FORM REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.5
THIS
REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of the
___
day of _____________ 200__, by and among: India Globalization Capital, Inc.,
a
Maryland corporation (the "Company"); and the undersigned parties listed under
Investors on the signature pages hereto (each, an "Investor" and collectively,
the "Investors").
This
Agreement is made pursuant to the Note Purchase Agreement, dated as of the
date
hereof, between the Company, each Investor and certain other parties for the
purchase of certain promissory notes (the “Notes”) in the aggregate principal
amount specified therein and, under certain conditions, shares of the Company’s
Common Stock (the "Purchase
Agreement").
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1.
DEFINITIONS. The following capitalized terms used herein have the following
meanings:
"AGREEMENT"
means this Agreement, as amended, restated, supplemented, or otherwise modified
from time to time.
"COMMISSION"
means the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
"COMMON
STOCK" means the common stock, par value $0.0001 per share, of the
Company.
"COMPANY"
is defined in the preamble to this Agreement
"DEMAND
REGISTRATION" is defined in Section 2.1.1.
"DEMANDING
HOLDER" is defined in Section 2.1.1.
"EXCHANGE
ACT" means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall
be
in effect at the time.
"FORM
S-3" is defined in Section 2.3.
"INDEMNIFIED
PARTY" is defined in Section 4.3.
"INDEMNIFYING
PARTY" is defined in Section 4.3.
"INVESTOR"
is defined in the preamble to this Agreement.
1
"INVESTOR
INDEMNIFIED PARTY" is defined in Section 4.1.
"MAXIMUM
NUMBER OF SHARES" is defined in Section 2.1.4.
"NOTICES"
is defined in Section 6.3.
"PIGGY-BACK
REGISTRATION' is defined in Section 2.2.1.
"REGISTER,"
"REGISTERED" and "REGISTRATION" mean a registration effected by preparing and
filing a registration statement or similar document in compliance with the
requirements of the Securities Act, and the applicable rules and regulations
promulgated thereunder, and such registration statement becoming
effective.
“REGISTRABLE
SECURITIES” means (A) all shares of Common Stock of the Company
issuable pursuant to the Purchase Agreement to the Investors that are party
to
this Agreement, and (B) any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the foregoing, provided,
that the
Investor has completed and delivered to the Company a Selling Shareholder
Questionnaire attached hereto as Exhibit A; and provided, further,
that an
Investor’s securities shall cease to be Registrable Securities upon the earliest
to occur of the following: (A) a sale pursuant to a Registration Statement
or
Rule 144 under the Securities Act (in which case, only such security sold shall
cease to be a Registrable Security); or (B) such security becoming eligible
for
sale by the Investor pursuant to Rule 144(k) under the Securities
Act.
"REGISTRATION
STATEMENT" means a registration statement filed by the Company with the
Commission in compliance with the Securities Act and the rules and regulations
promulgated thereunder for a public offering and sale of Common Stock (other
than a registration statement on Form S-4 or Form S-8, or their successors,
or
any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity or for equity compensation
plans, or a registration on any registration form that does not permit secondary
sales.
"RELEASE
DATE" means the date on which shares of Common Stock are issued by the Company
pursuant to the Purchase Agreement.
"SECURITIES
ACT" means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect
at
the time
"UNDERWRITER"
means a securities dealer who purchases any Registrable Securities as principal
in an underwritten offering and not as part of such dealer's market-making
activities.
2
2.
REGISTRATION RIGHTS.
2.1
DEMAND REGISTRATION.
2.1.1
REQUEST FOR REGISTRATION. At any time and from time to time on or after the
Release Date, the holders of a majority-in-interest of the Registrable
Securities held by the Investors may make a written demand for
registration under the Securities Act of all of the Registrable Securities
then
outstanding (a "DEMAND REGISTRATION"). Any demand for a Demand Registration
shall specify the number of shares of Registrable Securities proposed to be
sold
and the intended method(s) of distribution thereof. The Company will notify
all
holders of Registrable Securities of the demand, and each holder of Registrable
Securities who wishes to include all or a portion of such holder's Registrable
Securities in the Demand Registration (each such holder including shares of
Registrable Securities in such registration, a "DEMANDING. HOLDER") shall so
notify the Company within fifteen (15) days after the receipt by the holder
of
the notice from the Company. Upon any such request, the Demanding Investors
shall be entitled to have their Registrable Securities included in the Demand
Registration, subject to Section 2.1.4 and the provisos set forth in Section
3.1.1. The Company shall not be obligated to effect more than an aggregate
of
one (1) Demand Registration under this Section 2.1.1 in respect of Registrable
Securities.
2.1.2
EFFECTIVE REGISTRATION. A registration will not count as a Demand Registration
until the Registration Statement filed with the Commission with respect to
such
Demand Registration has been declared effective and the Company has complied
with all of its obligations under this Agreement with respect thereto; PROVIDED,
HOWEVER, that if, after such Registration Statement has been declared effective,
the offering of Registrable Securities pursuant to a Demand Registration is
interfered with by any stop order or injunction of the Commission or any other
governmental agency or court, the Registration Statement with respect to such
Demand Registration will be deemed not to have been declared effective, unless
and until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a majority-in-interest of the Demanding Investors
thereafter elect to continue the offering.
2.1.3
UNDERWRITTEN OFFERING. If a majority-in-interest of the Demanding Investors
so
elect and such holders so advise the Company as part of their written demand
for
a Demand Registration, the offering of such Registrable Securities pursuant
to
such Demand Registration shall be in the form of an underwritten offering by
an
underwriter selected by the Company and reasonably acceptable to the Demanding
Investors. In such event, the right of any holder to include its Registrable
Securities in such registration shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Securities in the underwriting to the extent provided herein. All
Demanding Investors proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the Underwriter or Underwriters selected for such underwriting by a
majority-ininterest of the holders initiating the Demand
Registration.
2.1.4
REDUCTION OF OFFERING. Subject to the rights of the holders of
securities issued or issuable upon exercise of those certain Unit Purchase
Options issued to Xxxxxx, Xxxxx Xxxxx, Inc. or its designees in connection
with
the Company's initial public offering in 2005 and the holders of securities
that
are subject to registration rights agreements entered into prior to the date
hereof, if the managing Underwriter or Underwriters for a Demand Registration
that is to be an underwritten offering advises the Company and the Demanding
Investors in writing that the dollar amount or number of shares of Registrable
Securities which the Demanding Investors desire to sell, taken together with
all
other shares of Common Stock or other securities which the Company desires
to
sell and the shares of Common Stock, if any, as to which registration has been
requested pursuant to written contractual piggy-back registration rights held
by
other shareholders of the Company who desire to sell, exceeds the maximum dollar
amount or maximum number of shares that can be sold in such offering without
adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering (such maximum dollar
amount or maximum number of shares, as applicable, the "MAXIMUM NUMBER OF
SHARES"), then the Company shall include in such registration: (i) first, the
Registrable Securities as to which Demand Registration has been requested by
the
Demanding Investors (pro rata in accordance with the number of shares of
Registrable Securities which such Demanding Investor has requested be included
in such registration, regardless of the number of shares of Registrable
Securities held by each Demanding Investor) that can be sold without exceeding
the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number
of Shares has not been reached under the foregoing clause (i), the shares of
Common Stock or other securities that the Company desires to sell that can
be
sold without exceeding the Maximum Number of Shares; (iii) third, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clauses (i) and (ii), the shares of Common Stock for the account of other
persons that the Company is obligated to register pursuant to written
contractual arrangements with such persons and that can be sold without
exceeding the Maximum Number of Shares; and (v) fourth, to the extent that
the
Maximum Number of Shares have not been reached under the foregoing clauses
(i),
(ii), and (iii), the shares of Common Stock that other shareholders desire
to
sell that can be sold without exceeding the Maximum Number of
Shares.
3
2.1.5
WITHDRAWAL. If a majority-in-interest of the Demanding Investors disapprove
of
the terms of any underwriting or are not entitled to include all of their
Registrable Securities in any offering, such majority-in-interest of the
Demanding Investors may elect to withdraw from such offering by giving written
notice to the Company and the Underwriter or Underwriters of their request
to
withdraw prior to the effectiveness of the Registration Statement filed with
the
Commission with respect to such Demand Registration. If the majority-in-interest
of the Demanding Investors withdraws from a proposed offering relating to a
Demand Registration, then such registration shall not count as a Demand
Registration provided for in Section 2.1.1.
2.1.6 The
Company shall not be required to effect a registration pursuant to this
Section 2.1:
(i)
during the period starting with the date that is 30 days prior to the filing
of,
and ending on the date 180 days following the effective date of, a Registration
Statement pertaining to a public offering, other than pursuant to a Registration
Statement relating to an employee benefit plan;
(ii)
if the Company shall furnish to the Demanding Investors a certificate signed
by
the Chief Executive Officer of the Company stating that in the good faith
judgment of the Company, it would be detrimental to the Company and its
stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than 120 days following receipt of the request for Demand
Registration;
(iii)
if the Company shall furnish to the Demanding Investors a certificate signed
by
the Chief Executive Officer of the Company that it intends to engage in a
registered public offering within 90 days following receipt of the request
for
Demand Registration; or
(iv)
if the Demanding Investors propose to dispose of Registrable Securities that
may
be immediately registered on Form S-3 pursuant to a request made pursuant
to Section 2.5 below.
2.2
PIGGY-BACK REGISTRATION.
2.2.1
PIGGY-BACK RIGHTS. If at any time on or after the Release Date the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by
the
Company for its own account or for shareholders of the Company for their account
(or by the Company and by shareholders of the Company including, without
limitation, pursuant to Section 2.1), other than a Registration Statement (i)
filed in connection with any employee stock option or other benefit plan, (ii)
for an exchange offer or offering of securities solely to the Company's existing
shareholders, (iii) for an offering of debt that is convertible into equity
securities of the Company or (iv) for a dividend reinvestment plan, then the
Company shall (x) give written notice of such proposed filing to the holders
of
Registrable Securities as soon as practicable but in no event less than ten
(10)
days before the anticipated filing date, which notice shall describe the amount
and type of securities to be included in such offering, the intended method(s)
of distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale
of
such number of shares ofRegistrable
Securities as such holders may request in writing within five calendar (5)
days
following receipt of such notice (a "PIGGY-BACK REGISTRATION"). The Company
shall cause such Registrable Securities to be included in such registration
and
shall use its commercially reasonable efforts to cause the managing Underwriter
or Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company and
to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method(s) of distribution thereof. All holders
of
Registrable Securities proposing to distribute their securities through a
Piggy-Back Registration that involves an Underwriter or Underwriters shall
enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such Piggy-Back Registration.
4
2.2.2
REDUCTION OF OFFERING. Subject to the rights of the holders of securities issued
or issuable upon exercise of those certain Unit Purchase Options issued to
Xxxxxx, Xxxxx Xxxxx, Inc. or its designees in connection with the Company's
initial public offering in 2005 and the holders of securities that are subject
to registration rights agreements entered into prior to the date hereof, if
the
managing Underwriter or Underwriters for a Piggy-Back Registration that is
to be
an underwritten offering advises the Company and the holders of Registrable
Securities in writing that the dollar amount or number of shares of Common
Stock
which the Company desires to sell, taken together with shares of Common Stock,
if any, as to which registration has been demanded pursuant to written
contractual arrangements with persons other than the holders of Registrable
Securities hereunder, the Registrable Securities as to which registration has
been requested under this Section 2.2, and the shares of Common Stock, if any,
as to which registration has been requested pursuant to the written contractual
piggy-back registration rights of other shareholders of the Company, exceeds
the
Maximum Number of Shares, then the Company shall include in any such
registration:
(i)
If
the registration is undertaken for the Company's account: (A) first, the shares
of Common Stock or other securities that the Company desires to sell that can
be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the shares of Common Stock, if any, including the Registrable
Securities, as to which registration has been requested pursuant to written
contractual piggy-back registration rights of security holders (pro rata in
accordance with the number of shares of Common Stock which each such person
has
actually requested to be included in such registration, regardless of the number
of shares of Common Stock with respect to which such persons have the right
to
request such inclusion) that can be sold without exceeding the Maximum Number
of
Shares; and
(ii)
If
the registration is a "demand" registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the shares of Common Stock for the
account of the demanding persons that can be sold without exceeding the Maximum
Number of Shares; (B) second, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clause (A), the shares of Common Stock
or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; and (C) third, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (A)
and (B), the Registrable Securities as to which registration has been requested
under this Section 2.2 (pro rata in accordance with the number of shares of
Registrable Securities held by each such holder); and
(D)
fourth, to the extent that the Maximum Number of Shares has not been reached
under the foregoing clauses (A), (B) and (C), the shares of Common Stock, if
any, as to which registration has been requested pursuant to written contractual
piggy-back registration rights which other shareholders desire to sell that
can
be sold without exceeding the Maximum Number of Shares.
2.2.3
WITHDRAWAL. Any holder of Registrable Securities may elect to withdraw such
holder's request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement. The Company may also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement.
2.3
REGISTRATIONS ON FORM S-3. The holders of Registrable Securities may at any
time
and from time to time, request in writing that the Company register the resale
of any or all of such Registrable Securities on Form S-3 or any similar
short-form registration which may be available at such time ("FORM S-3");
PROVIDED, HOWEVER, that the Company shall not be obligated to effect such
request through an underwritten offering. Upon receipt of such written request,
the Company will promptly give written notice of the proposed registration
to
all other holders of Registrable Securities, and, as soon as practicable
thereafter, effect the registration of all or such portion of such holder's
or
holders' Registrable Securities as are specified in such request, together
with
all or such portion of the Registrable Securities of any other holder or holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
PROVIDED, HOWEVER, that the Company shall not be obligated to effect any such
registration pursuant to this Section 2.3: (i) if Form S-3 is not available
for
such offering; or (ii) if the holders of the Registrable Securities, together
with the holders of any other securities of the Company entitled to inclusion
in
such registration, propose to sell Registrable Securities and such other
securities (if any) at any aggregate price to the public of less than
$1,000,000, (iii) if the Company shall furnish to the initiating holder(s)
of
the Registrable Securities a certificate signed by the Chief Executive Officer
of the Company that the Company intends to engage in a registered public
offering within 90 days following receipt of the Form S-3 request or (iv) if
the
Company shall furnish to the initiating holders(s) of the Registrable Securities
a certificate signed by the Chief Executive Officer of the Company stating
that
in the good faith judgment of the Company, it would be detrimental to the
Company for such Form S-3 registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the
Form S-3 registration statement for a period of not more than 120 days
following receipt of the Form S-3 Request or (v) if the Company has already
effected a registration on Form S-3 pursuant to this
Section 2.3.
2.3.1 Notwithstanding
the foregoing, the Company shall have the right, upon giving written notice
to
the holders that have exercised such right, to require each holder not to sell
any Registrable Securities pursuant to the Form S-3 for a reasonable period
(as
determined in good faith by the Company) from the date on which such notice
is
given (a "black-out
period"), if (i)(A) the Company is engaged in or proposes to engage in
discussions or negotiations with respect to, or has proposed or taken a
substantial step to commence, or there otherwise is pending, any merger,
acquisition, other form of business combination, divestiture, tender offer,
financing or other transaction, or there is an event or state of facts relating
to the Company, in each case which is material to the Company (any such
negotiation, step, event or state of facts being herein called a "Material Activity"),
(B) in the good faith judgment of the Company, disclosure of such Material
Activity would be necessary under applicable securities laws, and (C) such
disclosure would, in the good faith judgment of the Company, be adverse to
the
interests of the Company, or (ii) the Company, in its good faith judgment,
deems
it necessary to file a post-effective amendment to the Form S-3 Registration
Statement or to prepare a supplement to, or otherwise amend, the form of
prospectus contained therein. During any such black-out period each
Investor agrees not to sell any Registrable Securities under the Form S-3
Registration Statement for such period of time as the Company may in good xxxxx
xxxx advisable.
5
3.
REGISTRATION PROCEDURES.
3.1
FILINGS; INFORMATION. Whenever the Company is required to effect the
registration of any Registrable Securities pursuant to Section 2, the Company
shall use its reasonably commercial efforts to effect the registration and
sale
of such Registrable Securities in accordance with the intended method(s) of
distribution thereof as expeditiously as practicable, and in connection with
any
such request, comply with the following:
3.1.1
FILING REGISTRATION STATEMENT. The Company shall, as expeditiously as possible
and in any event within sixty (60) days after receipt of a request for a Demand
Registration pursuant to Section 2.1, prepare and file with the Commission
a
Registration Statement on any form for which the Company then qualifies or
which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall use
its commercially reasonable efforts to cause such Registration Statement to
become and remain effective for the period required by Section 3.1.3; PROVIDED,
HOWEVER, that the Company shall have the right to defer any Demand Registration
for up to thirty (30) days, and any Piggy-Back Registration for such period
as
may be applicable to deferment of any demand registration to which such
Piggy-Back Registration relates, in each case if the Company shall furnish
to
the holders a certificate signed by the Chief Executive Officer of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be materially detrimental to the Company and its shareholders
for such Registration Statement to be effected at such time; PROVIDED FURTHER,
HOWEVER, that the Company shall not have the right to exercise the right set
forth in the immediately preceding proviso more than once in any 365-day period
in respect of a Demand Registration hereunder.
3.1.2
COPIES. The Company shall, prior to filing a Registration Statement or
prospectus, or any amendment or supplement thereto, furnish without charge
to
the holders of Registrable Securities included in such registration, and such
holders' legal counsel, copies of such Registration Statement as proposed to
be
filed, each amendment and supplement to such Registration Statement (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such Registration Statement (including
each
preliminary prospectus), and such other documents as the holders of Registrable
Securities included in such registration or legal counsel for any such holders
may request in order to facilitate the disposition of the Registrable Securities
owned by such holders.
3.1.3.
AMENDMENTS AND SUPPLEMENTS. The Company shall prepare and file with the
Commission such amendments, including post-effective amendments, and supplements
to such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective and in
compliance with the provisions of the Securities Act until all Registrable
Securities and other securities covered by such Registration Statement have
been
disposed of in accordance with the intended method(s) of distribution set forth
in such Registration Statement (which period shall not exceed the sum of ninety
(90) days plus any period during which any such disposition is interfered with
by any stop order or injunction of the Commission or any governmental agency
or
court) or such securities have been withdrawn.
3.1.4
NOTIFICATION. After the filing of a Registration Statement, the Company shall
promptly, and in no event more than five (5) business days after such filing,
notify the holders of Registrable Securities included in such Registration
Statement of such filing, and shall further notify such holders promptly and
confirm such advice in writing in all events within two (2) business days of
the
occurrence of any of the following: (i) when such Registration Statement becomes
effective; (ii) when any post-effective amendment to such Registration Statement
becomes effective; (iii) the issuance or threatened issuance by the Commission
of any stop order (and the Company shall take all actions required to prevent
the entry of such stop order or to remove it if entered); and (iv) any request
by the Commission for any amendment or supplement to such Registration Statement
or any prospectus relating thereto or for additional information or of the
occurrence of an event requiring the preparation of a supplement or amendment
to
such prospectus so that, as thereafter delivered to the purchasers of the
securities covered by such Registration Statement, such prospectus will not
contain an 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
not misleading, and promptly make available to the holders of Registrable
Securities included in such Registration Statement any such supplement or
amendment.
3.1.5
STATE SECURITIES LAWS COMPLIANCE. The Company shall use its commercially
reasonable efforts to (i) register or qualify the Registrable Securities covered
by the Registration Statement under such securities or "blue sky" laws of such
jurisdictions in the United States as the holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other Governmental Authorities as may be necessary
by
virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the holders of
Registrable Securities included in such Registration Statement to consummate
the
disposition of such Registrable Securities in such jurisdictions; PROVIDED,
HOWEVER, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (e) or subject itself to taxation in any such
jurisdiction.
6
3.1.6
AGREEMENTS FOR DISPOSITION. The Company shall enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and
take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities. The representations, warranties
and covenants of the Company in any underwriting agreement which are made to
or
for the benefit of any Underwriters, to the extent applicable, shall also be
made to and for the benefit of the holders of Registrable Securities included
in
such registration statement. No holder of Registrable Securities included in
such registration statement shall be required to make any representations or
warranties in the underwriting agreement except, if applicable, with respect
to
such holder's organization, good standing, authority, title to Registrable
Securities, lack of conflict of such sale with such holder's material agreements
and organizational documents, and with respect to written information relating
to such holder that such holder has furnished in writing expressly for inclusion
in such Registration Statement.
3.1.7
COOPERATION. The principal executive officer of the Company, the principal
financial officer of the Company, the principal accounting officer of the
Company and all other officers and members of the management of the Company
shall cooperate fully in any offering of Registrable Securities hereunder,
which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors.
3.1.8
RECORDS. The Company shall make available for inspection by the holders
of Registrable Securities included in such Registration Statement,
any Underwriter participating in
any
disposition pursuant to such registration statement and any attorney, accountant
or other professional retained by any holder of Registrable Securities included
in such Registration Statement or any Underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, as shall
be necessary to enable them to exercise their due diligence responsibility,
and
cause the Company's officers, directors and employees to supply all information
requested by any of them in connection with such Registration Statement,
provided that such parties must first agree to execute a customary
non-disclosure agreement..
3.1.9
OPINIONS AND COMFORT LETTERS. The Company shall furnish to each
holder of Registrable Securities included in any Registration Statement a signed
counterpart, addressed to such holder, of (i) any opinion of counsel to the
Company delivered to any Underwriter and (ii) any comfort letter from the
Company's independent public accountants delivered to any Underwriter. In the
event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Registrable Securities included in such Registration
Statement, at any time that such holder elects to use a prospectus, an opinion
of counsel to the Company to the effect that the Registration Statement
containing such prospectus has been declared effective and that no stop order
is
in effect.
3.1.10
EARNINGS STATEMENT. The Company shall comply with all applicable rules and
regulations of the Commission and the Securities Act, and make available to
its
shareholders, as soon as practicable, an earnings statement covering a period
of
twelve (12) months, beginning within three (3) months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
3.1.11
LISTING. The Company shall use its commercially reasonable efforts to cause
all
Registrable Securities included in any registration to be listed on such
exchanges or otherwise designated for trading in the same manner as similar
securities issued by the Company are then listed or designated or, if no such
similar securities are then listed or designated, in a manner satisfactory
to
the holders of a majority of the Registrable Securities included in such
registration.
3.2. MARKET
STAND-OFF AGREEMENT; AGREEMENT TO FURNISH INFORMATION. Each holder of a
Registrable Security hereby agrees that such holder shall not sell or enter
into
any hedging or similar transaction with the same economic effect as a sale,
transfer, make any short sale, or grant any option for the purchase, of any
Common Stock (or other securities) of the Company held by such holder (other
than those, if any, included in the registration) for a period specified by
the
Company or representative of the underwriters of Common Stock (or other
securities) of the Company not to exceed 180 days following the effective date
of a registration statement of the Company filed under the Securities
Act. Each holder agrees to execute and deliver such other agreements
as may be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. In addition, if requested by the Company or the representative of
the
underwriters of Common Stock (or other securities) of the Company, each holder
shall provide, within 10 days of such request, such information as may be
required by the Company or such representative in connection with the completion
of any public offering of the Company's securities pursuant to a registration
statement filed under the Securities Act. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of said 180 day
period. Each holder agrees that any transferee of any shares of
Registrable Securities shall be bound by this Section 3.2.
7
3.3
REGISTRATION EXPENSES. The Company shall bear all costs and expenses incurred
in
connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back
Registration pursuant to Section 2.2, and any registration on Form S-3 effected
pursuant to Section 2.3, and all expenses incurred in performing or complying
with its other obligations under this Agreement, whether or not the Registration
Statement becomes effective, including, without limitation: (i) all registration
and filing fees; (ii) fees and expenses of compliance with securities or "blue
sky" laws (including fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities); (iii) printing expenses;
(iv)
the Company's internal expenses (including, without limitation, all salaries
and
expenses of its officers and employees); (v) the fees and expenses incurred
in
connection with the listing of the Registrable Securities as required by Section
3.1.11; (vi) National Association of Securities Dealers, Inc. fees; (vii) fees
and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company (including
the
expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 3.1.9); (viii) the fees and expenses
of
any special experts retained by the Company in connection with such registration
and (ix) the fees and expenses of one legal counsel selected by the holders
of a
majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses
of
the underwriter pro rata in proportion to the respective amount of shares each
is selling in such offering.
3.4
INFORMATION. The holders of Registrable Securities shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect
the
registration of any Registrable Securities under the Securities Act pursuant
to
Section 2 and in connection with the Company's obligation to comply with federal
and applicable state securities laws.
3.5
HOLDERS OBLIGATIONS. Each selling holder pursuant to a registration effected
pursuant to this Agreement shall:
(i)
Not take any action that would prevent the distribution of Registrable
Securities included in any such registration statement from being made in
accordance with the plan of distribution set forth in such registration
statement and with all applicable rules and regulations of the SEC.
(ii)
Not deliver any form of prospectus in connection with the sale of any
Registrable Securities as to which the Company has advised the selling holders
in writing that it is preparing an amendment or supplement.
(iii)
Notify the Company promptly in writing upon the sale by the holder of any
Registrable Securities covered by the registration statement.
No
holder
of a Registrable Security 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 3.5.
4. INDEMNIFICATION
AND CONTRIBUTION.
4.1
INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold
harmless each Investor and each other holder of Registrable Securities, and
each
of their respective officers, employees, affiliates, directors, partners,
members, attorneys and agents, and each person, if any, who controls an Investor
and each other holder of Registrable Securities (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) (each, an "INVESTOR
INDEMNIFIED PARTY"), from and against any expenses, losses, judgments, claims,
damages or liabilities, whether joint or several, arising out of or based upon
any untrue statement (or allegedly untrue statement) of a material fact
contained in any Registration Statement under which the sale of such Registrable
Securities was registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained in the Registration Statement,
or any amendment or supplement to such Registration Statement, or arising out
of
or based upon any omission (or alleged omission) to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule
or
regulation promulgated thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; and the Company shall promptly reimburse the InvestorIndemnified
Party for any legal and any other expenses reasonably incurred by such Investor
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any
such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon
and
in conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall indemnify
any
Underwriter of the Registrable Securities, their officers, affiliates,
directors, partners, members and agents and each person who controls such
Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
8
4.2
INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES_ Each selling holder of
Registrable Securities will, in the event that any registration is being
effected under the Securities Act pursuant to this Agreement of any Registrable
Securities held by such selling holder, indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any), and each
other
person, if any, who controls such selling holder or such underwriter within
the
meaning of the Securities Act, against any losses, claims, judgments, damages
or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out
of
or are based upon any untrue statement or allegedly untrue statement of a
material fact contained in any Registration Statement under which the sale
of
such Registrable Securities was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained in
the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary
to
make the statement therein not misleading, if the statement or omission was
made
in reliance upon and in conformity with information furnished in writing to
the
Company by such selling holder expressly for use therein, and shall reimburse
the Company, its directors and officers, and each such controlling person for
any legal or other expenses reasonably incurred by any of them in connection
with investigation or defending any such loss, claim, damage, liability or
action. Each selling holder's indemnification obligations hereunder shall be
several and not joint and shall be limited to the amount of any net proceeds
actually received by such selling holder.
4.3
CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by any person
of
any notice of any loss, claim, damage or liability or any action in respect
of
which indemnity may be sought pursuant to Section 4.1 or 4.2, such person (the
"INDEMNIFIED PARTY") shall, if a claim in respect thereof is to be made against
any other person for indemnification hereunder, notify such other person (the
"INDEMNIFYING PARTY") in writing of the loss, claim, judgment, damage, liability
or action; PROVIDED, HOWEVER, that the failure by the Indemnified Party to
notify the Indemnifying Party shall not relieve the Indemnifying Party from
any
liability which the Indemnifying Party may have to such Indemnified Party
hereunder, except and solely to the extent the Indemnifying Party is actually
prejudiced by such failure. If the Indemnified Party is seeking indemnification
with respect to any claim or action brought against the Indemnified Party,
then
the Indemnifying Party shall be entitled to participate in such claim or action,
and, to the extent that it wishes, jointly with allother
Indemnifying Parties, to assume control of the defense thereof with counsel
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume control of the defense of
such claim or action, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by
the
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation; PROVIDED, HOWEVER, that in any action in which both
the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified Party shall have the right to employ separate counsel (but no more
than one such separate counsel) to represent the Indemnified Party and its
controlling persons who may be subject to liability arising out of any claim
in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, with the fees and expenses of such counsel to be paid by
such Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would
be
inappropriate due to actual or potential differing interests between them.
No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party
is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
4.4
CONTRIBUTION.
4.4.1
If
the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3
isunavailable
to any Indemnified Party in respect of any loss, claim, damage, liability or
action referred to herein, 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 loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection
with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The relative
fault of any Indemnified Party and any Indemnifying Party shall be determined
by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged _omission to state a material
fact
relates to information supplied by such Indemnified Party or such Indemnifying
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
4.4.2
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by PRO RATA allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding Section
4.4.3
The
amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no holder of Registrable Securities shall be
required to contribute any amount in excess of the dollar amount of the net
proceeds (after payment of any underwriting fees, discounts, commissions or
taxes) actually received by such holder from the sale of Registrable Securities
which gave rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(1) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
9
5. UNDERWRITING
AND DISTRIBUTION.
5.1
RULE 144. The Company covenants that it shall file any reports required to
be
filed by itunder
the
Securities Act and the Exchange Act and shall take such further action as the
holders of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holders to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 under the Securities Act, as such Rules may
be
amended from time to time, or any similar Rule or regulation hereafter adopted
by the Commission.
6.
MISCELLANEOUS.
6.1
OTHER
REGISTRATION RIGHTS. The Investors acknowledge that the Company has granted
registration rights to other investors and that those other investors have
the
right to require the Company to register shares of the Company's capital stock
for sale or to include shares of the Company's capital stock in any registration
filed by the Company for the sale of shares of capital stock for its own account
or for the account of any other person.
