Exhibit 10.15
LOAN AGREEMENT
THIS LOAN AGREEMENT entered into this __day of __________, 2000 by and
between Advanced Technology Industries, Inc., a Delaware corporation,
("Borrower") and_____________________("Lender") provides as follows:
RECITALS
A. Borrower desires to borrow funds from Lender and Lender desires to
lend said funds to Borrower.
B. This Agreement sets forth the terms on which Lender will lend funds
to Borrower and Borrower will repay said funds.
NOW THEREFORE, in consideration for the mutual covenants and agreements
contained herein and for other good and valuable consideration the receipt of
which is hereby acknowledged the parties hereto agree as follows:
1. LOAN
Lender shall loan Borrower USD_____________. The loan shall be deemed
to have been made when Borrower receives good and sufficient funds in the form
of a cashiers check, wire transfer, or other means (the "Loan Date"). The funds
shall be payable either in U. S. Dollars or German Deutsch Marks at the option
of Lender. However, all repayments of principal and interest shall be in U. S.
Dollars . The loan shall be evidenced by a promissory note ("Note") in the form
attached hereto as Exhibit "A".
2. INTEREST
The Note shall bear interest at the rate of 1% per month commencing on
the Loan Date which shall be prorated based upon the number of days in the month
if said loan is made on other than the first day of the calender month. Interest
shall be accrued and paid on the Maturity Date as defined in Paragraph 3 below.
At the option of the Borrower interest shall be paid in cash or in $.0001 par
value common stock of Borrower ("Stock"). The number of shares to be delivered
to Lender in payment of the interest shall be determined by multiplying (i) the
average closing bid price of the Stock for the five (5) trading days prior to
the Maturity Date by (ii) 85% and dividing the interest due at the Maturity Date
by the resulting multiple (the "Interest Shares"). By way of example if the
interest due at the Maturity Date is $36,000 and the average of the closing bid
price as determined above is $1.00 the number of Interest Shares would be 42,353
determined as follows: $36,000 divided by ($1.00 x .85)= 42,353. All Interest
Shares shall be restricted shares subject to the provisions of Paragraph 9
below.
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3. MATURITY DATE
The Maturity Date shall be the earlier of (i) 180 days from the Loan
Date (ii) the sale by Borrower subsequent to November 1, 2000 of shares of
Eurotech, Ltd, a D.C. corporation, ("Eurotech Shares") owned by the Borrower
aggregating at least $1,500,000 after sales commissions and related expenses or
(iii) the closing of a loan to Borrower in an amount net to Borrower of not less
than 1,500,000 secured by the Eurotech Shares.
4. EQUITY INCENTIVE
Lender will receive one share of $.0001 par value common stock of
Borrower for each $1.00 loaned to Borrower ("Incentive Shares"). Said shares
shall be restricted shares subject to the provisions of Paragraph 9 below.
5. PREPAYMENT RIGHT
Borrower shall have the right, without penalty, to pay the Note in full
together with any unpaid interest at any time after 30 days from the Loan Date
upon the giving of 10 days written notice.
6. REGISTRATION RIGHTS
Lender shall have the right to have the Incentive Shares and the
Interest Shares, if any, registered under the Securities Act of 1933 pursuant to
the Registration Rights Agreement attached hereto as Exhibit "B" and made a part
hereof as though fully set forth herein. The execution of this Agreement shall
be deemed to be the execution of the Registration Rights Agreement in the form
set forth in Exhibit "B".
7. WARRANTIES AND REPRESENTATIONS OF LENDER.
Lender hereby makes the following representations and warranties to
Borrower:
7.01. Lender is an "accredited investor" because Lender is (initial
appropriate item):
_____A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase, exceeds
$1,000,000, or
_____A natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year, or
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____A trust, with total assets are in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities offered hereby,
whose purchase is directed by a sophisticated person, as described below; or
____An entity in which all of the equity owners are accredited
investors.
7.02. Lender has significant prior investment experience, including
investments in unsecured loans and unregistered securities and recognizes the
speculative nature of this investment. Lender is knowledgeable, sophisticated
and experienced in making and is qualified to make decisions with respect to
investments of the nature evidenced by this Agreement and has requested,
received, reviewed and considered all information Lender deems relevant in
making a decision to execute this Agreement. Lender is capable of evaluating the
merits and risks of entering into this Agreement and consummating the
transactions contemplated thereby.
7.03. Lender has relied upon Borrower's filings with the Securities and
Exchange Commission under Section 13 of the Securities Exchange Act of 1934,
this Agreement, and independent investigations of Borrower made by Lender and
has been given access and the opportunity to examine all material books and
records of Borrower, all material contracts and has had the opportunity to ask
questions of and to receive answers from Borrower or any person acting on its
behalf concerning the terms and conditions of the transaction contemplated by
this Agreement. Lender has been furnished with all material relating to the
business, finances, and operations of Borrower and materials relating to the
transactions under this Agreement which have been requested by such person and
such person has received complete and satisfactory answers to any such
inquiries.
7.04. Lender hereby agrees to take any further action or execute such
further instruments as may be necessary to effectuate the terms of this
Agreement.
7.05 Lender is acquiring the shares on Lender's own account and not
with a view to or for sale in connection with any distribution of the security.
8. WARRANTIES AND REPRESENTATIONS OF BORROWER.
Borrower hereby makes the following representations and warranties to
Lender:
8.01 Borrower is a Delaware corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
full corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby. The Board of Directors of Borrower has
taken all action required by law, Borrower's corporate charter, its By- Laws, or
otherwise, to be taken by it to authorize the execution and delivery of this
Agreement, the issuance of the Note and the shares which are the subject of this
Agreement, and the consummation of the transactions contemplated hereby.
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8.02 The Incentive Share and the Interest Shares, if any, delivered
hereunder shall be validly issued and outstanding and fully paid and
non-assessable.
8.03. The Note when issued shall be a validly issued and binding
obligation of the Borrower.
8.04 Borrower has the full right and power to issue the Note, the
Incentive Shares and the Interest Shares, if any, free and clear of any
statutory, contractual, or other limitation, and none of said shares are subject
to any lien, pledge, hypothecation, or any encumbrance whatsoever. The issuance
of the Note, the Incentive Shares, and the Interest Shares, if any, as provided
for herein will vest directly in Lender title to said instruments and securities
free and clear of any and all encumbrances, liens, restrictions, options,
agreements, and conditions except as set forth in Paragraph 9 hereof.
8.05 The person or persons executing this agreement on behalf of
Borrower have the requisite power authority to do so and to make, execute, and
deliver all instruments and documents to be executed in connection herewith.
9. INVESTMENT RESTRICTIONS.
The Incentive Shares and Interest Shares, if any, to be issued to
Lender hereunder have not been registered under the Securities Act of 1933
("Securities Act") or any state securities laws and are issued in reliance upon
certain exemptions included in federal and state securities laws from such
registration. There are substantial restrictions on the sale of the shares and
the shares may be transferred only in accordance with the provisions of this
paragraph. Each certificate representing the shares issuable hereunder and any
other securities issued in respect of the shares issuable hereunder and any
other securities issued in respect of the shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, will (unless
otherwise permitted or unless the shares of Borrower's stock evidenced by such
certificate shall have been registered under the Securities Act) will be stamped
or otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
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The shares may be transferred only upon (i) registration under the Securities
Act, (ii) the receipt by Borrower of an opinion of counsel acceptable to
Borrower (including then counsel to Borrower) that such transfer is exempt from
the registration provisions of the Securities Act and state securities laws), or
(iii) the receipt by Borrower of a "no-action" letter from the Securities and
Exchange Commission to the effect that any transfer by such holder of the
securities evidenced by such certificate will not violate the Securities Act and
applicable state securities laws.
10. MISCELLANEOUS
10.01 NOTICES
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of computer transmission)
to the parties at the following addresses (or at another address for a party as
shall be specified by like notice):
To: Borrower: Advanced Technology Industries Inc.
Xxxxxxxxxxxxx 00
Xxxxxx, Xxxxxxx D-10117
Telephone No.: (0000) 000-0000
Facsimile No.: __________________
With copy to: H. Xxx Xxxxxxx
Law Offices of H. Xxx Xxxxxxx
11900 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
To: Lender __________________________________
__________________________________
__________________________________
Telephone No.: ___________________
Facsimile No.: ___________________
10.02 INTERPRETATION
The words "include", "includes" and "including", when used
herein, shall be deemed in each case to be followed by the words "without
limitation". The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. As used herein, references to the singular include the plural and the
plural include the singular, except where the context requires otherwise. As
used herein, references to person includes individuals and entities.
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10.03 COUNTERPARTS AND FACSIMILE SIGNATURES
This Agreement may be executed in one or more counterparts and
by facsimile signature, all which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each party delivered to the other party, it being understood that all parties
need not sign the same counterpart.
10.04 ENTIRE AGREEMENT
This Agreement and the exhibits hereto, and the documents and
instruments and other agreements among the parties hereto referenced herein
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
10.05 SEVERABILITY
In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void, or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provisions to
persons or circumstances will be interpreted reasonably so as to give effect to
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes intended by the void or unenforceable provision.
10.06 OTHER REMEDIES
Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with, and not
exclusive of, any other remedy conferred hereby, or by law or equity, upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
10.07 GOVERNING LAW; VENUE
This Agreement shall be governed by and construed in
accordance with the laws of the Republic of Germany, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
The parties irrevocably consent to the jurisdiction and venue of the courts of
the Republic of Germany concerning any action relating to this Agreement
including, but not limited to, any action related to the Note, the Incentive
Shares, and the Interest Shares, if any.
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10.08 RULES OF CONSTRUCTION
The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
10.09 SPECIFIC PERFORMANCE
The parties hereto agree that irreparable damages would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court having proper venue hereunder, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.10 ATTORNEYS' FEES AND COST
In the event of any action at law or in equity between the
parties hereto to enforce any of the provisions hereof, the unsuccessful party
or parties to such litigation shall pay to the successful party or parties all
costs and expenses, including actual attorneys' fees, incurred therein by such
successful party or parties and if such successful party or parties shall
recover judgment in any such action or proceeding, such costs, expenses and
attorneys' fees shall be included in and as part of such judgment. The
successful party shall be the party who is entitled to recover his or its costs
of suit, whether or not the suit proceeds to final judgment. A party not
entitled to recover his or its costs shall not recover attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"Borrower" Advanced Technology Industries, Inc.
By ___________________________
X. X. Xxxxxxxxx, President
"Lender" __________________________
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EXHIBIT "A"
PROMISSORY NOTE
$____________________ _________, 2000
On the Maturity Date as defined in that certain Loan Agreement by and
between Advanced Technology Industries, Inc. as Borrower and ___________________
as Lender dated as of __________, 2000 ("Loan Agreement") Borrower promises to
pay to, or order, the sum of $_______________________ together with interest as
provided in the Loan Agreement.
Borrower has certain rights of prepayment, without penalty, as set
forth in the Loan Agreement.
This Promissory Note is governed by and subject to the provisions of
the Loan Agreement. A copy of the Loan Agreement may be obtained from the
corporate office of the Borrower whose address and telephone number are as
follows: Advanced Technology Industries Xxx.,Xxxxxxxxxxxxx 00, Xxxxxx, Xxxxxxx
D-10117, Telephone No.: (0000) 000-0000
Advanced Technology Industries, Inc.
By___________________________
X. X. Xxxxxxxxx, President.
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EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT
-----------------------------
SECTION I
DEFINITIONS
-----------
Capitalized terms used in this Agreement and not defined elsewhere
herein shall have the meanings set forth below:
"COMMISSION" means the Securities and Exchange Commission, or any other
federal agency then administering the Securities Act.
"COMMON STOCK" means the $.0001 par value common stock of Borrower.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"LOSSES" means all losses, claims, damages, or liabilities and
reasonable expenses related thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"SHARES" means then Incentive Shares and the Interest Shares, if any.
SECTION 2
DEMAND REGISTRATION
-------------------
2.1 At any time commencing with the first anniversary date of this
Agreement and during a period of five years from the date hereof, upon the
written demand of Lender, the Borrower shall prepare and file a registration
statement under the Securities Act covering an offering of such number of Shares
as shall have been requested to be registered by Lender in such demand;
provided, however, that Borrower shall not be obligated to effect a registration
pursuant to this Section 2.1 more than once during each twelve (12) month period
commencing with the effective date of this Agreement.
