EXHIBIT 4.4
ABAXIS, INC.
REGISTRATION RIGHTS AGREEMENT
March 29, 2002
TO EACH OF THE PURCHASERS
NAMED ON THE SIGNATURE PAGES HEREOF
Ladies and Gentlemen:
ABAXIS, Inc., a California corporation (the "Company"), proposes
to issue and sell to the Purchasers (as defined herein) upon the terms set forth
in the Securities Purchase Agreement (as defined herein) (i) 10,000 shares of
its Series E Cumulative Convertible Series E Preferred Stock having the rights,
preferences, privileges and restrictions set forth in the form of Certificate of
Designations attached as Exhibit B to the Securities Purchase Agreement (the
"Series E Preferred Stock"), and (ii) warrants, substantially in the form
attached to the Securities Purchase Agreement as Exhibit A (the "Warrants"), to
purchase 50 shares of the Company's common stock, no par value (the "Common
Stock"), for each share of Series E Preferred Stock purchased. As an inducement
to the Purchasers to enter into the Securities Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder, the
Company agrees with the Purchasers for the benefit of holders (as defined
herein) from time to time of the Registrable Securities (as defined herein) as
follows:
1. Definitions.
(a) Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Securities Purchase Agreement. As used
in this Agreement, the following defined terms shall have the following
meanings:
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Closing Date" has the meaning in the Securities Purchase
Agreement.
"Closing Price" as of any date means the closing price of one
share of Common Stock as reported by the Nasdaq National Market on such date.
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Exchange
Act or the Securities Act, whichever is the relevant statute for the particular
purpose.
"Common Stock" has the meaning set forth in the preamble hereto.
"Company" has the meaning set forth in the preamble hereto.
"Delay Conditions" means (i) the Company is in possession of
material non-public information the disclosure of which would have a material
adverse effect on the business, operations, prospects, condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole or (ii) the
Board of Directors of the Company determines in good faith that a delay in the
effectiveness of the Shelf Registration Statement, or the Shelf Registration
Statement ceasing to be effective or a Prospectus thereunder ceasing to be
usable, as the case may be, is appropriate due to occurrence or existence of any
pending corporate development with respect to the Company. The Delay Conditions
shall be deemed to no longer exist if (x) in the case of clause (i) above, the
Board of Directors of the Company determines in good faith that the disclosure
of such material information would not be prejudicial to or contrary to the
interest of the Company and (y) in the case of clause (ii) above, the Board of
Directors of the Company determines in good faith that such delay or cessation
is no longer appropriate.
"Effectiveness Period" has the meaning assigned thereto in
Section 2(b)(i) hereof.
"Effective Time" means the date on which the Commission declares
the Shelf Registration Statement effective or on which the Shelf Registration
Statement otherwise becomes effective.
"Effectiveness Deadline Date" means the date which is 90 days
from the Closing Date; provided that the Effectiveness Deadline Date may be
postponed for up to 60 days if and so long as the Delay Conditions exist.
"Electing Holder" has the meaning assigned thereto in Section
3(a)(ii) hereof.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Filing Deadline Date" means the date which is 30 days from the
Closing Date.
"holder" means, when used with respect to any security, the
record holder of such security.
"Indemnified Person" has the meaning assigned thereto in Section
5(a) hereof.
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"Maximum Delay Period" means 60 consecutive days (or 60 days in
the aggregate in any calendar year); provided that the Maximum Delay Period
shall be reduced by the number of days in which the Effectiveness Deadline Date
was postponed pursuant to the proviso in the definitions thereof.
"NASD Rules" means the Rules of the National Association of
Securities Dealers, Inc., as amended from time to time.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire, substantially in the form of
Exhibit A attached hereto, relating to the Securities.
"person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus (including, without limitation,
any preliminary prospectus, any final prospectus and any prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Securities
Act) included in the Shelf Registration Statement, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Shelf Registration
Statement and by all other amendments and supplements to such prospectus,
including all material incorporated by reference in such prospectus and all
documents filed after the date of such prospectus by the Company under the
Exchange Act and incorporated by reference therein.
"Purchasers" means the Purchasers named on the signature pages of
the Securities Purchase Agreement.
"Registrable Securities" means (i) any shares of Common Stock
issued or issuable upon the conversion of, or as a dividend with respect to, the
Series A Preferred Stock, (ii) any Warrant Shares and (iii) any shares of Common
Stock that may be issued or distributed or be issuable in respect of any
Registrable Securities by way of conversion, dividend, stock split or other
distribution, merger, consolidation, exchange, recapitalization or
reclassification or similar transaction; provided, however, that a security
ceases to be a Registrable Security when it is no longer a Restricted Security.
"Restricted Security" means any Security except any such Security
that (i) has been registered pursuant to an effective registration statement
under the Securities Act and sold in a manner contemplated by the Shelf
Registration Statement, (ii) has been transferred in compliance with Rule 144
under the Securities Act (or any successor provision thereto) or is transferable
pursuant to paragraph (k) of such Rule 144 (or any successor provision thereto)
or (iii) has otherwise been transferred and a new Security not subject to
transfer restrictions under the Securities Act has been delivered by or on
behalf of the Company.
"Rules and Regulations" means the published rules and regulations
of the Commission promulgated under the Securities Act or the Exchange Act, as
in effect at any relevant time.
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"Securities Act" means the United States Securities Act of 1933,
as amended.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of March 29, 2002, between the Company and the Purchasers.
"Series E Preferred Stock" has the meaning set forth in the
preamble hereto.
"Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
"Shelf Registration Statement" means a "shelf" registration
statement filed under the Securities Act providing for the registration of, and
the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities pursuant to Rule 415 under the Securities Act and/or any
similar rule that may be adopted by the Commission, filed by the Company
pursuant to the provisions of Section 2 of this Agreement, including the
Prospectus contained therein, any amendments and supplements to such
registration statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such registration statement.
"Warrants" has the meaning set forth in the preamble hereto.
"Warrant Shares" means the shares of Common Stock issued or
issuable upon exercise of the Warrants.
2. Shelf Registration.
(a) The Company shall, (1) on or prior to the Filing
Deadline Date, file with the Commission a Shelf Registration Statement relating
to the offer and sale of the Registrable Securities and (2) use its best efforts
to cause such Shelf Registration Statement to be declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date; provided,
however, that no holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement or to use the Prospectus for
resales of Registrable Securities unless such holder is an Electing Holder.
(b) The Company shall use all reasonable efforts:
(i) to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus to be
usable by holders for resales of Registrable Securities until the
earlier of (A) the sale under the Shelf Registration Statement of
all the Registrable Securities registered thereunder and (B) all
of the Securities ceasing to be Restricted Securities (such
period being referred to herein as the "Effectiveness Period");
and
(ii) after the Effective Time, promptly upon the
request of any holder of Series E Preferred Stock, Warrants, or
Registrable Securities that is not then an Electing Holder, to
take any action reasonably necessary to enable such holder to use
the Prospectus for resales of Registrable Securities, including
without limitation any action necessary to identify such holder
as a selling securityholder in the Shelf Registration Statement;
provided, however,
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that nothing in this subparagraph shall relieve such holder of
the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(a)
hereof.
3. Registration Procedures. In connection with the Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall mail the Notice and Questionnaire to
holders of the Series E Preferred Stock, Warrants and Registrable Securities. No
such holder shall be entitled to be named as a selling securityholder in the
Shelf Registration Statement as of the Effective Time, and no such holder shall
be entitled to use the Prospectus for resales of Registrable Securities at any
time unless such holder has returned a completed and signed Notice and
Questionnaire to the Company by the deadline for response set forth therein;
provided, however, such holders shall have at least 10 calendar days from the
date on which the Notice and Questionnaire is first mailed to such holders to
return a completed and signed Notice and Questionnaire to the Company.
(i) After the Effective Time, the Company shall,
upon the request of any holder of Series E Preferred Stock,
Warrants or Registrable Securities that is not then an Electing
Holder, promptly send a Notice and Questionnaire to such holder.
The Company shall not be required to take any action to name such
holder as a selling securityholder in the Shelf Registration
Statement or to enable such holder to use the Prospectus for
resales of Registrable Securities until such holder has returned
a completed and signed Notice and Questionnaire to the Company.
(ii) The term "Electing Holder" shall mean any
holder of Series E Preferred Stock, Warrants or Registrable
Securities that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(a)
hereof.
(b) The Company shall furnish to each Electing Holder,
counsel to the Electing Holders, no fewer than five Business Days prior to the
initial filing of the Shelf Registration Statement, a copy of such Shelf
Registration Statement, and shall furnish to such holders, counsel to such
holders, no fewer than two Business Days prior to the filing of any amendment or
supplement to the Prospectus, a copy of such amendment or supplement and shall
use all reasonable efforts to reflect in each such document when so filed with
the Commission such comments as such holders and their respective counsel
reasonably may propose; provided, however, that the Company shall make the final
decision as to the form and content of each such document. If any such Shelf
Registration Statement refers to any Electing Holder by name or otherwise as the
holder of any securities of the Company, then such Electing Holder shall have
the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Electing Holder, to the effect that
the holding by such Electing Holder of such securities is not to be construed as
a recommendation by such Electing Holder of the investment quality of the
Company's securities covered thereby and that such holding does not imply that
such Electing Holder will assist in meeting any future financial requirements of
the Company or (ii) in the event that such reference to such Electing
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Holder by name or otherwise is not required by the Securities Act or any similar
Federal statute then in force, the deletion of the reference to such Electing
Holder in any amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be required.
