EXHIBIT 4.3
TARGET LOGISTICS, INC.
STOCK SUBSCRIPTION AGREEMENT
Target Logistics, Inc.
000 Xxxxxxxxxx Xxxxx, Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
This Stock Subscription Agreement (the "AGREEMENT") is being furnished to
Target Logistics, Inc. (the "COMPANY"), a Delaware corporation, by the
undersigned subscribers (each an "Investor" and, collectively, the "INVESTORS")
in connection with offering by the Company to sell shares (the "SHARES") of its
common stock, par value $0.01 per share, (the "COMMON STOCK"). This offering is
being made only to persons or entities who are "accredited Investors" as defined
below. Each Investor hereby agrees to purchase Shares in a private transaction,
as described herein.
In consideration for the acceptance by the Company of this Agreement, the
Investors hereby agree, covenants, represents and warrants, each severally and
not jointly, as follows:
1. (a) Purchase. Subject to the terms of this Agreement, each Investor
hereby severally, and not jointly, subscribes for Shares as follows:
Name Shares Subscription Price
---- ------ ------------------
Kinderhook Partners, L.P. 3,324,138 $1,928,000
Xxxxxxxx X. Xxxx 124,138 $ 72,000
---------- ------------
Total 3,448,276 $2,000,000
Each Investor hereby agrees that it or he shall pay the Subscription Price set
forth opposite its name above within one week following its or his execution and
delivery of this Agreement, in immediately available funds pursuant to such wire
transfer instructions provided by the Company. Promptly thereafter, but in no
event later than one week following its receipt of such payment, the Company
shall deliver to each Investor a certificate(s) representing the Shares
registered in the name of such Investor or its or his nominee. Anything herein
to the contrary notwithstanding, the Company shall not be obligated to accept
any Investor's subscription and issue any Shares hereunder unless the full
$2,000,000 Subscription Price is paid in full.
2. Representations and Warranties of each Investor. Each Investor hereby
represents and warrants to the Company that:
(i) Each Investor is acquiring the Shares solely for investment,
solely for each Investor's own account, not for the account of any other person,
and not for distribution, assignment or resale to others and no other person has
a direct or indirect beneficial interest in any Shares so acquired.
(ii) Each Investor has consulted with his or its professional and
tax advisors with respect to the financial and tax consequences of an investment
in the Company, as well as the suitability of this investment, based on his or
it's individual circumstances.
(iii) Investor represents and acknowledges that he or it has had a
reasonable opportunity, at a reasonable time prior to his or its investment in
the Company, to ask questions of and receive answers from the Company or other
representative of the Company concerning the terms and conditions of the
offering of the Shares, and the Company and its operations, and all such
questions have been answered to each Investor's full satisfaction. Each Investor
further acknowledges that he or it has had a reasonable opportunity to obtain
any relevant information which the Company possesses or can acquire without
unreasonable effort or expense.
(iv) Each Investor has neither relied upon nor seen any form of
advertising or general or public solicitation, including communications
published in or broadcasted by any print or electronic medium and mass mailings,
in connection with the offering of the Shares, and are aware of no such
solicitation or advertisement received by others.
(v) Kinderhook Partners, L.P. ("KPLP") is an "accredited investor"
within the meaning of Rule 501 of Regulation D under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), by virtue of being a partnership, not formed
for the specific purpose of acquiring the Shares with total assets in excess of
$5 million. Xx. Xxxxxxxx X. Xxxx ("XX. XXXX") is an "accredited investor" within
the meaning of Rule 501 of Regulation D under the Securities Act by virtue of
being a natural person whose individual net worth, or joint net worth with his
spouse, exceeds $1,000,000.
(vi) Each Investor has the financial means to make an investment in
the Company; each Investor is able to bear the economic risk of an investment in
the Company; and each Investor's present financial condition is such that each
Investor is under no present or contemplated future need to dispose of any
portion of the Shares to satisfy any existing or contemplated undertaking, need
or indebtedness.
(vii) Each Investor acknowledges that an investment in the Company
involves a high degree of risk.
(viii) Each Investor understands that limited rights exist to
transfer the Shares.
(ix) KPLP is a limited partnership, duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
all requisite power and authority to execute and deliver this Agreement and to
carry out the provisions hereof. All limited partnership action on the part of
KPLP necessary for the authorization of this Agreement and the performance of
all obligations of KPLP hereunder have been taken. The execution, delivery, and
performance of this Agreement by KPLP will not violate (with or without the
giving of notice or the lapse of time, or both), conflict with, or require any
consent or approval under any agreement or instrument binding on KPLP. The
principal business address of KPLP is located at Xxx Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxx Xxx, Xxx Xxxxxx 00000. Xx. Xxxx is a natural person with his address at 00
Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000. The execution, delivery, and
performance of this Agreement by Xx. Xxxx will not violate (with or without the
giving of notice or the lapse of time, or both), conflict with, or require any
consent or approval under any agreement or instrument binding on Xx. Xxxx.
(x) The signature of each Investor is binding upon such Investor to
purchase the Shares. Each Investor has previously made other investments or
engaged in other substantive business activities prior to receiving an
opportunity to purchase the Shares and was not formed with a view to investment
in the Shares.
(xi) The foregoing representations and warranties and all other
information which each Investor has provided to the Company concerning such
Investor, the financial position of such Investor, and the knowledge of
financial and business matters of the person making the investment decision on
behalf of such Investor, including all information contained herein, are true
and accurate in all material respects.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that:
(i) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to execute and deliver this Agreement
and to carry out the provisions hereof. All corporate action on the part of the
Company, necessary for the authorization of this Agreement, the performance of
all obligations of the Company hereunder, and the authorization, issuance, and
delivery of the Shares to each Investor have been taken. The execution,
delivery, and performance of this Agreement by the Company will not violate
(with or without the giving of notice or the lapse of time, or both), conflict
with, or require any consent or approval under any agreement or instrument
binding on the Company.
(ii) The Shares to be issued to each Investor pursuant to the terms
hereof, when issued in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid, non-assessable and free of pre-emptive
rights, with no personal liability attaching to ownership thereof.
(iii) This Agreement, when executed and delivered, will be a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (b) general principles of equity
that restrict the availability of equitable remedies.
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(iv) The capitalization of the Company consists of: (a) 30,000,000
shares of Common Stock, of which 12,179,002 are issued and outstanding prior to
the date hereof; (b) 500,000 shares of Class A Preferred, of which no shares are
issued and outstanding; (c) 25,000 shares of Class B Preferred Stock, par value
$10.00 per share, of which no shares are issued and outstanding; (d) 400,000
shares of Class C 10% Convertible Preferred Stock, par value $10.00 per share,
of which 197,750 shares are issued and outstanding; (e) 200,000 shares of Class
D Preferred Stock, par value $10.00 per share, of which no shares are issued and
outstanding; (f) 250,000 shares of Class E Preferred Stock, par value $10.00 per
share, of which no shares are issued and outstanding; and (g) 300,000 shares of
Class F Preferred, of which 122,946 shares are issued and outstanding. There are
no outstanding or authorized options, warrants, calls, subscriptions, rights,
convertible securities, commitments, agreements, or understandings of any
character obligating the Company to issue any shares of any class of stock of
the Company or securities convertible into, or evidencing the right to purchase,
any shares of any class of stock of the Company, other than (1) pursuant to the
Company's 1996 Stock Option Plan, (2) as otherwise set forth in the Certificate
of Designations, Preferences and Rights with respect to the Class C Preferred
Stock, and (3) with respect to dividends on outstanding shares of Class F
Preferred Stock.
(v) The Company is subject to the periodic reporting obligations set
forth in the Exchange Act and the rules and regulations promulgated thereunder
and is current in all such filings (the "SEC FILINGS"). The SEC Filings are
accurate and complete in all material respects and the Company's financial
position and results of operations reflected therein fairly present the
financial position of the Company as at the dates set forth therein and the
results of its operations for the periods reflected therein.
(vi) Since the date of the latest filing included in the SEC
Filings, there has been no material adverse change to the business, financial
results or prospects of the Company.
(vii) All representations and warranties set forth herein with
respect to the Company are true and correct as of the date hereof. This
Agreement does not contain any untrue statement of a material fact with respect
to the Company or omit to state any material fact with respect to the Company
necessary to make the statements contained herein not misleading.
(viii) There is no proceeding pending or, to the Company's
knowledge, threatened, relating to or seeking to enjoin the transactions
contemplated by this Agreement.
4. Covenants of the Company.
(i) Within 30 days following the payment of the Subscription Price
and the acceptance of the subscription, the Company will cause the appointment
or election of Xxxxxxx X. Xxxxxxxx, designee of Kinderhook Partners, L.P., as a
member of the Board of Directors of the Company. To the extent permitted by law,
the Company will agree to indemnify such designee for the actions of such
designee as a director of the Company. In the event the Company maintains a
liability insurance policy affording coverage for the acts of its officers and
directors, it will, if possible, include such designee as an insured under such
policy. The designee shall be entitled to receive such compensation which is
paid by the Company to its other independent directors and reimbursement for all
reasonable costs incurred in attending such meetings in accordance with the
Company's policies.
(ii) No claim will be made or enforced by the Company or any other
person that either Investor, or any general partner or controlling person of
Kinderhook Partners, L.P., including, without limitation, Xx. Xxxxxxx X.
Xxxxxxxx, is an "Acquiring Person" (or similar term) under any shareholders
rights plan or similar plan or arrangement in effect or hereafter adopted by the
Company, or that any such Investors or other person could be deemed to trigger
the provisions of any such plan or arrangement, by virtue of acquiring Shares at
any time and from time to time.
(iii) As long as any Investor owns Shares, the Company covenants to
timely file all reports required to be filed by the Company after the date
hereof pursuant to the Securities Exchange Act of 1934. Upon request, the
Company shall deliver to any Investor a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence. As
long as any Investor owns Shares, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Shares under Rule 144.
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5. Survival of Representations and Warranties; Indemnification.
(i) The representations and warranties of the Company contained in
Section 3 shall survive the effectuation of the transactions contemplated hereby
for a period of two years. The Company will indemnify and hold each Investor and
their directors, officers, shareholders, partners, controlling persons,
employees and agents (each, an "INVESTOR PARTY") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation (collectively, "LOSSES")
that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement. The Company will reimburse such Investor Party for its reasonable
legal and other expenses (including the cost of any investigation, preparation
and travel in connection therewith) incurred in connection therewith, as such
expenses are incurred. The Company and the Investor Party may not, without the
prior written consent of the other, agree to any settlement of any claim or
action with respect to which the Company is required to indemnify the Investor
Party pursuant to this Section 5.
(ii) The representations and warranties of the Investors contained
in Section 2 shall survive the effectuation of the transactions contemplated
hereby for a period of two years. Ecah Investor will indemnify and hold the
Company and its directors, officers, shareholders, controlling persons,
employees and agents (each, a "COMPANY PARTY") harmless from any and all Losses
that any such Company Party may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by such Investor in
this Agreement. Each Investor will reimburse such Company Party for its
reasonable legal and other expenses (including the cost of any investigation,
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. Any Investor and the Company Party may
not, without the prior written consent of the other, agree to any settlement of
any claim or action with respect to which such Investor is required to indemnify
the Company Party pursuant to this Section 5.
6. Transferability and Resale.
(i) Each Investor acknowledges that the Shares have not been
registered under the Securities Act and any applicable State securities laws
(the "STATE ACTS"), and, except as provided herein, may not be sold, pledged,
hypothecated, donated or otherwise transferred (whether or not for
consideration) by such Investor unless registered pursuant to the Act, or upon
presentation to the Company of evidence satisfactory to the Company, or
submission to the Company of a favorable opinion of counsel reasonably
acceptable to the Company, to the effect that any such transfer is subject to an
applicable exemption under and will not be in violation of the Act and the State
Acts. The above notwithstanding, the Company acknowledges and agrees that an
Investor may from time to time pledge pursuant to a bona fide margin agreement
or grant a security interest in some or all of the Shares and, if required under
the terms of such arrangement, such Investor may transfer pledged or secured
Shares to the pledgees or secured parties. Such a pledge or transfer would not
be subject to notice to, or approval of, the Company and no legal opinion of the
pledgee, secured party or pledgor shall be required in connection therewith.
(ii) Each Investor acknowledges that it may be required to hold the
Shares indefinitely and therefore may not realize any liquidity from any sale of
the Shares.
(iii) Each Investor and the Company agree that the Company will
register the Shares in accordance with the Registration Rights Addendum attached
hereto and incorporated herein by reference.
(iv) Upon request of an Investor, the Company shall, or shall cause
its transfer agent, to remove any restrictive legend from the Shares (a) while a
registration statement covering the resale of such security is effective under
the Securities Act, or (b) following any sale of such Shares pursuant to Rule
144, or (c) if such Shares are eligible for sale under Rule 144(k), or (d) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Securities and Exchange Commission ("SEC")). The Company shall cause its
counsel to issue any legal opinion as shall be required to so remove such
legend. The Company shall not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
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7. Binding Effect; Successors and Assigns. This Agreement will be binding
upon the parties hereto, the successors and assigns of the Company and the
successors and assigns of each Investor. This Agreement will inure to the
benefit of the Company and its successors and assigns. Neither this Agreement
nor any part of it will be assignable by each Investor.
8. Miscellaneous.
(i) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subscription of each Investor's Shares and
may be amended only by a writing executed by the parties hereto.
(ii) Within 10 days after receipt of a written request from the
Company, each Investor agrees to provide such information and to execute and
deliver such documents as reasonably may be necessary to comply with any and all
laws and ordinances to which the Company is subject.
(iii) In this Agreement the singular shall include the plural and
the masculine gender shall include the feminine and neuter and vice versa, as
the context requires.
(iv) