REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
March 27, 1998, by and among CAM DESIGNS INC., a corporation organized
under the laws of the State of Delaware (the "Company"), and the
undersigned (together with affiliates, the "Initial Investors").
WHEREAS:
A. In connection with the Securities Purchase Agreement of even
date herewith by and between the Company and the Initial Investors (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms
and subject to the conditions contained therein, to issue and sell to the
Initial Investors (i) Eight Hundred (800) shares of its Series A
Convertible Preferred Stock (the "Preferred Stock") that are convertible
into shares of the Company's Class A Common Stock, par value $.001 per
share (the "Common Stock"), upon the terms and subject to the limitations
and conditions set forth in the Certificate of Designations, Rights and
Preferences with respect to such Preferred Stock (the "Certificate of
Designation") and (ii) warrants to acquire Fifty-Six Thousand (56,000)
shares of Common Stock (the "Warrants"); and
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act"), and applicable state securities
laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
the Initial Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall
have the following meanings:
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(i) "Investors" means the Initial Investors
and any transferees or assignees who agree to become bound by the
provisions of this Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
Registration Statement or Statements in compliance with the Securities
Act and pursuant to Rule 415 under the Securities Act or any successor
rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "Registrable Securities" means the
Conversion Shares and the Warrant Shares (including (A) any Conversion
Shares issuable with respect to the Damages Amount or with respect to
Conversion Default Payments under the Certificate of Designation or in
redemption of any Preferred Stock and (B) any Warrant Shares issuable
with respect to Exercise Default Payments under the Warrants) issued or
issuable with respect to the Preferred Stock and the Warrants, and any
shares of capital stock issued or issuable, from time to time (with any
adjustments), as a distribution on or in exchange for or otherwise with
respect to any of the foregoing.
(iv) "Registration Statement" means a
registration statement of the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare
and, on or before the twentieth (20th) day following the Closing Date
(the "Filing Date"), file with the SEC a Registration Statement on Form
S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available to effect a registration of all of the
Registrable Securities, subject to the consent of the Initial Investors
(as determined pursuant to Section 11(j) hereof)) covering the resale of
at least 1,010,000 Registrable Securities (200% of the maximum number of
shares of Common Stock issuable upon the full conversion of or otherwise
with respect to the Preferred Stock (based on the Conversion Price (as
defined in the Certificate of Designation) in effect on the Closing
Date), plus 100% of the maximum number of shares of Common Stock issuable
upon the full exercise of the Warrants), which Registration Statement, to
the extent allowable under the Securities Act and the Rules promulgated
thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon conversion of the Preferred
Stock (i) to prevent dilution resulting from stock splits, stock
dividends or similar transactions or (ii) by reason of reductions in the
Conversion Price of the Preferred Stock in accordance with the terms
thereof (including, but not limited to, the terms which cause the
Variable Conversion Price to decrease to the extent the Closing Bid Price
of the Common
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Stock decreases). The Registrable Securities initially set forth in such
Registration Statement shall be allocated to the Investors as set forth
in Section 11(k) hereof. The Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to (and subject to the approval of) the
Initial Investors and their counsel prior to its filing or other
submission.
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Investors who hold a majority in interest of
the Registrable Securities subject to such underwritten offering, with
the consent of the Initial Investors, shall have the right to select one
legal counsel to represent the Investors and an investment banker or
bankers and manager or managers to administer the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company. In the event that any Investors elect not to
participate in such underwritten offering, the Registration Statement
covering all of the Registrable Securities shall contain appropriate
plans of distribution reasonably satisfactory to the Investors
participating in such underwritten offering and the Investors electing
not to participate in such underwritten offering (including, without
limitation, the ability of nonparticipating Investors to sell from time
to time and at any time during the effectiveness of such Registration
Statement).
c. Payments by the Company. The Company shall cause the
Registration Statement required to be filed pursuant to Section 2(a)
hereof to become effective as soon as practicable, but in no event later
than the seventy-fifth (75th) day following the date hereof (the
"Registration Deadline"). If (i) (A) the Registration Statement required
to be filed by the Company pursuant to Section 2(a) hereof is not filed
with the SEC on or before the Filing Date or (B) any Registration
Statement required to be filed by the Company pursuant to Section 3(b)
hereof is not filed with the SEC within fifteen (15) days after the
applicable Registration Trigger Date (as defined in Section 3(b) hereof),
or (ii) (A) the Registration Statement required to be filed by the
Company pursuant to Section 2(a) hereof is not declared effective by the
SEC on or before the Registration Deadline or (B) any Registration
Statement required to be filed by the Company pursuant to Section 3(b)
hereof is not declared effective by the SEC within sixty (60) days after
the applicable Registration Trigger Date, or (iii) if, after any such
Registration Statement has been declared effective by the SEC, sales of
all of the Registrable Securities (including any Registrable Securities
required to be registered pursuant to Section 3(b) hereof) cannot be made
pursuant to such Registration Statement (by reason of a stop order or the
Company's failure to update the Registration Statement or any other
reason outside the control of the Investors) or (iv) the Common Stock is
not listed or included for quotation on the Nasdaq National Market
("NNM"), the Nasdaq SmallCap Market ("SmallCap"), the New York Stock
Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") at any
time after the Registration Deadline, then the Company will make payments
to the Investors in such amounts and at such times as shall be determined
pursuant to this Section 2(c) as partial relief for the damages to the
Investors by reason of any such delay in or reduction of their ability to
sell the Registrable Securities (which remedy shall not be exclusive of
any other remedies available at law or in equity). The Company shall pay
to each Investor an amount equal to the product of (i) the aggregate
Purchase Price of the Preferred Stock and Warrants held by such Investor
(including, without limitation, Preferred Stock that has been converted
into Conversion
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Shares and Warrants that have been exercised for Warrant Shares then held
by such Investor) (the "Aggregate Share Price"), multiplied by (ii)
twenty-five thousandths (.025), for each thirty (30) day period (or
portion thereof) (A) after the Filing Date and prior to the date the
Registration Statement required to be filed pursuant to Section 2(a)
hereof is filed with the SEC, (B) after the fifteenth (15th) day
following a Registration Trigger Date and prior to the date on which the
Registration Statement required to be filed pursuant to Section 3(b)
hereof is filed with the SEC, (C) after the Registration Deadline and
prior to the date the Registration Statement required to be filed
pursuant to Section 2(a) hereof is declared effective by the SEC, (D)
after the sixtieth (60th) day following a Registration Trigger Date and
prior to the date the Registration Statement required to be filed
pursuant to Section 3(b) hereof is declared effective by the SEC, (E)
during which sales of any Registrable Securities cannot be made pursuant
to any such Registration Statement after the Registration Statement has
been declared effective, and (F) during which the Common Stock is not
listed or included for quotation on the NNM, SmallCap, NYSE or AMEX after
the Registration Deadline; provided, however, that there shall be
excluded from each such period any delays which are solely attributable
to changes (other than corrections of Company mistakes with respect to
information previously provided by the Investors) required by the
Investors in the Registration Statement with respect to information
relating to the Investors, including, without limitation, changes to the
plan of distribution. (For example, if the Registration Statement is not
effective by the Registration Deadline, the Company would pay $250 for
each thirty (30) day period thereafter with respect to each $10,000 of
Aggregate Share Price until the Registration Statement becomes
effective.) Such amounts shall be paid in cash or, at each Investor's
option, may be convertible into Common Stock at the "Conversion Price"
(as defined in the Certificate of Designation) then in effect. Any shares
of Common Stock issued upon conversion of such amounts shall be
Registrable Securities. If the Investor desires to convert the amounts
due hereunder into Registrable Securities it shall so notify the Company
in writing within two (2) business days after the date on which such
amounts are first payable in cash and such amounts shall be so
convertible (pursuant to the mechanics set forth under Article IV of the
Certificate of Designation) beginning on the last day upon which the cash
amount would otherwise be due in accordance with the following sentence.
Payments of cash pursuant hereto shall be made within five (5) days after
the end of each period that gives rise to such obligation, provided that,
if any such period extends for more than thirty (30) days, interim
payments shall be made for each such thirty (30) day period.
d. Piggy-Back Registrations. If at any time prior to
the expiration of the Registration Period (as hereinafter defined) the
Company shall file with the SEC a Registration Statement relating to an
offering for its own account or the account of others under the
Securities Act of any of its equity securities (other than on Form S-4 or
Form S-8 or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock option or
other employee benefit plans), the Company shall send to each Investor
who is entitled to registration rights under this Section 2(d) written
notice of such determination and, if within fifteen (15) days after the
date of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of
the Registrable Securities such Investor requests to be registered,
except that if, in connection with any underwritten public offering, the
managing underwriter(s) thereof shall impose a limitation on the number
of shares of Common Stock which may be included in the Registration
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Statement because, in such underwriter(s)' judgment, marketing or other
factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion
hereunder as the underwriter shall permit. Any exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however,
that the Company shall not exclude any Registrable Securities unless the
Company has first excluded all outstanding securities, the holders of
which are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and provided, further, however, that, after
giving effect to the immediately preceding proviso, any exclusion of
Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to
inclusion of their securities in such Registration Statement by reason of
demand registration rights. No right to registration of Registrable
Securities under this Section 2(d) shall be construed to limit any
registration required under Section 2(a) hereof. If an offering in
connection with which an Investor is entitled to registration under this
Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the
same terms and conditions as other shares of Common Stock included in
such underwritten offering.
e. Eligibility for Form S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for
registration of the sale by the Initial Investors and any other Investor
of the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as
to maintain such eligibility for the use of Form S-3.
f. Rule 416. The Company and the Investors each
acknowledge that an indeterminate number of Registrable Securities shall
be registered pursuant to Rule 416 under the Securities Act so as to
include in such Registration Statement any and all Registrable Securities
which may become issuable (i) to prevent dilution resulting from stock
splits, stock dividends or similar transactions and (ii) by reason of
reductions in the Conversion Price of the Preferred Stock in accordance
with the terms thereof, including, but not limited to, the terms which
cause the Variable Conversion Price to decrease to the extent the Closing
Bid Price of the Common Stock decreases (collectively, the "Rule 416
Securities"). In this regard, the Company agrees to take all steps
necessary to ensure that all Registrable Securities are registered
pursuant to Rule 416 under the Securities Act in such Registration
Statement and, absent guidance from the SEC or other definitive authority
to the contrary, the Company shall affirmatively support and not take any
action adverse to the position that the Registration Statements filed
hereunder cover all of the Rule 416 Securities. If the Company determines
that the Registration Statements filed hereunder do not cover all of the
Rule 416 Securities, the Company shall immediately provide to each
Investor written notice (a "Rule 416 Notice") setting forth the basis for
the Company's position and the authority therefor. The Company
acknowledges that the number of shares of Common Stock initially included
in such
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Registration Statement relating to the Registrable Securities represents
a good faith estimate of the maximum number of shares issuable upon
conversion of the Preferred Stock and exercise of the Warrants.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable
Securities, the Company shall have the following obligations:
a. The Company shall prepare and file with the SEC the
Registration Statement required by Section 2(a) as soon as practicable
after the date hereof (but in no event later than the Filing Date) and
shall cause such Registration Statement relating to Registrable
Securities to become effective as soon as practicable after such filing
(but in no event later than the Registration Deadline), and keep the
Registration Statement effective pursuant to Rule 415 at all times until
such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which all of
the Registrable Securities (in the reasonable opinion of counsel to the
Initial Investors) may be immediately sold to the public without
registration or restriction pursuant to Rule 144(k) under the Securities
Act or any successor provision (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein and all documents incorporated by
reference therein) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and,
during such period, comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement. In the event (i) the Company
delivers a Rule 416 Notice to the Investors or the Investors who hold a
majority in interest of the Registrable Securities shall reasonably
determine, or the SEC shall state formally or informally, that Rule 416
under the Securities Act does not permit a registration statement to
cover securities which may become issuable upon conversion or exercise of
convertible or exercisable securities by reason of reductions in the
conversion or exercise price of such securities and (ii) the number of
shares available under a Registration Statement filed pursuant to this
Agreement is, for any three (3) consecutive trading days (the last of
such three (3) trading days being the "Registration Trigger Date"),
insufficient to cover one hundred thirty-five percent (135%) of the
Registrable Securities issued or issuable upon conversion (without giving
effect to any limitations on conversion contained in Article IV.C of the
Certificate of Designation) of the Preferred Stock and exercise of the
Warrants (without giving effect to any limitations on exercise contained
in Section 7 of the Warrants), the Company shall amend such Registration
Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover two hundred
percent (200%) of
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the Registrable Securities issued or issuable (without giving effect to
any limitations on conversion or exercise contained in the Certificate of
Designation or the Warrants) as of the Registration Trigger Date, in each
case, as soon as practicable, but in any event within fifteen (15) days
after the Registration Trigger Date (based on the market price then in
effect of the Common Stock and other relevant factors on which the
Company reasonably elects to rely). The Company shall cause such
amendment and/or new Registration Statement to become effective as soon
as practicable following the filing thereof. In the event the Company
fails to obtain the effectiveness of any such Registration Statement
within sixty (60) days after a Registration Trigger Date, each Investor
shall thereafter have the option, exercisable in whole or in part at any
time and from time to time by delivery of a written notice to the Company
(a "Mandatory Redemption Notice"), to require the Company to purchase for
cash, at an amount per share equal to the Mandatory Redemption Amount (as
defined in Article VIII.B of the Certificate of Designation), a portion
of the Investor's Preferred Stock such that the total number of
Registrable Securities included on the Registration Statement for resale
by such Investor exceeds 135% of the Registrable Securities issued or
issuable upon conversion (without giving effect to any limitations on
conversion contained in Article IV.C of the Certificate of Designation)
of such Investor's Preferred Stock and exercise of such Investor's
Warrants. If the Corporation fails to redeem any of such shares within
five (5) business days after its receipt of a Mandatory Redemption
Notice, then such Investor shall be entitled to the remedies provided in
Article VIII.C of the Certificate of Designation.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement and its
legal counsel (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, one copy of
the Registration Statement and any amendment thereto, each preliminary
prospectus and prospectus and each amendment or supplement thereto, and,
in the case of the Registration Statement referred to in Section 2(a),
each letter written by or on behalf of the Company to the SEC or the
staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of any Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of
the SEC, in each case relating to such Registration Statement (other than
any portion, if any, thereof which contains information for which the
Company has sought confidential treatment), (ii) on the date of
effectiveness of the Registration Statement or any amendment thereto, a
notice stating that the Registration Statement or amendment has been
declared effective, and (iii) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements
thereto and such other documents as such Investor may reasonably request
in order to facilitate the disposition of the Registrable Securities
owned by such Investor.
d. The Company shall use its best efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or "blue sky" laws of
such jurisdictions in the United States as each Investor who holds
Registrable Securities being offered reasonably requests, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as
may be necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times
during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable
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to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any
such jurisdiction, (d) provide any undertakings that cause the Company
undue expense or burden, or (e) make any change in its charter or bylaws,
which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders.
e. In the event the Investors who hold a majority in
interest of the Registrable Securities being offered in an offering
select underwriters for the offering, the Company shall enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification
and contribution obligations, with the underwriters of such offering.
f. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor of the happening of
any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and deliver such number of
copies of such supplement or amendment to each Investor as such Investor
may reasonably request.
g. The Company shall use its best efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable moment (including in
each case by amending or supplementing such Registration Statement) and
to notify each Investor who holds Registrable Securities being sold (or,
in the event of an underwritten offering, the managing underwriters) of
the issuance of such order and the resolution thereof (and if such
Registration Statement is supplemented or amended, deliver such number of
copies of such supplement or amendment to each Investor as such Investor
may reasonably request).
h. The Company shall permit a single firm of counsel
designated by the Initial Investors to review the Registration Statement
and all amendments and supplements thereto a reasonable period of time
prior to their filing with the SEC, and not file any document in a form
to which such counsel reasonably objects and will not request
acceleration of the effectiveness of any Registration Statement without
prior notice to such counsel.
i. The Company shall make generally available to its
security holders as soon as practical, but not later than ninety (90)
days after the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 under the Securities
Act) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the effective date of
the Registration Statement.
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j. At the request of any Investor, the Company shall
furnish, on the date of effectiveness of the Registration Statement (i)
an opinion, dated as of such date, from counsel representing the Company
addressed to the Investors and in form, scope and substance as is
customarily given in an underwritten public offering and (ii) in the case
of an underwriting, a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and the Investors.
k. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition
pursuant to the Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "Inspectors") all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed necessary by
each Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees
to supply all information which any Inspector may reasonably request for
purposes of such due diligence; provided, however, that each Inspector
shall hold in confidence and shall not make any disclosure (except to an
Investor) of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any
Registration Statement, (b) the release of such Records is ordered
pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been
made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company shall not be
required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form
of this Section 3(k). Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein
shall be deemed to limit the Investors' ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws
and regulations.
l. The Company shall hold in confidence and not make
any disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement, or (v) such Investor consents
to the form and content of any such disclosure. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in
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or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to such Investor prior to making such
disclosure, and allow the Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
m. The Company shall use its best efforts to promptly
either (i) cause all of the Registrable Securities covered by the
Registration Statement to be listed on the NYSE or the AMEX or another
national securities exchange and on each additional national securities
exchange on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii)
secure the designation and quotation of all of the Registrable Securities
covered by the Registration Statement on the NNM or SmallCap and, without
limiting the generality of the foregoing, to arrange for or maintain at
least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities.
n. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities
not later than the effective date of the Registration Statement.
o. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the managing underwriter or underwriters,
if any, or the Investors may reasonably request and registered in such
names as the managing underwriter or underwriters, if any, or the
Investors may request, and, within three (3) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an opinion of
such counsel in the form attached hereto as Exhibit 1.
p. At the request of any Investor, the Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
q. The Company shall comply with all applicable laws
related to a Registration Statement and offering and sale of securities
and all applicable rules and regulations of governmental authorities in
connection therewith (including, without limitation, the Securities Act
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the SEC.)
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r. The Company shall take all such other actions as any
Investor or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of the Registrable Securities.
s. From and after the date of this Agreement, the
Company shall not, and shall not agree to, allow the holders of any
securities of the Company to include any of their securities in any
Registration Statement under Section 2(a) hereof or any amendment or
supplement thereto under Section 3(b) hereof without the consent of the
holders of a majority in interest of the Registrable Securities.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable
Securities, the Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5)
business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement hereunder, unless such Investor
has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from the
Registration Statement.
c. In the event Investors holding a majority in
interest of the Registrable Securities being offered determine to engage
the services of an underwriter, each Investor agrees to enter into and
perform such Investor's obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of
the Registrable Securities, unless such Investor has notified the Company
in writing of such Investor's election not to participate in such
underwritten distribution.
d. Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Sections 3(f) or 3(g), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented
11
or amended prospectus contemplated by Sections 3(f) or 3(g) and, if so
directed by the Company, such Investor shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession, of
the prospectus covering such Registrable Securities current at the time
of receipt of such notice.
e. No Investor may participate in any underwritten
distribution hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into by the
Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements,
and (iii) agrees to pay its pro rata share of all underwriting discounts
and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 4, including, without
limitation, all registration, listing and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the
Company and the fees and disbursements contemplated by Section 3(k)
hereof shall be borne by the Company. In addition, the Company shall pay
all of the Investors' costs and expenses (including legal fees) incurred
in connection with the enforcement of the rights of the Investors
hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
12
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds such
Registrable Securities, and (ii) the directors, officers, partners,
members, employees, agents and each person who controls any Investor
within the meaning of Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if
any, (each, an "Indemnified Person"), against any joint or several
losses, claims, damages, liabilities or expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as
such Claims arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement
or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act,
any other applicable securities law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to
the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations").
Subject to the restrictions set forth in Section 6(c) with respect to the
number of legal counsel, the Company shall reimburse the Investors and
each other Indemnified Person, promptly as such expenses are incurred and
are due and payable, for any reasonable legal fees or other reasonable
expenses incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i)
shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in
writing to the Company by such Indemnified Person expressly for use in
the Registration Statement or any such amendment thereof or supplement
thereto; (ii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (iii) with
respect to any preliminary prospectus, shall not inure to the benefit of
any Indemnified Person if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3(c) hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise
to a Violation and such Indemnified Person, notwithstanding such advice,
used it. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and
shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 hereof.
13
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees severally
and not jointly to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors
or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any
Claim to which any of them may become subject, under the Securities Act,
the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity
with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and
subject to Section 6(c) such Investor will reimburse any legal or other
expenses (promptly as such expenses are incurred and are due and payable)
reasonably incurred by them in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement contained
in this Section 6(b) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of
such Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that
amount as does not exceed the net proceeds actually received by such
Investor as a result of the sale of Registrable Securities pursuant to
such Registration Statement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9 hereof. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus
shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then
amended or supplemented, and the Indemnified Party failed to utilize such
corrected prospectus.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action (including any governmental action), such Indemnified Person
or Indemnified Party shall, if a Claim in respect thereof is to made
against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that such indemnifying party shall not be entitled to
assume such defense and an Indemnified Person or Indemnified Party shall
have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of
the Indemnified Person or Indemnified Party and the indemnifying party
would be inappropriate due to actual or potential conflicts of interest
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in
14
such proceeding or the actual or potential defendants in, or targets of,
any such action include both the Indemnified Person or the Indemnified
Party and the indemnifying party and any such Indemnified Person or
Indemnified Party reasonably determines that there may be legal defenses
available to such Indemnified Person or Indemnified Party which are
different from or in addition to those available to such indemnifying
party. The indemnifying party shall pay for only one separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as
applicable, and such legal counsel shall be selected by Investors holding
a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of
the Initial Investors if they hold Registrable Securities included in
such Registration Statement), if the Investors are entitled to
indemnification hereunder, or by the Company, if the Company is entitled
to indemnification hereunder, as applicable. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under
this Section 6, except to the extent that the indemnifying party is
actually prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is
due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (i) no contribution shall be made under
circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (ii) no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any seller of Registrable Securities who was not guilty of such
fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller
of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the Securities Act or any other similar rule
or regulation of the SEC that may at any time permit the Investors to
sell securities of the Company to the public without registration ("Rule
144"), the Company agrees to:
a. file with the SEC in a timely manner and make and
keep available all reports and other documents required of the Company
under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing and availability of such
reports and other documents is required for the applicable provisions of
Rule 144; and
15
b. furnish to each Investor so long as such Investor
owns shares of Preferred Stock, Warrants or Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities under Rule 144
without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to
have the Company register Registrable Securities pursuant to this
Agreement, shall be automatically assignable by each Investor to any
transferee of all or any portion of the shares of Preferred Stock, the
Warrants or the Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy
of such agreement is furnished to the Company after such assignment, (ii)
the Company is furnished with written notice of (a) the name and address
of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws, (iv) the transferee
or assignee agrees in writing for the benefit of the Company to be bound
by all of the provisions contained herein, and (v) such transfer shall
have been made in accordance with the applicable requirements of the
Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with written consent of the
Company and Investors who hold a majority in interest of the Registrable
Securities; provided, however, that no amendment hereto which restricts
the ability of an Investor to elect not to participate in an underwritten
offering shall be effective against any Investor which does not consent
in writing to such amendment; provided, further, however, that no
consideration shall be paid to an Investor by the Company in connection
with an amendment hereto unless each Investor similarly affected by such
amendment receives a pro-rata amount of consideration from the Company.
Unless an Investor otherwise agrees, each amendment hereto must similarly
affect each Investor. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
16
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to
the same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of
such Registrable Securities.
b. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier or by
confirmed telecopy, and shall be effective five (5) days after being
placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by courier or confirmed telecopy, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
CAM Designs Inc.
Birmingham Road
Allesley, Coventry
CV 00 XX
Xxxxxxx, XX
Telecopy: 000 00 0000 407 335
Attention: Xxxx X. Xxxxxxxx
with a copy to:
Xxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
and if to any Investor, at such address as such Investor shall have
provided in writing to the Company, or at such other address as each such
party furnishes by notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
made and to be performed in the State of Delaware. The Company
irrevocably consents to the jurisdiction of the United States federal
courts
17
and the state courts located in the State of Delaware in any suit or
proceeding based on or arising under this Agreement and irrevocably
agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of
an inconvenient forum to the maintenance of such suit or proceeding. The
Company further agrees that service of process upon the Company, mailed
by first class mail shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. Nothing herein
shall affect the Investors' right to serve process in any other manner
permitted by law. The Company agrees that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on such judgment or in any other lawful
manner.
e. This Agreement, the Securities Purchase Agreement
(including all schedules and exhibits thereto) and the Warrants
constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof. This Agreement, the Securities
Purchase Agreement and the Warrants supersede all prior agreements and
understandings among the parties hereto with respect to the subject
matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof,
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
j. All consents, approvals and other determinations to
be made by the Investors or the Initial Investors pursuant to this
Agreement shall be made by the Investors or the Initial Investors holding
a majority in interest of the Registrable Securities (determined as if
all shares of Preferred Stock and Warrants then outstanding had been
converted into or exercised for Registrable Securities) held by all
Investors or Initial Investors, as the case may be.
k. The initial number of Registrable Securities
included on any Registration Statement and each increase (if any) to the
number of Registrable Securities included thereon shall be allocated pro
rata among the Investors based on the number of Registrable Securities
held by each Investor at the time of such establishment or increase, as
the case may be. In the event an Investor
18
shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be allocated a pro rata portion of the
number of Registrable Securities included on a Registration Statement for
such transferor. Any shares of Common Stock included on a Registration
Statement and which remain allocated to any person or entity which does
not hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of shares of Registrable
Securities then held by such Investors. For the avoidance of doubt, the
number of Registrable Securities held by any Investor shall be determined
as if all shares of Preferred Stock and Warrants then outstanding were
converted into or exercised for Registrable Securities.
l. For purposes of this Agreement, the term "business
day" means any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated
by law, regulation or executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
CAM DESIGNS INC.
By:____________________________________
Name:__________________________________
Its:___________________________________
INITIAL INVESTORS:
JNC STRATEGIC FUND LTD.
By:____________________________________
Name:__________________________________
Its:___________________________________
EXHIBIT 1
to
Registration
Rights
Agreement
[Date]
[Name and address
of transfer agent]
RE: CAM DESIGNS INC.
Ladies and Gentlemen:
We are counsel to CAM DESIGNS INC., a corporation organized
under the laws of the State of Delaware (the "Company"), and we
understand that [Name of Investor] (the "Holder") has purchased from the
Company (i) shares of the Company's Series A Convertible Preferred Stock
(the "Preferred Stock") that are convertible into shares of the Company's
Class A Common Stock, par value $.001 per share (the "Common Stock"), and
(ii) warrants (the "Warrants") to acquire shares of Common Stock.
Pursuant to a Registration Rights Agreement, dated as of March 27, 1998,
by and among the Company and the signatories thereto (the "Registration
Rights Agreement"), the Company agreed with the Holder, among other
things, to register the Registrable Securities (as that term is defined
in the Registration Rights Agreement) under the Securities Act of 1933,
as amended (the "Securities Act"), upon the terms provided in the
Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on ________ __,
1998, the Company filed a Registration Statement on Form S-___ (File No.
333- _____________) (the "Registration Statement") with the Securities
and Exchange Commission (the "SEC") relating to the Registrable
Securities, which names the Holder as a selling stockholder thereunder.
The Registration Statement was declared effective by the SEC on
_____________, 1998.
[Other customary introductory and scope of examination language
to be inserted]
Based on the foregoing, we are of the opinion that the
Registrable Securities have been registered under the Securities Act.
[Other customary language to be included.]
Very truly yours,
cc: [Name of Investor]
