EXHIBIT 10.2
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EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("AGREEMENT") is entered into as of August
22, 2000, between XXXXXXXXX.XXX, INC., a Florida corporation with offices at
0000 Xxxxxx Xxxx, Xxxxx 000X, Xxxx Xxxxx, XX 00000 (the "COMPANY"), XXXXXXX
ASSOCIATES, L.P., a Delaware limited partnership ("XXXXXXX"), and WESTGATE
INTERNATIONAL, L.P., a Cayman Islands limited partnership ("WESTGATE"). Each of
Xxxxxxx and Westgate are referred to hereinafter individually as an "INVESTOR"
and collectively as the "INVESTORS".
W I T N E S S E T H:
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WHEREAS, pursuant to that certain Common Stock Investment Agreement,
dated the date hereof, among the Company and the Investors (the "INVESTMENT
AGREEMENT"), the Company has agreed to sell and issue to the Investors, and the
Investors have agreed to purchase from the Company, inter alia, an aggregate of
358,423 shares (the "INITIAL SHARES") of the Company's common stock, $.01 par
value ("COMMON STOCK"), and certain warrants, all as more fully specified and
subject to the terms and conditions set forth in the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Investment Agreement and this Agreement, the Company and the Investors agree as
follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Investment
Agreement. As used in this Agreement, the following terms shall have the
following respective meanings:
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in the Investment Agreement.
"COMMISSION" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"FAIR MARKET VALUE" shall equal the 10 Trading Day average closing
trading price of the Common Stock on the principal market for the 10 Trading
Days preceding the date of determination or, if the Common Stock is not listed
or admitted to trading on any principal market, the average of the closing bid
and asked prices on the over-the-counter market as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by the Company
for that purpose and reasonably acceptable to the Holder, or, if the Common
Stock is not listed or admitted to trading on the Principal Market or traded
over-the-counter and the average price cannot be determined as contemplated
above, the Fair Market Value of the Common Stock shall be as reasonably
determined in good faith by the Company's Board of Directors with the
concurrence of the Holder.
"HOLDER" and "HOLDERS" shall include the Investors and any transferee
or transferees of the Purchased Shares or Registrable Securities which have not
been sold to the public to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement and the
Investment Agreement.
"MANDATORY REDEMPTION PRICE" shall mean an amount in immediately
available funds, on a per share basis, equal to:
(a) as to the Purchased Shares, the greater of (i) 120% of the Share
Purchase Price and (ii) the highest Common Stock closing price on the Principal
Market between and including date of the event triggering the right of
redemption and the trading day immediately prior to the actual redemption of the
Purchased Shares;
(b) as to the Warrants, the price calculated pursuant to (a) above as
applied to the number of Warrant Shares into which the Warrant could be
converted as calculated hereunder ("DELIVERABLE SHARES"). For purposes hereof,
the number of Deliverable Shares shall equal the product of (x) the number of
Warrant Shares with respect to which the Warrant is being surrendered for
Deliverable Shares, multiplied by (y) the quotient of (i) the Fair Market Value
of Common Stock less the Exercise Price (as such term is defined in the Common
Stock Purchase Warrant entered into simultaneously herewith) divided by (ii) by
Fair Market Value of Common Stock.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"PURCHASED SHARES" means the Initial Shares, Warrant Shares and the
Adjustment Shares issued or issuable for the current or previous Adjustment
Periods.
"REGISTRABLE SECURITIES" shall mean: (i) the Initial Shares; (ii) the
Warrant Shares; (iii) the Adjustment Shares; (iv) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar event with
respect to the foregoing; and (v) any other security issued as a dividend or
other distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses; provided such securities will
cease to be Registrable Securities for purposes of this Agreement if and to the
extent they become freely saleable by the Holders pursuant to Rule 144.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
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to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"REGISTRATION STATEMENT" shall have the meaning set forth in Section
2(a)(i) herein.
"REGULATION D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"SECURITIES ACT" or "ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
"TRADING DAY" shall mean (x) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (y) if the Common Stock is not listed on
either of such stock exchanges but sale prices of the Common Stock are reported
on an automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.
2. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as would permit or facilitate the sale or distribution
of all the Registrable Securities in the manner (including manner of sale) and
in all states reasonably requested by any Holder. Such best efforts by the
Company shall include, without limitation, the following:
(a) The Company shall as expeditiously as possible after
the Closing Date (except in the case of (i) below):
(i) Within seventy-five (75) calendar days
after the Closing, prepare and file a registration
statement with the Commission pursuant to Rule 415
under the Securities Act on Form S-3 under the
Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the
Company is eligible to use under the Securities Act)
covering resales by the Holders of the Registrable
Securities ("REGISTRATION STATEMENT"). Thereafter the
Company shall use its best efforts to cause such
Registration Statement and other filings to be
declared effective as soon as possible, and in any
event prior to 100 days following the Closing Date;
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provided that if the SEC reviews and gives comments
on the Registration Statement requiring changes and
amendments thereto before it will declare the
Registration Statement effective, then the Company
shall use its best efforts to have the Registration
Statement and other filings declared effective no
later than 130 days following the Closing Date.
Without limiting the foregoing, the Company will
promptly respond to all SEC comments, inquiries and
requests, and shall request acceleration of
effectiveness at the earliest possible date.
(ii) Prepare and file with the SEC such
amendments and supplements to such Registration
Statement and the prospectus used in connection with
such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to
the disposition of all securities covered by such
Registration Statement and promptly notify the
Holders of the filing and effectiveness of such
Registration Statement and any amendments or
supplements.
(iii) Furnish to each Holder such numbers of
copies of a current prospectus conforming with the
requirements of the Act, copies of the Registration
Statement, any amendment or supplement thereto and
any documents incorporated by reference therein and
such other documents as such Holder may reasonably
require in order to facilitate the disposition of
Registrable Securities owned by such Holder.
(iv) Register and qualify the securities
covered by such Registration Statement under the
securities or "Blue Sky" laws of all domestic
jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a
condition thereto to register or qualify as a foreign
corporation in any jurisdiction where it is not now
so qualified or take any action that would subject it
to service of process in suits or taxation, in each
case, in any jurisdiction where it is not now so
subject.
(v) Notify each Holder immediately of the
happening of any event (but not the substance or
details of any such events unless specifically
requested by a Holder) as a result of which the
prospectus (including any supplements thereto or
thereof) included in such Registration Statement, as
then in effect, includes an untrue statement of
material fact or omits to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing, and use its best efforts
to promptly update and/or correct such prospectus.
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(vi) Notify each Holder immediately of the
issuance by the Commission or any state securities
commission or agency of any stop order suspending the
effectiveness of the Registration Statement or the
threat or initiation of any proceedings for that
purpose. The Company shall use its best efforts to
prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof
at the earliest possible time.
(vii) Permit counsel to the Holders to
review and comment upon the Registration Statement
and all amendments and supplements thereto within a
reasonable period of time (but not less than five (5)
full trading days) prior to each filing, and shall
not file any document in a form to which such counsel
reasonably objects and will not request acceleration
of the Registration Statement without prior notice to
such counsel.
(viii) List the Registrable Securities
covered by such Registration Statement with all
securities exchange(s) and/or markets on which the
Common Stock is then listed and prepare and file any
required filings with the Nasdaq National Market
System or any exchange or market where the Common
Stock is traded.
(ix) Take all steps necessary to enable
Holders to avail themselves of the prospectus
delivery mechanism set forth in Rule 153 (or
successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events
that may arise that the parties consider will interfere with the full enjoyment
by the Investors of their rights under this Agreement and the Investment
Agreement (the "INTERFERING EVENTS"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b)
describe the Interfering Events, provide a remedy to the Investors if an
Interfering Event occurs and provide that the Investors may require that the
Company repurchase outstanding Purchased Shares at a specified price if certain
Interfering Events are not timely cured.
Paragraph (v) provides, inter alia, that if default
adjustments required as the remedy in the case of certain of the Interfering
Events are not provided when due, the Company may be required by the Investors
to redeem outstanding Purchased Shares at a specified price.
Paragraph (vi) provides, inter alia, that the
Investors have the right to specific performance.
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The preceding paragraphs in this Section 2(b) are
meant to serve only as an introduction to this Section 2(b), are for convenience
only, and are not to be considered in applying, construing or interpreting this
Section 2(b).
(i) Delay in Effectiveness of Registration
Statement.