2.2 The Borrower shall proceed as expeditiously as possible after
receipt of a demand pursuant to Section 2.1 hereof to file a registration
statement and use its best efforts to cause such registration statement to
become effective within one hundred twenty (120) days after the receipt of such
written demand, or, in the case of a demand made within sixty (60) days prior to
the end of the Borrower's then-fiscal year, within two hundred ten (210) days
after the receipt of such written demand. The Borrower shall select any
underwriter(s) to be engaged in connection with any such registration.
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SECTION 3
PIGGYBACK REGISTRATION
----------------------
3.1 If at any time within five years from the effective date of this
Agreement the Borrower proposes to register any offering of shares of its
capital stock under the Securities Act, and if such registration is to be on a
form of the Commission that may include, or is at any time amended or changed to
such a form that may include, the Shares, the Borrower will provide written
notice to Lender of the Borrower's intention to register the offering at least
thirty (30) days prior to the filing of said registration statement.
3.2 Unless objected to by any underwriter(s) participating in the sale
and distribution of the Borrower's securities covered by the registration
statement referred to in Section 3.1 hereof, the Borrower's notice shall give
Lender the opportunity to elect to include in the registration some of the
Shares as provided herein. Lender shall have thirty (30) days after receipt of
the Borrower's notice to notify the Borrower in writing of the number of Shares
(the "Elected Shares") which Lender elects to include in the offering. If the
number of Elected Shares that Lender requests to include in such registration
exceeds the number of shares permitted by any underwriter then Lender, and each
other selling shareholder who also has piggyback registration rights and has
elected to include shares of Common Stock in the registration, shall be entitled
to include that number of shares of Common Stock that bears the same ratio to
the number of shares permitted by the underwriter as the number of Elected
Shares which Lender requests to include bears to the aggregate number of shares
that Lender and any other selling shareholders request to include. The piggyback
registration rights provided by this Section 3.2 with respect to the Shares
shall not apply to offerings that are registered on Form X-0, Xxxx X-0, or
successor forms thereto, for registering stock issued under business
combinations or employee plans.
3.3 The inclusion of Shares in registered offerings pursuant to this
Section 3 shall be upon the condition that Lender sells its Elected Shares to
any underwriter at the same price and on substantially the same terms and
conditions as the Borrower.
3.4 The Borrower shall give Lender the right to participate in each
registration pursuant to this Section 3 without limitation as to number of
registrations.
3.5 In the case of any public offering of securities of the Borrower
pursuant to which Lender exercises registration rights under this Section 3, the
Borrower shall designate any underwriters in connection therewith.
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SECTION 4
CONDITIONS TO PARTICIPATION
---------------------------
4.1 To include any Shares in a registration under Section 2 or Section
3 hereof, Lender shall:
(a) cooperate with the Borrower in preparing the registration
statement and execute such agreements as Borrower or any underwriter may deem
reasonably necessary, including, but not limited to, an agreement concerning
distribution of the shares to be registered to insure that the distribution will
not adversely impact the market price of said shares;
(b) promptly supply the Borrower with such information,
documents, representations and warranties as any underwriter may deem reasonably
necessary in connection with such registration; and
(c) as requested by the Borrower or any underwriter, agree in
writing not to sell or transfer any Common Stock not included in such
registration for a period of fifteen (15) days prior to and one hundred eighty
(180) days after the effective date of the registration without the
underwriter's consent, but Lender shall not be required to make such agreement
unless the other holders of Common Stock included in the offering covered by
such registration shall similarly agree.
SECTION 5
OPINION OF COUNSEL
------------------
The Borrower shall have no obligation under Section 2 or Section 3
hereof to register any Shares if the Borrower delivers to Lender an opinion of
counsel reasonably satisfactory to Lender to the effect that the proposed sale
or disposition of the Shares for which registration was requested does not
require registration under the Securities Act for a sale or disposition in a
single public transaction. The Borrower hereby agrees to indemnify Lender
against, and to hold it harmless from, all Losses, including liability for
rescission, that it may incur under the Securities Act or otherwise by reason of
it proceeding in accordance with such opinion of counsel.
SECTION 6
REGISTRATION PROCEDURES
-----------------------
If and whenever the Borrower is obligated by the provisions of this
Agreement to effect the registration of any offering of Shares under the
Securities Act, as expeditiously as possible the Borrower will, or will use its
best efforts to, as the case may be:
(a) Prepare and file with the Commission a registration
statement with respect to such Shares and cause such registration statement to
become effective; provided, however, that before filing a registration statement
or prospectus or any amendments or supplements thereto, the Borrower shall
furnish to Lender and its counsel selected pursuant to Section 7.2 hereof copies
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of all such documents proposed to be filed, which documents will be the subject
of review of Lender and its counsel and, in the event of a demand registration
which is not accompanied by a registration of Common Stock for sale by the
Borrower, the Borrower shall not file any registration statement or prospectus
or any amendments or supplements thereto to which Lender or its counsel shall
reasonably object on a timely basis.
(b) Prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary to keep the registration statement effective until
the earlier of the sale of all Shares covered thereby or the expiration of a
period of two hundred seventy (270) days after its effective date, and comply
with the provisions of the Securities Act with respect to the disposition of all
shares of Common Stock covered by the registration statement; provided, however,
that if maintaining the effectiveness of the registration statement would
require the filing of a post-effective amendment including new financial
statements (other than financial statements which the Borrower would be required
to include in a current report on Form 10-Q or Form 10-QSB), the Borrower shall
be obligated to use its best efforts to maintain the effectiveness of the
registration statement for only six (6) months in the case of the first
registration filed hereunder, and ninety (90) days in the case of any other
registration filed hereunder. In the event that any Shares included in a
registration statement subject to this Agreement remain unsold at the end of the
period during which the Borrower is obligated to use its best efforts to
maintain the effectiveness of the registration statement, the Borrower, if and
when a further amendment or supplement would be required to comply with Section
10 of the Securities Act, may file a post-effective amendment to the
registration statement for the purpose of removing such Shares from registered
status.
(c) Furnish to Lender as many copies of prospectuses,
including preliminary prospectuses, in conformity with the requirements of the
Securities Act, and other related documents, as Lender may reasonably request.
(d) Register or qualify the Shares covered by the registration
statement under the securities or blue sky laws of such jurisdictions as Lender
shall reasonably request, and do any acts that may be reasonably necessary or
advisable to enable Lender to consummate the disposition in such jurisdictions
of the Shares; provided, however, that the Borrower shall not be obligated, by
reason thereof, to qualify as a foreign corporation or file any general consent
to service of process under the laws of any such jurisdiction or subject itself
to taxation as doing business in any such jurisdiction.
(e) Furnish to Lender an opinion of counsel for the Borrower,
which opinion shall be reasonably acceptable to Lender and the counsel selected
pursuant to Section 7.2 hereof, to the effect (i) that a registration statement
covering the offering of the Shares has been filed with the Commission under the
Securities Acts and has been made effective by order of the Commission, (ii)
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that a prospectus complying as to form with the requirements of the Securities
Act is available for delivery, (iii) that no stop order has been issued by the
Commission suspending the effectiveness of such registration statement and (iv)
that, to the best of such counsel's knowledge, no proceedings for the issuance
of such a stop order are threatened or contemplated, and that the securities
included in the offering covered by such registration statement have been
registered or qualified, or exempted from such registration or qualification,
under the securities or blue sky laws of each state in which the Borrower has
been required to register or qualify such shares under Section 6(d) hereof. In
giving such opinion, counsel for the Borrower shall be entitled to rely upon the
opinion of counsel for any underwriter.
(f) Notify Lender promptly after the Borrower shall receive
notice that (i) any registration statement, supplement or amendment has become
effective, (ii) any registration statement is required to be amended or
supplemented, or (iii) any stop order with respect thereto has been issued.