(c) From the date hereof until the end of the Effective
Period, the Company shall (subject to paragraph (j) below) promptly take such
action as may be necessary so that (i) each of the Shelf Registration Statement
and any amendment thereto and the Prospectus and any amendment or supplement
thereto (and each report or other document incorporated by reference therein in
each case) complies in all material respects with the Securities Act and the
Exchange Act and the respective rules and regulations thereunder, (ii) each of
the Shelf Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) each of the Prospectus and any
amendment or supplement to the Prospectus does not at any time during the
Effectiveness Period include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(d) The Company shall promptly advise each Electing
Holder, and shall confirm such advice in writing if so requested by any such
holder (which notice pursuant to clauses (ii) through (iv) hereof shall be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made):
(i) when the Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when the
Shelf Registration Statement or any post-effective amendment
thereto has become effective;
(ii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order
suspending the effectiveness of the Shelf Registration Statement
or the initiation of any proceedings for such purpose;
(iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification
of the securities included in the Shelf Registration Statement
for sale in any jurisdiction or the initiation of any proceeding
for such purpose; and
(iv) if changes in the Shelf Registration Statement
or the Prospectus are required in order that the Shelf
Registration Statement and Prospectus do not contain an untrue
statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading.
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(e) The Company shall use its reasonable efforts to
prevent the issuance, and if issued to obtain the withdrawal, of any order
suspending the effectiveness of the Shelf Registration Statement at the earliest
possible time.
(f) The Company shall furnish to each requesting Electing
Holder, without charge, at least one copy of the Shelf Registration Statement
and all post-effective amendments thereto, including financial statements and
schedules, and, if such holder so requests in writing, all reports, other
documents and exhibits that are filed with or incorporated by reference in the
Shelf Registration Statement.
(g) The Company shall, during the Effectiveness Period,
deliver to each Electing Holder, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) and any amendment or
supplement thereto as such Electing Holder may reasonably request; and the
Company consents (except during the continuance of any event described in
Section 3(d)(iv) above) to the use of the Prospectus and any amendment or
supplement thereto by each of the Electing Holders in connection with the
offering and sale of the Registrable Securities covered by the Prospectus and
any amendment or supplement thereto during the Effectiveness Period.
(h) Prior to any offering of Registrable Securities
pursuant to the Shelf Registration Statement, the Company shall (i) register or
qualify or cooperate with the Electing Holders and a single counsel for the
Electing Holders in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or "blue sky"
laws of such jurisdictions within the United States as any Electing Holder may
reasonably request, (ii) keep such registrations or qualifications in effect and
comply with such laws so as to permit the continuance of offers and sales in
such jurisdictions for so long as may be necessary to enable any Electing Holder
to complete its distribution of Registrable Securities pursuant to the Shelf
Registration Statement, and (iii) take any and all other actions necessary or
advisable to enable the disposition in such jurisdictions of such Registrable
Securities; provided, however, that in no event shall the Company be obligated
to (A) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(h) or (B) file any general consent to service of process in any
jurisdiction where it is not as of the date hereof so subject.
(i) The Company shall cooperate with the Electing Holders
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to the Shelf Registration Statement,
which certificates shall not bear any restrictive legends and shall meet the
requirements of any securities exchange on which the Company's Common Stock is
then listed and which certificates shall be in such permitted denominations and
registered in such names as Electing Holders may request in connection with the
sale of Registrable Securities pursuant to the Shelf Registration Statement.
(j) Upon the occurrence of any fact or event contemplated
by paragraph 3(d)(iv) above, the Company shall (subject to the next sentence)
promptly prepare a post-effective amendment or supplement to the Shelf
Registration Statement or the Prospectus, or any document incorporated therein
by reference, or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities included therein, the
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Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If the Company
notifies the Electing Holders in accordance with clauses (ii) through (iv) of
paragraph 3(d) above to suspend the use of the Prospectus until the requisite
changes to the Prospectus have been made, then each Electing Holder shall
suspend the use of the Prospectus until (i) such Electing Holder has received
copies of the supplemented or amended Prospectus contemplated by the preceding
sentence or (ii) such Electing Holder is advised in writing by the Company that
the use of the Prospectus may be resumed and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. Notwithstanding the foregoing, the Company may suspend the use of
the Prospectus and shall not be required to amend or supplement the Shelf
Registration Statement, any related Prospectus or any document incorporated by
reference, for a period not to exceed the Maximum Delay Period if and so long as
the Delay Conditions exist.
(k) The Company shall use all reasonable efforts to comply
with all applicable Rules and Regulations, and to make generally available to
its securityholders as soon as practicable, but in any event not later than
eighteen months after (i) the effective date (as defined in Rule 158(c) under
the Securities Act) of the Shelf Registration Statement, (ii) the effective date
of each post-effective amendment to the Shelf Registration Statement, and (iii)
the date of each filing by the Company with the Commission of an Annual Report
on Form 10-K that is incorporated by reference in the Shelf Registration
Statement, an earnings statement of the Company and its subsidiaries complying
with Section 11(a) of the Securities Act and the Rules and Regulations of the
Commission thereunder (including, at the option of the Company, Rule 158).
(l) The Company shall (i) make reasonably available for
inspection by requesting Electing Holders, one counsel, one accountant and any
other agent retained by such holders all relevant financial and other records,
pertinent corporate documents and properties of the Company and its subsidiaries
and (ii) cause the Company's officers, directors and employees to supply all
information reasonably requested by such holders or any such attorney,
accountant or agent in connection with the Shelf Registration Statement, in each
case, as is customary for similar due diligence examinations; provided, however,
that all records, information and documents that are designated in writing by
the Company, in good faith, as confidential shall be kept confidential by such
holders and any such attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by law, or such records,
information or documents become available to the public generally or through a
third party without an accompanying obligation of confidentiality; and provided,
further, however, that, if the foregoing inspection and information gathering
would otherwise disrupt the Company's conduct of its business, such inspection
and information gathering shall, to the greatest extent possible, be coordinated
on behalf of the requesting Electing Holders and the other parties entitled
thereto by one counsel designated by and on behalf of Electing Holders and other
parties;
(m) The Company will use all reasonable efforts to cause
the Securities to be listed on the Nasdaq National Market or other stock
exchange or trading system, if any, on which the Common Stock primarily trades
on or prior to the Effective Time.
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(n) The Company shall use all reasonable efforts to take
all other steps necessary to effect the registration, offering and sale of the
Registrable Securities covered by the Shelf Registration Statement contemplated
hereby.
4. Registration Expenses.
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by it whether or
not any Shelf Registration Statement is filed or becomes effective and whether
or not any securities are issued or sold pursuant to any Shelf Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including
without limitation fees and expenses (A) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (B) in
compliance with securities or Blue Sky laws), (ii) printing expenses (including
without limitation expenses of printing certificates for Registrable Securities
and of printing Prospectuses), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, (v) Securities Act
liability insurance, if the Company desires such insurance, and (vi) fees and
expenses of all other persons retained by the Company. In addition, the Company
shall pay its internal expenses (including without limitation all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, and the fees and expenses incurred in
connection with the listing of the Securities on the Nasdaq National Market.
Notwithstanding the foregoing or anything in this Agreement to the contrary,
each Electing Holder shall pay the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than counsel referred to in clause (iv) above.
5. Indemnification and Contribution.
(a) Indemnification by the Company.
(i) The Company shall indemnify and hold harmless
each Electing Holder and each of its respective officers and
directors and each person who controls such Electing Holder
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (each such person being sometimes referred
to as an "Indemnified Person") against any losses, claims,
damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact
contained in any Shelf Registration Statement or any Prospectus
contained therein or furnished by the Company to any Indemnified
Person, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and
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(ii) the Company hereby agrees to reimburse such
Indemnified Person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such
Indemnified Person in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission made in such Shelf Registration Statement or
Prospectus, or amendment or supplement thereto, in reliance upon
and in conformity with written information relating to such
Indemnified Person furnished to the Company by or on behalf of
such Indemnified Person expressly for use therein; provided,
further, however, that the foregoing indemnity agreement with
respect to any Prospectus shall not inure to the benefit of any
Indemnified Person who failed to deliver a final Prospectus or an
amendment or supplement thereto (provided by the Company to the
several Indemnified Persons in the requisite quantity and on a
timely basis to permit proper delivery on or prior to the
relevant transaction date) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any
untrue statement or alleged untrue statement of a material fact
contained in any Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, if
such material misstatement or omission or alleged material
misstatement or omission was cured in the final Prospectus or an
amendment or supplement thereto.
(b) Indemnification by the Holders. Each Electing Holder
agrees, as a consequence of the inclusion of any of such holder's Registrable
Securities in any Shelf Registration Statement, severally and not jointly, to
(i) indemnify and hold harmless the Company, its directors, officers who sign
such Shelf Registration Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, against any losses, claims, damages or liabilities to
which the Company or such other persons may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in such Shelf
Registration Statement or Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information relating to such holder furnished to the Company by or on behalf of
such holder expressly for use therein and (ii) reimburse the Company and its
directors and officers who sign such Shelf Registration Statement for any legal
or other expenses reasonably incurred by the Company and such directors and
officers in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) of this Section 5 of notice of the
commencement of any
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action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under this Section 5, notify such
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under this Section 5. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party under this
Section 5 for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the written consent of the indemnified party, which consent
will not be unreasonably withheld, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) Contribution. If the indemnification provided for in
this Section 5 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) of this Section 5 in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the indemnified
party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party 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 about such indemnifying party or indemnified party supplied by such
indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 5(d) were determined by
pro rata allocation (even if the Electing Holders 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 this Section 5(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. 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
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fraudulent misrepresentation. The obligations of the Electing Holders in this
Section 5(d) to contribute shall be several in proportion to the percentage of
Registrable Securities registered by them and not joint.
(e) Notwithstanding any other provision of this Section 5,
in no event will any Electing Holder be required to undertake liability to any
person under this Section 5 for any amounts in excess of the dollar amount of
the proceeds to be received by such holder from the sale of such holder's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Shelf Registration Statement.
(f) The obligations of the Company under this Section 5
shall be in addition to any liability that the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 5 shall be in addition to any liability that such Indemnified Person may
otherwise have to the Company. The remedies provided in this Section 5 are not
exclusive and shall not limit any rights or remedies that may otherwise be
available to an indemnified party at law or in equity.
6. Rule 144.
The Company agrees, for so long as any Registrable Securities
remain outstanding and during any period in which the Company is subject to
Section 13 of 15 (d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Registrable Securities
pursuant to Rule 144 of the Securities Act.
7. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any
failure by the Company to comply with its obligations under this Agreement may
result in material irreparable injury to the Purchasers or the holders of
Registrable Securities for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that, in
the event of any such failure, the Purchasers or any holder of Registrable
Securities may obtain such relief as may be required to specifically enforce the
Company's obligations hereunder. The Company further agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.
(b) Other Registration Rights. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Company shall not permit any securities other than the
Registrable Securities to be included in the Shelf Registration Statement other
than 227,500 shares of common stock issuable upon exercise of certain warrants.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given unless (i) in the
case of Section 2 hereof and this Section 7(c)(i), the Company has obtained the
written consent of holders of all outstanding Registrable Securities and (ii) in
the case of all other provisions hereof, the Company has obtained the written
consent of holders of a majority of the Registrable Securities (excluding
12
Registrable Securities held by the Company or its Affiliates). Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of holders whose Registrable Securities are
being sold pursuant to a Shelf Registration Statement and that does not affect
directly or indirectly the rights of other holders of Registrable Securities may
be given by the holders of a majority of Registrable Securities being sold by
such holders pursuant to such Shelf Registration Statement.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be given as provided in the Securities Purchase
Agreement.
(e) Parties in Interest. The parties to this Agreement
intend that all holders of Series E Preferred Stock, Warrants or Registrable
Securities shall be entitled to receive the benefits of this Agreement and that
any Electing Holder shall be bound by the terms and provisions of this Agreement
by reason of such election with respect to the Registrable Securities that are
included in a Shelf Registration Statement. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the parties hereto and
any holder from time to time of the Series E Preferred Stock, Warrants or
Registrable Securities to the aforesaid extent. In the event that any transferee
of any holder of Series E Preferred Stock, Warrants or Registrable Securities
shall acquire Series E Preferred Stock, Warrants or Registrable Securities, in
any manner, whether by gift, bequest, purchase, operation of law or otherwise,
such transferee shall, without any further writing or action of any kind, be
entitled to receive the benefits of and, if an Electing Holder, be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement to the aforesaid extent.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning, construction or interpretation hereof.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to provisions relating to conflicts of law to the extent the application
of the laws of another jurisdiction would be required thereby.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by law.
13
(j) Survival. The respective indemnities, agreements,
representations, warranties and other provisions set forth in this Agreement or
made pursuant hereto shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Electing Holder, any director, officer, partner or controlling person of
such holder, and shall survive the transfer and registration of the Series E
Preferred Stock, Warrants or Registrable Securities of such holder.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
Please confirm by signing in the space provided below that the
foregoing correctly sets forth the agreement between the Company and you.
Very truly yours,
ABAXIS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President and CEO
14
REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE
Accepted and Agreed
-----------------------------------
Name (Print)
By:
--------------------------------
Name:
Title:
Date:
------------------------------
Address:
---------------------------
---------------------------
---------------------------
Telephone:
-------------------------
Facsimile:
-------------------------
15
EXHIBIT A
ABAXIS, INC.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Registration Rights Agreement
(the "Registration Rights Agreement") between ABAXIS, Inc. (the "Company") and
the Purchasers named therein. Pursuant to the Registration Rights Agreement, the
Company intends to file with the United States Securities and Exchange
Commission (the "Commission") a registration statement on Form S-_ (the "Shelf
Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of up to ____________
shares of the Company's common stock, par value $_______ per share (the
"Securities"). A copy of the Registration Rights Agreement is attached hereto.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined
below) is entitled to have the Registrable Securities beneficially owned by it
included in the Shelf Registration Statement. In order to have Registrable
Securities included in the Shelf Registration Statement, this Notice of
Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Company's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Beneficial owners of Registrable Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement and (ii)
may not use the Prospectus forming a part thereof for resales of Registrable
Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
The term "Registrable Securities" is defined in the Registration
Rights Agreement to mean (i) any shares of Common Stock issued or issuable upon
the conversion of, or as a dividend with respect to, the Series A Preferred
Stock, (ii) any shares of Common Stock issued or issuable upon exercise of the
Warrants and (iii) any shares of Common Stock that may be issued or distributed
or be issuable in respect of any Registrable Securities by way of conversion,
dividend, stock split or other distribution, merger, consolidation, exchange,
re-
A-1
capitalization or reclassification or similar transaction; provided, however,
that a security ceases to be a Registrable Security when it is no longer a
Restricted Security
The term "Restricted Security" is defined in the Registration
Rights Agreement to mean any Security except any such Security that (i) has been
registered pursuant to an effective registration statement under the Securities
Act and sold in a manner contemplated by the Shelf Registration Statement, (ii)
has been transferred in compliance with Rule 144 under the Securities Act (or
any successor provision thereto) or is transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto), or (iii) has otherwise been
transferred and a new Security not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company.
ELECTION
The undersigned holder (the "Selling Securityholder") of
Registrable Securities hereby elects to include in the Shelf Registration
Statement the Registrable Securities beneficially owned by it and the
Registrable Securities listed below in Item (3). The undersigned, by signing and
returning this Notice and Questionnaire, agrees to be bound with respect to such
Registrable Securities by the terms and conditions of this Notice and
Questionnaire and the Registration Rights Agreement, including without
limitation Section 5 of the Registration Rights Agreement as if the undersigned
Selling Securityholder were an original party thereto.
The Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such information is
accurate and complete:
QUESTIONNAIRE
Certain capitalized terms used in this Questionnaire are defined
in Appendix l attached hereto. Capitalized terms used in this Questionnaire but
not defined in Appendix 1 have the meanings given to them in the accompanying
letter.
(1) (a) Full legal name of Selling Securityholder:
---------------------------------------------------------------
(i) Is such Selling Securityholder a:
[ ] Corporation [ ] General Partnership
[ ] Individual [ ] Limited Partnership
[ ] Other (please specify:____________________)
(ii) In what state is such Selling Securityholder organized or
domiciled?
-----------------------------
A-2
(b) Full legal name of Registered Holder (if not the same as in (a)
above) of Registrable Securities listed in Item (4) below:
---------------------------------------------------------
(2) Address for Notices to Selling Securityholder:
----------------------------
----------------------------
----------------------------
Telephone:
----------------------------
Fax:
----------------------------
Contact Person:
----------------------------
(3) Beneficial Ownership of Securities by Another Entity or Individual:
(a) Is another entity or individual the Beneficial Owner of any
Securities?
[ ] No (skip questions (b)-(e) below)
[ ] Yes (answer questions (b)-(e) below)
(b) What is the full legal name of such Beneficial Owner?
-----------------------------------------------------
(c) Is such Beneficial Owner a:
[ ] Corporation [ ] General Partnership
[ ] Individual [ ] Limited Partnership
[ ] Other (please specify:____________________)
(d) In what state is such Beneficial Owner organized or domiciled?
---------------------------------------------------
(e) Please provide the name, address and telephone number of a
contact person for such Beneficial Owner.
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
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(4) Beneficial Ownership of Securities:
Except as set forth below in this Item (4), the undersigned is not a
Beneficial Owner of any Securities.
(a) Number of Registrable Securities (as defined in the Registration
Rights Agreement) Beneficially Owned:
----------------------------------------
(b) Number of Securities other than Registrable Securities
Beneficially Owned:
----------------------------------------
(c) Number of Registrable Securities that the undersigned wishes to
be included in the Shelf Registration Statement:
----------------------------------------
(5) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (5), the undersigned Selling
Securityholder is not a Beneficial Owner of any shares of Common Stock
or any other securities of the Company, other than the Securities listed
above in Item (4).
State any exceptions here:
(6) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its Affiliates, officers, directors or principal equity holders (5% or
more) has held any position or office or has had any other Material
Relationship with the Company (or its predecessors or Affiliates) during
the past three years.
State any exceptions here:
(7) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Registrable Securities listed above in Item
(4) only as follows (if at all): Such Registrable Securities may be sold
from time to time directly by the undersigned Selling Securityholder or,
alternatively, through underwriters, broker-dealers or agents who
A-4
may receive discounts, concessions or commissions from the Selling
Stockholder or the purchaser. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at prices relating to the prevailing market prices at
the time of sale, at varying prices determined at the time of sale, or
at negotiated prices. Such sales may be effected in transactions (which
may involve crosses or block transactions) (i) on any national
securities exchange or quotation service on which the Registered
Securities may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market, (iv) through
the writing of options, whether such options are listed on an option
exchange or otherwise, or (iv) through the settlement of short sales. In
connection with sales of the Registrable Securities or otherwise, the
Selling Securityholder may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage
in short sales of the Registrable Securities in the course of hedging
the positions they assume. The Selling Securityholder may also sell
Registrable Securities short and deliver Registrable Securities to close
out such short positions, or loan or pledge Registrable Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here:
(8) Are you a Member, an affiliate of a Member, or a person associated with
a Member, of the National Association of Securities Dealers, Inc. (the
"NASD")?
Yes _____ No _____
If the answer to Question 8 is "yes", state (a) the name of any such
NASD Member, (b) the nature of your affiliation or association with such
NASD Member, (c) information as to such NASD Member's participation in
any capacity in the offering or the original placement of the
Securities, (d) the number of shares of equity securities or face value
of debt securities of the Company owned by you, (e) the date such
securities were acquired and (f) the price paid for such securities.
---------------------------------------------------------------------
---------------------------------------------------------------------
--------------------------------------------.
(9) If you answered "yes"to Question 8 above, please fill out the following
table with respect to any purchases from the Company or any of its
Affiliates in a private placement within twelve months prior to the date
hereof (excluding your purchase of the Securities).
A-5
================================================================================
Amount and Name Price or Other
Date of Purchase Seller of Securities Consideration
-------------------- ----------------- ------------------- ---------------------
-------------------- ----------------- ------------------- ---------------------
-------------------- ----------------- ------------------- ---------------------
-------------------- ----------------- ------------------- ---------------------
-------------------- ----------------- ------------------- ---------------------
================================================================================
Note: In no event may such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M. The Selling Securityholder also acknowledges that it
understands that the answers to this Questionnaire are furnished for use in
connection with the Registration Statement and any amendments or supplements
thereto filed with the SEC pursuant to the Securities Act of 1933, as amended.
In the event that the Selling Securityholder transfers all or any
portion of the Registrable Securities listed in Item (3) above after the date on
which such information is provided to the Company, the Selling Securityholder
agrees to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Registration Rights
Agreement.
By signing below, the Selling Securityholder consents to the disclosure
of the information contained herein in its answers to Items (1) through (9)
above and the inclusion of such information in the Shelf Registration Statement
and related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation of the Shelf Registration Statement and related Prospectus.
The Selling Securityholder acknowledges that material misstatements and
omissions of material facts in the Registration Statement and any amendments or
supplement thereto may give rise to civil and criminal liabilities to the
Company and to each officer and director of the Company signing the Registration
Statement and to other persons signing such document. As a result, in accordance
with the Selling Securityholder's obligation under Section 3(a) of the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Registration Rights Agreement
shall be made in writing, by hand-delivery, first-class mail, or air courier
guaranteeing overnight delivery as follows:
A-6
(i) to the Company:
ABAXIS, Inc.
0000 Xxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
(ii) with a copy to:
Xxxx Xxxx Xxxx & Freidenrich, LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Registrable
Securities Beneficially Owned by such Selling Securityholder and the Registrable
Securities listed in Item (3) above). This Agreement shall be governed in all
respects by the laws of the State of ______________ without giving effect to
provisions relating to conflicts of law to the extent the application of the
laws of another jurisdiction would be required thereby.
I confirm that, to the best of my knowledge and belief, the foregoing
statements (including without limitation the answers to this Questionnaire) are
correct.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated:
------------------
-----------------------------------------
Selling Securityholder
(Print/type full legal name of beneficial
owner of Registrable Securities)
By:
-------------------------------------
Name:
Title:
A-7
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Xxxx Xxxx Xxxx & Freidenrich, LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
A-8
APPENDIX 1
DEFINITIONS
For the purpose of this Questionnaire, the following definitions
apply:
1. Affiliate. As used in Questions 1 - 7 and Question 9, a person
is an "Affiliate" of a person if such person controls, is controlled by, or is
under common control with, another person. Please assume that an "Affiliate" of
the Company includes without limitation, any 5% stockholder of the Company
(including any person who owns, controls, or holds or holds an option to
acquire, and has the power to vote, 5% or more of the Company's outstanding
voting securities). "Control" is the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of an
entity, whether through the ownership of voting securities, by contract or
otherwise.
As used in Question 8 of this Questionnaire, an "affiliate" of an
NASD member has the following meaning:
a company which controls, is controlled by or is under common
control with a member;
the term affiliate is presumed to include, but is not limited to,
the following:
a company will be presumed to control a member if the
company beneficially owns 10% or more of the outstanding
voting securities of a member which is a corporation, or
beneficially owns a partnership interest in 10% or more of
the distributable profits or losses of a member which is a
partnership;
a member will be presumed to control a company if the
member and persons associated with the member beneficially
own (i) 10% or more of the outstanding subordinated debt
of a company, (ii) 10% or more of the outstanding voting
securities of a company which is a corporation or (iii) a
partnership interest in 10% or more of the distributable
profits or losses of a company which is a partnership;
a company will be presumed to be under common control with
a member if:
the same natural person or company controls both
the member and company by beneficially owning 10%
or more of the outstanding voting securities of a
member or company which is a corporation, or by
beneficially owning a partnership interest in 10%
or more of the distributable profits or losses of a
member or company which is a partnership; or
A-9
a person having the power to direct or cause the
direction of the management or policies of the
member or the company also has the power to direct
or cause the direction of the management or
policies of the other entity in question.
Beneficial Owner. A "Beneficial Owner" of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares voting
power and/or investment power with respect to such security. Voting power
includes "the power to vote, or to direct the voting, of such security" and
investment power includes "the power to dispose, or to direct the disposition,
of such security."
A person is also a Beneficial Owner of a security if he has the
right to acquire beneficial ownership of such security, at any time within sixty
days, including but not limited to, any right to acquire through: (a) the
exercise of an option, warrant or right, (b) the conversion of a convertible
security, (c) the power to revoke a trust, discretionary account or similar
arrangement, or (d) the automatic termination of a trust, discretionary account
or similar arrangement; provided, however, that if the acquisition of an option,
warrant, right, convertible security or power described in (a), (b) or (c) is
for the purpose of maintaining or obtaining control over the issuer of the
security, the holder of the option, warrant, right, convertible security or
power shall, immediately upon such acquisition and regardless of when it is
exercisable, be deemed a beneficial owner of the underlying securities.
The possession of the legal power to vote and/or direct the
disposition of securities, absent unusual circumstances, will be sufficient to
confer beneficial ownership. Such power may be held directly, or indirectly,
through one or more controlled entities.
Material Relationship. The term "material relationship"
has not been defined by the Securities and Exchange Commission (the "SEC"). The
SEC, however, is likely to construe as material any relationship which tends to
impact arm's length bargaining in dealings with a company, whether arising from
a close business connection, family relationship, a relationship of control or
otherwise. For example, you should conclude that you have such a relationship
with any organization of which you own, directly or indirectly, 10% more of the
outstanding voting stock, or in which you have some other substantial interest,
and with any person or organization with whom you have, or with whom any
relative (or any other person or organization as to which you have any of the
foregoing other relationships) has, a contractual relationship.
Member. Rule 0120 of the NASD's Rules of Fair Practice
defines the term "member" to mean any individual, partnership, corporation or
other legal entity admitted to membership in the NASD, and Article l of the
NASD's By-Laws defines the term "person associated with a member" to mean every
sole proprietor, partner, officer, director, or branch manager of any member, or
any natural person occupying a similar status or performing similar functions,
or any natural person engaged in the investment banking or securities business
who is directly or indirectly controlling or controlled by such member (for
example, any employee), whether or not such person is registered or exempt from
registration with the NASD.
A-10