(A) In the event that such Registration
Statement has not been declared effective within the
periods specified in Section 2(a)(i), then the
Company shall pay each Holder a Monthly Delay Payment
(as defined below) for each 30 day period (or portion
thereof) that effectiveness of the Registration
Statement is delayed. In addition to the foregoing,
if for any reason the Registration Statement has not
been declared effective within 210 days after the
Closing Date, then each Holder shall have the right
but not the obligation to sell to the Company, and
the Company shall have the obligation to purchase for
immediately available funds, at any time after the
210th day after the Closing Date, any or all of its
Purchased Shares or Warrants for a per share
consideration equal to the applicable Mandatory
Redemption Price.
(B) As used in this Agreement, a "MONTHLY DELAY PAYMENT" shall
be a payment in immediately available funds equal to 1% of the
Aggregate Share Purchase Price of the Purchased Shares held by a Holder
for the initial 30 day period (or portion thereof) that the specified
condition in this Section 2(b) has not been fulfilled or the specified
deficiency has not been remedied, and 2% of the Share Purchase Price of
the Purchased Shares held by a Holder for each subsequent such 30 day
period (or portion thereof) that the specified condition in this
Section 2(B) has not been fulfilled or the specified deficiency has not
been remedied (prorated in each case as appropriate). Payment of the
Monthly Delay Payments and Mandatory Redemption Price shall be due and
payable from the Company to such Holder within five (5) business days
of demand therefor. Without limiting the foregoing, if payment in
immediately available funds of the Mandatory Redemption Price is not
made within such 5 business day period, the Holder may revoke and
withdraw in whole or in part its election to cause the Company to make
such mandatory purchase at any time prior to its receipt of such cash,
without prejudice to its ability to elect to receive that particular or
other Mandatory Redemption Price payments in the future. An Investor
may only exercise its right to cause the Company to repurchase at the
Mandatory Redemption Price as a result of a particular event or
circumstance for a period of 150 days following the later of (i) its
receipt of a written notice from the Company informing that Investor of
such event or circumstance or (ii) the date on which the Mandatory
Redemption Price put right first becomes available to such Investor in
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respect of such event or circumstance. A failure of an Investor to
cause a Mandatory Redemption Price repurchase within such 150 day
period shall not limit that Investor's right to cause Mandatory
Redemption Price repurchases with respect to any other triggering event
or circumstance.
(C) Notwithstanding the foregoing, for purposes of determining
the Monthly Delay Payment there shall be excluded from the calculation
of the number of days that the Registration Statement has not been
declared effective, the number of delayed days which are solely
attributable to delays due to the Investor not providing the Company
with information required for the Registration Statement and requested
by the Company, assuming the Company has complied with the timing
requirements contained in this Agreement.
(ii) No Listing; Premium Price Redemption for
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Delisting of Class of Shares.
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(A) In the event that the Company fails, refuses or for any
other reason is unable to cause the Registrable Securities covered by
the Registration Statement to be listed with Nasdaq National Market
System or another Approved Market at all times during the period
("LISTING PERIOD") from the 130th day following the Closing Date until
such time as the registration period in Section 5 herein terminates and
so long as any share of Common Stock is outstanding, then each Holder
shall have the right but not the obligation from time to time to sell
to the Company, and the Company shall have the obligation to purchase
for immediately available funds, any or all of its Purchased Shares or
Warrants at the Mandatory Redemption Price. In the event that the
Company is statutorily prohibited from purchasing all Purchased Shares
or Warrants submitted for repurchase, the Company shall only be
required (as long as such prohibition remains) to purchase a pro rata
amount from each Holder based on the number of Purchased Shares or
Warrants submitted for repurchase by all Holders. In any case where the
Company fails to repurchase any Purchased Shares or Warrant as
required, in addition to any other remedies available to the Holders,
the Company shall provide to each Holder a Monthly Delay Payment in
respect of each Purchased Share or Warrant not so repurchased, for each
30-day period or portion thereof during which such listing is not in
effect. The provisions of Section 2(b)(i)(B) shall apply to this
Section 2(b)(ii)(A).
(B) In the event the shares of Common Stock are delisted or
otherwise suspended from the Approved Market at any time following the
Closing Date and remain delisted or suspended for five (5) consecutive
Trading Days, then at the option of each Holder and to the extent such
Holder so elects, each Holder shall have the right to sell to the
Company the Purchased Shares and Warrants held by such Holder, in whole
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or in part, for the Mandatory Redemption Price on the terms set forth
in Section 2(b)(i)(B) above.
(iii) Blackout Periods. In the event any Holder's
ability to sell Registrable Securities under the Registration
Statement is suspended for more than (i) five (5) consecutive
Trading Days or (ii) an aggregate of twenty (20) Trading Days
in any twelve (12) month period ("SUSPENSION GRACE PERIOD"),
including without limitation by reason of any suspension or
stop order with respect to the Registration Statement or the
fact that an event has occurred as a result of which the
prospectus (including any supplements thereto) included in
such Registration Statement then in effect includes an untrue
statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing (a "BLACKOUT"), then the Company
shall provide to each Holder a Monthly Delay Payment for each
30 day period or portion thereof (appropriately prorated) from
and after the expiration of the Suspension Grace Period, on
the terms set forth in Section 2(b)(i)(B) above. In addition,
if at any time following the expiration of the Suspension
Grace Period, the Blackout continues for more than five (5)
additional consecutive Trading Days, a Holder shall have the
right to sell to the Company its Purchased Shares and
Warrants, in whole or in part, for the applicable Mandatory
Redemption Price on the terms set forth in Section 2(b)(i)(B)
above.
(iv) Redemption for Exercise Deficiency. In the event
that the Company does not have a sufficient number of shares
of Common Stock available to satisfy the Company's obligations
to any Holder upon receipt of a notice of exercise of a
Warrant from an Investor, or is otherwise unable or unwilling
for any reason to issue Common Stock as required by, and in
accordance with the provisions of, the Warrants or the
Investment Agreement (each, an "EXERCISE DEFICIENCY"), then:
(A) The Company shall provide to each Holder a Monthly Delay
Payment for each 30 day period or portion thereof (appropriately
prorated) following the Exercise Deficiency, on the terms set forth in
Section 2(b)(i)(B) above.
(B) At any time five (5) days after the commencement of the
running of the first 30-day period described above in clause (A) of
this paragraph (iv), at the request of any Holder, the Company promptly
shall purchase from such Holder, and on the terms set forth in Section
2(b)(i)(B) above, the outstanding Warrants to the extent required to be
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issued but not issuable, in each case as a result of the Exercise
Deficiency at the Mandatory Redemption Price, on the terms set forth in
Section 2(b)(i)(B) above.
(C) The Holder shall have the right to withdraw any request
for redemption hereunder at any time prior to its receipt of the
Mandatory Redemption Price.
(v) Mandatory Redemption Price for Defaults.
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(A) The Company acknowledges that any failure, refusal or
inability by the Company to perform the obligations described in the
foregoing paragraphs (i) through (iv) will cause the Holders to suffer
damages in an amount that will be difficult to ascertain, including
without limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in holding
the Registrable Securities. Accordingly, the parties agree, after
consulting with counsel, that it is appropriate to include in this
Agreement the foregoing provisions for Monthly Delay Payments and
mandatory redemptions in order to compensate the Holders for such
damages. The parties acknowledge and agree that the Monthly Delay
Payments and mandatory redemptions set forth above represent the
parties' good faith effort to quantify such damages and, as such, agree
that the form and amount of such payments and mandatory redemptions are
reasonable and will not constitute a penalty.
(B) In the event that the Company fails to pay any Monthly
Delay Payment within 5 business days of demand therefor, each Holder
shall have the right to sell to the Company any or all of its Purchased
Shares and Warrants at the Mandatory Redemption Price on the terms set
forth in Section 2(b)(i)(B) above.
(C) The Holder shall have the right to withdraw any request
for redemption hereunder at any time prior to its receipt of the
Mandatory Redemption Price.
(vi) Cumulative Remedies. The Monthly Delay Payments
and mandatory redemptions provided for above are in addition
to and not in lieu or limitation of any other rights the
Holders may have at law, in equity or under the terms of the
Investment Agreement, the Warrants and this Agreement,
including without limitation the right to monetary contract
damages and specific performance. Each Holder shall be
entitled to specific performance of any and all obligations of
the Company in connection with the registration rights of the
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Holders hereunder without the necessity of posting a bond or
surety.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by nationally or
regionally recognized investment bankers reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters, if
any, opinions of independent outside counsel to the Company,
on and dated as of the effective day (or in the case of an
underwritten offering, dated the date of delivery of any
Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following
the end of each fiscal year thereafter, which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s), if any,
and their counsel and covering, without limitation, such
matters as the due authorization and issuance of the
securities being registered and compliance with securities
laws by the Company in connection with the authorization,
issuance and registration thereof and other matters that are
customarily given to underwriters in underwritten offerings,
addressed to the Holders and each underwriter, if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case
of an underwritten offering, at the time of delivery of any
Registrable Securities sold pursuant thereto), and at the
beginning of each fiscal year following a year during which
the Company's independent certified public accountants shall
have reviewed any of the Company's books or records, a
"comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each
underwriter, if any, stating that such accountants are
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independent public accountants within the meaning of the
Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are
customarily covered by letters of the independent certified
public accountants delivered in connection with secondary
offerings; such accountants shall have undertaken in each such
letter to update the same during each such fiscal year in
which such books or records are being reviewed so that each
such letter shall remain current, correct and complete
throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the
Holders;
(iv) if an underwriting agreement is entered into,
the same shall include customary indemnification and
contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable
Securities being sold or by the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Investment Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the
use of any prospectus used in connection with the Registration Statement only in
the event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved Registrable Securities within
five (5) business days of any stockholders or directors meeting formally
authorizing same and shall use its best efforts to cause such Registration
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Statement to become effective within thirty (30) days of such stockholders
meeting. If the Holders receive any Registrable Securities that were not already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below and cause such Registration
Statement to become effective within 30 days of that date that the need to file
the Registration Statement arose. All of the registration rights and remedies
under this Agreement shall apply to the registration of such newly reserved
shares and such new Registrable Securities, including without limitation the
provisions providing for default payments and mandatory redemptions contained
herein.
3. Expenses of Registration. All Registration Expenses in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best
efforts to remain qualified for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration
effected by the Company pursuant to this Agreement, the Company will use its
best efforts to keep such registration effective until the earliest of (a) the
second (2nd) anniversary of the Closing Date or (b) the date upon which such
Registrable Securities may be sold freely and without limitation by the Holders
under Rule 144(k) (provided that the Company's transfer agent has accepted an
irrevocable instruction from the Company to such effect, a copy of which shall
have been given and be reasonably acceptable to the Holders and their counsel)
or (c) the date on which all the Holders have completed the sales described in
the Registration Statement relating thereto. As long as an Investor holds any
Registrable Securities, the Company shall do all things necessary to make Rule
144 available to the Holders.
6. Indemnification.
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(a) Company Indemnity. The Company will indemnify each
Holder, each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and regulations
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thereunder, any underwriter, against all claims, losses, damages, expenses
(including the costs of enforcing this provision) and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
or any violation by the Company of the Securities Act or any state securities
law or in either case, any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
Holder, each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action; provided that the Company will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on (1) any untrue statement or omission
based upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use therein or
(2) any untrue statement or omission contained in any prospectus, offering
circular or other document if the Company shall have delivered to the Holder a
revised prospectus, offering circular or other document in which the Company
shall have corrected such untrue statement or omission and the Holder shall have
failed to deliver such revised prospectus, offering circular or other document
to any purchaser. The indemnity agreement contained in this Section 6(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and
not jointly, if Registrable Securities held by it are included in the securities
as to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, agents and partners, and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person controlling such other Holder(s) against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statement therein not misleading in light of the circumstances under which
they were made, and will reimburse the Company and such other Holder(s) and
their directors, officers and partners, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with investigating
and defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
13
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
and stated to be specifically for use therein, and provided that the maximum
amount for which such Holder shall be liable under this indemnity shall not
exceed the net proceeds received by such Holder from the sale of the Registrable
Securities pursuant to the registration statement in question. The indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities if such settlement
is effected without the consent of such Holder (which consent shall not be
unreasonably withheld).
(c) Procedure. Each party entitled to indemnification
under this Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party
required to provide indemnification (the "INDEMNIFYING PARTY") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim in any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 6 except to
the extent that the Indemnifying Party is materially and adversely affected by
such failure to provide notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
non-privileged information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
7. Contribution. If the indemnification provided for in
Section 6 herein is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein (other than by reason
of the exceptions provided therein), then each such Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
14
In no event shall the obligation of any Indemnifying
Party to contribute under this Section 7 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of indemnification if
the indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the Holders or the underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no Holder or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of any Holder, the net proceeds received by such Holder
from the sale of Registrable Securities pursuant to the registration statement
in question or (ii) in the case of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed to the public were
offered to the public exceeds, in any such case, the amount of any damages that
such Holder or underwriter 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.
8. Survival. The indemnity and contribution agreements
contained in Sections 6 and 7 and the representations and warranties of the
Company referred to in Section 2(d)(i) shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement or the Investment
Agreement or any underwriting agreement, (ii) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of the Company, and (iii) the
consummation of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the
Company such information regarding such Holder and the distribution and/or sale
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. Replacement Certificates. The certificate(s) representing
the shares of Common Stock held by any Investor (or then Holder) may be
exchanged by such Investor (or such Holder) at any time and from time to time
for certificates with different denominations representing an equal aggregate
15
number of shares of Common Stock, as reasonably requested by such Investor (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange. Upon receipt by the Corporation of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any certificate representing the Registrable Securities, and in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Corporation, or upon surrender and cancellation of such certificate if
mutilated, the Corporation will make and deliver, or cause to be made and
delivered, a new certificate of like tenor.
11. Transfer or Assignment. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The rights granted to the
Investors by the Company under this Agreement to cause the Company to register
Registrable Securities may be transferred or assigned (in whole or in part) to a
permitted transferee or assignee of Registrable Securities or Warrants, and all
other rights granted to the Investors by the Company hereunder may be
transferred or assigned to any such transferee or assignee; provided in each
case that the Company must be given written notice by the such Investor at the
time of or within a reasonable time after said transfer or assignment, stating
the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned; and provided further that the transferee or assignee of such rights
agrees in writing to be bound by the registration provisions of this Agreement
and such transfer is in compliance with applicable federal and state securities
laws.
12. Miscellaneous.
--------------
(a) Remedies. The Company and the Investors acknowledge
and agree that irreparable damage 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 or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof without the necessity of posting a bond or surety,
this being in addition to any other remedy to which any of them may be entitled
by law or equity.
(b) Jurisdiction. EACH OF THE COMPANY AND EACH OF THE
INVESTORS (I) HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE
UNITED STATES SITTING IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II)
HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND THE
INVESTORS CONSENT TO
16
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR
LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) Notices. Any notice or other communication required
or permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
Xxxxxxxxx.xxx, Inc.
0000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000, ext. 250
Facsimile: (000) 000-0000
Attention: General Counsel
to the Investors:
Xxxxxxx Associates L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
Westgate International, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000)000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
17
Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) Indemnity. Each party shall indemnify each other
party against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement, including, without limitation, any
enforcement of this indemnity.
(e) Waivers. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. The representations and warranties and
the agreements and covenants of the Company and each Investor contained herein
shall survive the Closing.
(f) Execution in Counterpart. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement, it being understood that all parties need not sign the same
counterpart. Facsimile signatures shall be valid and binding on each party
submitting the same.
(g) Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Investors without their consent, unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such requirement.
The Company agrees to submit for reasonable review and comment a copy of any
public announcement regarding the matters covered by this Agreement or any
agreement or document executed herewith to the Investors and any public
announcement including the name of the Investors to the Investors, prior to the
publication of such announcements.
(h) Entire Agreement; Amendment. This Agreement,
together with the Investment Agreement, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be amended, modified or terminated except
by a written agreement signed by the Company plus the Holders of two-thirds
(2/3) of the Registrable Securities (as if all Warrants were exercised).
(i) Governing Law. THIS AGREEMENT AND THE VALIDITY AND
PERFORMANCE OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE EXTENT THAT THE LAW OF
THE STATE OF DELAWARE REGULATES THE COMPANY'S ISSUANCE OF SECURITIES.
18
(j) Titles. The titles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
[Signature Page Follows]
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
XXXXXXXXX.XXX, INC.
By: /s/ Xxxxxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: Chairman and CEO
INVESTORS:
XXXXXXX ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxx
----------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
WESTGATE INTERNATIONAL, L.P.
By: XXXXXXX INTERNATIONAL CAPITAL
ADVISORS INC.
Attorney-in-Fact
By: /s/ Xxxx Xxxxxx
-------------------
Name: Xxxx Xxxxxx
Title: President
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
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