6.2
ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and the rights, duties
and obligations of the Company hereunder may not be assigned or delegated by
the
Company in whole or in part. This Agreement and the rights, duties and
obligations of the holders of Registrable Securities hereunder may be freely
assigned or delegated by such holder of Registrable Securities in conjunction
with and to the extent of any transfer of Registrable Securities by any such
holder provided that the assignee acquires at least 50,000 shares (or all
of the transferring holder's shares) of Registrable Securities (as adjusted
for
stock splits, stock dividends, reverse stock splits, stock combinations or
other
similar capitalization change); provided, further that, as a condition of
any such
assignment, (i) the transferor shall, no later than 10 days prior to such
transfer, furnish to the Company written notice of the name and address of
such
transferee or assignee and the securities with respect to which such
registration rights are being assigned and (ii) such transferee shall, no
later than the date of such transfer, furnish to the Company its agreement
in
writing to be subject to all obligations of a holder set forth in this
Agreement. This Agreement and the provisions hereof shall be binding upon and
shall inure to the benefit of each of the parties and their respective
successors and the permitted assigns of the Investor or holder of Registrable
Securities or of any assignee of the Investor or holder of Registrable
Securities. This Agreement is not intended to confer any rights or benefits
on
any persons that are not party hereto other than as expressly set forth in
Article 4 and this Section 6.2.
6.3
NOTICES. All notices, demands, requests, consents, approvals or other
communications (collectively, "NOTICES") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service
with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall
have
specified most recently by written notice. Notice shall be deemed given on
the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile;PROVIDED,
that if such service or transmission is not on a business day or is after normal
business hours, then such notice shall be deemed given on the next business
day.
Notice otherwise sent as provided herein shall be deemed given on the next
business day following timely delivery of such notice to a reputable air courier
service with an order for next-day delivery.
To
the Company:
0000
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxx 00000
Attention:
Chairman
with
a
copy to:
Xxxxxxx
Xxxxxx Xxxxxx Xxxxx and Xxxxx, P.A.
00000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxxxxx
To
an Investor, to the address set forthon
the signature page to the Purchase Agreement
10
6.4
SEVERABILITY. This Agreement shall be deemed severable, and the invalidity
or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or provision,
the
parties hereto intend that there shall be added as a part of this Agreement
a
provision as similar in terms to such invalid or unenforceable provision as
may
be possible and be valid and enforceable.
6.5
COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
6.6
ENTIRE AGREEMENT. This Agreement (including all agreements entered into pursuant
hereto and all certificates and instruments delivered pursuant hereto and
thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written.
6.7
MODIFICATIONS AND AMENDMENTS. 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 upon the written
consent of the Company and Investors holding at least a majority of the
Registrable Securities issued or issuable pursuant to the Note Purchase
Agreement. Any amendment or waiver effected in accordance with this
Section 6.7 shall be binding upon each Investor who did not consent in writing
thereto.
6.8
TITLES AND HEADINGS. Titles and headings of sections of this Agreement are
for
convenience only and shall not affect the construction of any provision of
this
Agreement.
6.9
WAIVERS AND EXTENSIONS. Any party to this Agreement may waive any right, breach
or default which such party has the right to waive, PROVIDED that such waiver
will not be effective against the waiving party unless it is in writing, is
signed by such party, and specifically refers to this Agreement. Waivers may
be
made in advance or after the right waived has arisen or the breach or default
waived has occurred. Any waiver may be conditional. No waiver of any breach
of
any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts_
6.10
REMEDIES CUMULATIVE. In the event that the Company fails to observe or perform
any covenant or agreement to be observed or performed under this Agreement,
the
Investor or any other holder of Registrable Securities may proceed to protect
and enforce its rights by suit in equity or action at law, whether for specific
performance of any term contained in this Agreement or for an injunction against
the breach of any such term or in aid of the exercise of any power granted
in
this Agreement or to enforce any other legal or equitable right, or to take
any
one or more of such actions, without being required to post a bond. None of
the
rights, powers or remedies conferred under this Agreement shall be mutually
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred by this
Agreement or now or hereafter available at law, in equity, by statute or
otherwise.
6.11
GOVERNING LAW. This Agreement shall be governed by, interpreted under, and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed within the State of New York,
without giving effect to any choice-oflaw provisions thereof that would
compel the application of the substantive laws of any other
jurisdiction.
6.12
WAIVER OF TRIAL BY JURY. Each party hereby irrevocably and unconditionally
waives the right to a trial by jury in any action, suit, counterclaim or other
proceeding (whether based on contract, tort or otherwise) arising out of,
connected with or relating to this Agreement, the transactions contemplated
hereby, or the actions of the Investor in the negotiation, administration,
performance or enforcement hereof.
[Remainder
of page left intentionally blank. Signature pages follow]
11
IN
WITNESS WHEREOF, the
Company has executed this Note Purchase Agreement on the date set forth
above.
By:
___________________________________
Name:
Title:
IN
WITNESS WHEREOF, the
Investor named below has caused this Registration Rights Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first written above.
INVESTOR:
NAME:_____________________________
By:
Title:
Address:
12