rights
are requested determines that marketing or other factors require a
limitation on the number of shares of Common Stock to be offered and
sold in such offering, then (i) such underwriter shall provide
written notice thereof to each of the Corporation and the
Stockholders, and (ii) the Corporation shall be required to include
in the offering only that number of such securities, including
Registrable Shares, which the underwriters reasonably determine will
not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling Stockholders
according to the total amount of securities entitled to be included
therein owned by each selling Stockholder or in such other
proportions as shall mutually be agreed to by such selling
Stockholders) but in no event shall the amount of securities of the
selling Stockholders included in the offering be reduced below ten
percent (10%) of the total amount of securities included in such
offering.
2.2 EXPENSES OF REGISTRATION. All Registration Expenses incurred by
the Corporation in connection with any registration, qualification or compliance
pursuant to Section 2.1 herein shall be borne by the Corporation.
2.3 OBLIGATIONS OF THE CORPORATION. Whenever required to effect the
registration of the Registrable Shares pursuant to Section 2.1, the Corporation
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
for the Registration Effective Period.
(b) Furnish to the Stockholders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of
Registrable Shares owned by them.
(c) Use all commercially reasonable efforts to register and
qualify the securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Stockholders; PROVIDED that the
Corporation shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business as a foreign
corporation in such states or jurisdictions, (ii) file a general
consent to service of process in any such states or jurisdictions, or
(iii) subject itself to taxation in any such state or jurisdiction by
reason of such registration or qualification.
(d) Notify each Stockholder covered by such Registration
Statement at any time when a prospectus relating thereto is required
to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
such statements were made. Thereafter, the Corporation shall use
commercially reasonable efforts to prepare and file with the SEC and
furnish to each Stockholder as promptly as practicable a reasonable
number of copies of a supplement to or an amendment of such
prospectus or other such documents as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Shares,
such prospectus shall not include 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 not misleading in the
light of the circumstances under which such statements were made.
(e) Use its best efforts to furnish, on the date that such
Registrable Shares are delivered to the underwriters for sale, if
such securities are being sold through underwriters, (i) an opinion,
dated as of such date, of the counsel representing the Corporation
for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and (ii) a letter dated as of
such date, from the independent certified public accountants of the
Corporation, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering addressed to the underwriters.
2.4 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Stockholder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of
the Corporation to take any action pursuant to Section 2.1 that the
Stockholders shall furnish to the Corporation such information
regarding themselves, the Registrable Shares held by them and the
intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Shares.
2.5 INDEMNIFICATION. In the event any Registrable Shares are
included in a Registration Statement under Section 2.1:
(a) To the extent permitted by law, the Corporation will
indemnify and hold harmless each Stockholder, the partners, officers
and directors of each Stockholder, any underwriter (as defined in the
Securities Act) for such Stockholder and each person, if any, who
controls such Stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation") by the Corporation: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading or (iii) any violation or alleged violation by
the Corporation of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement;
and the Corporation will pay as incurred to each such Stockholder,
partner, officer, director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED HOWEVER, that the indemnity agreement
contained in this Section 2.5(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 Corporation,
which consent shall not be unreasonably withheld, nor shall the
Corporation be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs (i) in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by such Stockholder,
partner, officer, director, underwriter or controlling person of such
Stockholder, or (ii) because of Stockholder's failure to send or give
a copy of the final prospectus to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of Registrable
Securities to such person if such statement was corrected in such
final prospectus and such Stockholder received the final prospectus
in sufficient time to reasonably make such delivery.
(b) To the extent permitted by law, each Stockholder will
indemnify and hold harmless the Corporation, each of its directors,
its officers and each person, if any, who controls the Corporation
within the meaning of the Securities Act, any underwriter and any
other Stockholder selling securities under such registration
statement or any of such other Stockholder's partners, directors or
officers or any person who controls such Stockholder, against any
losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by such Stockholder under an
instrument duly executed by such Stockholder and stated to be
specifically for use in connection with such registration; and each
such Stockholder will pay as incurred any legal or other expenses
reasonably incurred by the Corporation or any such director, officer,
controlling person, underwriter or other Stockholder, or partner,
officer, director or controlling person of such other Stockholder in
connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined in a
final, non-appealable decision that there was such a Violation;
PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 2.5(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Stockholder, which consent shall
not be unreasonably withheld; and PROVIDED, FURTHER, that in no event
shall any indemnity under this Section 2.5(b) exceed the net proceeds
from the offering received by the Stockholder, except in the case of
willful fraud by such Stockholder.
(c) Promptly after receipt by an indemnified party under this
Section 2.5 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 2.5, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to
both the indemnifying party and the indemnified party; PROVIDED,
HOWEVER, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate
due to actual
or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this Section 2.5, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this
Section 2.5.
(d) If the indemnification provided for in this Section 2.5 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s)
that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The obligations of the Corporation and Stockholders under
this Section 2.5 shall survive completion of any offering of
Registrable Shares in a registration statement and the termination of
this agreement. 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.
2.7 RULE 144 REPORTING. With a view to making available to the
Stockholders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Shares to the public without registration,
the Corporation agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 or any similar or analogous
rule promulgated under the Securities Act;
(b) File with the SEC, in a timely manner, all reports and
other documents required of the Corporation under the Exchange Act;
and
(c) So long as a Stockholder owns any Registrable Shares,
furnish to such Stockholder forthwith upon request: a written
statement by the Corporation as to its compliance with the reporting
requirements of said Rule 144 of the Securities Act and of the
Exchange Act; a copy of the most recent annual or quarterly report of
the Corporation; and such other reports and documents as a
Stockholder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
SECTION 3. MISCELLANEOUS.
3.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
3.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Stockholder
and the closing of the transactions contemplated hereby until the end of any
applicable statute of limitations. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Corporation pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Corporation
hereunder solely as of the date of such certificate or instrument.
3.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Shares from time to time; PROVIDED,
HOWEVER, that prior to the receipt by the Corporation of adequate written notice
of the transfer of any Registrable Shares specifying the full name and address
of the transferee, The Corporation may deem and treat the person listed as the
holder of such shares in its records as the absolute owner and holder of such
shares for all purposes, including the payment of dividends or any redemption
price.
3.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and the other
documents delivered pursuant thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
3.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
3.6 AMENDMENT AND WAIVER.
(a) Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the
written consent of the Corporation and the Stockholders owning of
record at least 80% of the Registrable Shares then outstanding. Any
amendment or waiver effected in accordance with this Section 3.6
shall be binding upon each Stockholder and the Corporation; PROVIDED,
HOWEVER, that no such amendment or waiver shall disproportionately
affect a Stockholder adversely without such Stockholder's consent. By
acceptance of any benefits under this Agreement, the Stockholders
hereby agree to be bound by the provisions hereunder.
(b) Except as otherwise expressly provided, the obligations of
the Corporation and the rights of the Stockholders under this
Agreement may be waived only with the written consent of the holders
of at least a majority of the Registrable Shares.
3.7 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or
EXHIBIT A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.
3.8 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
3.9 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. This Agreement may be executed by any
party by delivery of a facsimile signature, which signature shall have the same
force and effect as an original signature. Any party which delivers a facsimile
signature shall promptly thereafter deliver an originally executed signature to
the other party(ies); provided, however, that the failure to deliver an original
signature page shall not affect the validity of any signature delivered by
facsimile.
3.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
This Registration Rights Agreement has been executed and delivered as of
the date first stated above.
APEX INNOVATIONS, INC.
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
STOCKHOLDERS:
XXXXXXX XXXX GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
GSIG, LLC
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
GSWG, LLC
By: /s/ Xxx X. Xxxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
-----------------------------------
XXX X. XXXXXX
/s/ Xxx X. Xxxxxx
-----------------------------------
TOROTEL INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
CALOYERAS 1982 REVOCABLE TRUST
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
CALOYERAS FAMILY PARTNERSHIP
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
-----------------------------------
EXHIBIT A
STOCKHOLDERS
Xxxxxxx Xxxx Group, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 0
Xxxxxxxx Xxxx, Xxxxxx 00000
GSIG, LLC
0000 Xxxxxx
Xxxxxxx, Xxxxxx 00000
GSWG, LLC
0000 Xxxxxx
Xxxxxxx, Xxxxxx 00000
Xxxxx X. Xxxxxx
0000 Xxxxxx
Xxxxxxx, Xxxxxx 00000
Xxx X. Xxxxxx
0000 Xxxxxx
Xxxxxxx, Xxxxxx 00000
Torotel Inc.
00000 Xxxxx 00 Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Caloyeras 1982 Revocable Trust
0000 Xxxx 000xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Caloyeras Family Partnership
0000 Xxxx 000xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Xxxxx X. Xxxxx
00000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