(g) Enter into such agreements, including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings, and take all other actions in connection therewith, including actions
reasonably requested by any underwriter or Lender, in order to expedite or
facilitate the disposition of the Shares. The Borrower's obligations pursuant to
the preceding sentence can include without limitation, the Borrower: (i) making
representations and warranties to the underwriters with respect to the business
of the Borrower, the registration statement, the prospectus and the documents,
if any, incorporated or deemed to be incorporated by reference in the
registration statement, in each case in form, substance and scope as are
customarily made by issuers to underwriters in underwritten secondary offerings
and confirm such matters if and when requested; (ii) obtaining opinions of
counsel to the Borrower and updates thereof, which counsel and opinions, in
form, scope and substance, shall be reasonably satisfactory to the underwriters,
covering the matters customarily covered in opinions requested in underwritten
offerings; (iii) obtaining "cold comfort" letters and updates thereof from the
independent certified public accountants of the Borrower (and, if necessary, any
other independent certified public accountants of any subsidiary of the Borrower
or of any business acquired by the Borrower for which financial statements and
financial data are or are required to be included in the registration statement)
addressed to the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters to
underwriters in connection with underwritten offerings; (iv) agreeing in any
underwriting agreement to the indemnification and contribution provisions and
procedures of Sections 9 through 12 hereof (or such other less favorable
provisions and procedures for the underwriters that are acceptable to the
underwriters) with respect to all parties to be indemnified pursuant to said
Sections; and (v) delivering such documents and certificates as may be requested
by an underwriter to evidence the continued validity of the representations and
warranties made pursuant to clause (i) of this Section 6(g), and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Borrower.
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(h) Make available for inspection, by any underwriter and any
counsel or accountant retained by the underwriter, financial and other records,
pertinent corporate documents and properties of the Borrower, and cause the
officers, directors and employees of the Borrower to supply information
reasonably requested by any underwriter, counsel or accountant in connection
with such registration statement; provided, however, that any records,
information or documents that are designated by the Borrower in writing as
confidential shall be kept confidential by such persons unless (i) disclosure of
such records, information or documents is required by court or administrative
order, (ii) disclosure of such records, information, or documents, in the
opinion of counsel to such person, is required by law, including, without
limitation, pursuant to the requirements of the Securities Act, or (iii) such
records, information, or documents are in the public domain or otherwise
publicly available.
SECTION 7
REGISTRATION EXPENSES; COUNSEL FOR LENDER
-----------------------------------------
7.1 The costs and expenses in connection with the registrations and
qualifications of Shares under Section 2 hereof shall be paid by Lender. The
costs and expenses (other than underwriting discounts or commissions and such
fees for counsel, printing, registration and other fees as state securities
officials may require that Lender and other selling shareholders pay) of all
registrations and qualifications of Shares under Section 3 hereof shall be paid
by the Borrower, including, without limitation, all registration and filing
fees, printing expenses, costs of special audits incident to or required by any
registration, fees and disbursements of counsel for the Borrower and the fees
and disbursements of one special counsel acting for Lender and selected pursuant
to Section 7.2 hereof, except that all such expenses in connection with any
amendment or supplement to the registration statement or the prospectus used in
connection therewith required to be filed more than two hundred seventy (270)
days after the date on which such registration statement becomes effective under
the Securities Act because Lender has not effected the disposition of all Shares
covered by such registration statement shall be borne pro rata by Lender and any
other selling shareholders benefitted thereby.
7.2 Lender may select the counsel to act on his behalf in connection
with a registration, under this Agreement, provided that such counsel is
reasonably acceptable to the Borrower.
SECTION 8
RULE 144
--------
The Borrower shall file the reports required under the Securities Act
and the Exchange Act and the rules and regulations adopted by the Commission
thereunder and shall take such further action as Lender may reasonably request,
as required from time to time to enable Lender to sell Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission.
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SECTION 9
INDEMNIFICATION BY THE BORROWER
-------------------------------
In the event of any registration under the Securities Act of any
offering of Shares, the Borrower hereby agrees to indemnify and hold harmless
Lender and each person (including each underwriter, and each other person, if
any, who controls such underwriter) who participates in the offering of such
Shares against any Losses, joint or several, to which Lender or such
participating person may become subject under the Securities Act or otherwise,
insofar as such Losses (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which Shares were registered under the Securities Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon 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 and will reimburse
Lender and each such participating person for any legal or other expenses
reasonably incurred by Lender or such participating person in connection with
investigating or defending any such Loss: PROVIDED, HOWEVER, that, the Borrower
will not be liable in any such case to the extent that any such Loss arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, said preliminary or
final prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished by Lender or such participating
person, as the case may be, specifically for use in the preparation thereof. The
Borrower shall also indemnify underwriters, selling brokers, dealers, managers,
and similar securities industry professionals participating in the distribution,
their officers, directors, agents, and employees and each person who controls
such persons (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) to the same extent as provided above with respect to the
indemnification of Lender.
SECTION 10
INDEMNIFICATION BY LENDER
-------------------------
In the event of any registration under the Securities Act of any
offering of Shares, Lender hereby agrees to indemnify and hold harmless the
Borrower and each person who controls the Borrower within the meaning of the
Securities Act and each other person (including each underwriter, and each other
person, if any, who controls such underwriter, and each other selling
shareholder, and each other person, if any, who controls such selling
shareholder) who participates in the offering of such Shares, against any
Losses, joint or several, to which the Borrower, other selling shareholder, or
controlling person or participating person may become subject under the
Securities Act or otherwise, insofar as such Losses (or proceedings in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained therein, on the effective date thereof,
in any registration statement under which an offering of such Shares was
registered under the Securities Act, in any preliminary prospectus or final
prospectus contained therein, or in any amendment or supplement thereto, or
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arise out of or are based upon 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, and will reimburse the Borrower, other
selling shareholders, and each such controlling person or participating person
for any legal or other expenses reasonably incurred by the Borrower, other
selling shareholders, or such controlling person or participating person in
connection with investigating or defending any such Loss or proceeding:
PROVIDED, HOWEVER, that Lender will be liable in any such case to the extent,
and only to the extent, that any such Loss arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, said preliminary or final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by Lender specifically for use in the preparation thereof.
Notwithstanding the foregoing, the liability of Lender under this Section 10
shall be limited to an amount equal to the price of the Shares sold by Lender in
connection with such registration unless such liability arises out of acts based
on willful conduct of Lender.
SECTION 11
CONDUCT OF INDEMNIFICATION PROCEEDINGS
--------------------------------------
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or any claim shall be asserted against any person
entitled to indemnity hereunder (an "indemnified party") such indemnified party
shall promptly notify the person from which such indemnity is sought (the
"indemnifying party") in writing, and the indemnifying party shall 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 the defense thereof. Any such indemnified party shall have the
right to employ separate counsel in any such action, claim, or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses, or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim, or
proceeding, or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified 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 of such action, claim, or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim, or proceeding,
or separate but substantially similar or related actions, claims, or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any time
for all such indemnified parties, unless in the reasonable judgment of such
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indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such action,
claim, or proceeding, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels. The
indemnifying party shall not be liable for any settlement of any such action or
proceeding effected without its written consent.
SECTION 12
CONTRIBUTION
------------
If the indemnification provided for in this Agreement is unavailable to
an indemnified party under Section 9 or Section 10 hereof (other than by reason
of exceptions provided in such Sections) in respect of any Losses, then each
applicable 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 of the indemnifying party and indemnified parties in connection
with the actions, statements, or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and the indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue
statement or alleged untrue statement of a material fact, 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
party's 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 11 hereof, any legal or other fees or
expenses reasonably incurred by such party in connection with any action, suit,
claim, investigation, or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 12 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 12, Lender shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Shares sold by it exceeds the amount of any damages which such
indemnifying party has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 (f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
SECTION 13
RIGHT OF FIRST REFUSAL
----------------------
In lieu of registering any shares under this Agreement pursuant to
Section 2 or 3 hereof or rendering an opinion pursuant to Section 5 hereof,
Borrower may elect to purchase all or a portion of the Shares that Lender
demands to be registered under Section 2 or requests to be registered under
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Section 3. Borrower may elect to purchase said Shares by giving notice thereof
to Lender within 15 days from receipt by Borrower of the demand from Lender
under Section 2 or the request to register Shares under Section 3. The purchase
price of said Shares shall be 80% of the average of the closing bid prices for
the last 20 trading days. Borrower shall pay said amount to Lender within 15
days of the receipt of the election to purchase by Lender. Simultaneously with
receipt of payment, Lender shall deliver to Borrower share certificates
evidencing the number of Shares to be purchased by Borrower together with an
executed Stock Assignment Separate from Certificate and such other documents as
Borrower may reasonably demand.
SECTION 14
EFFECTIVE DATE
--------------
The effective date of this Agreement shall be the same as the Loan Date
under the Loan Agreement.
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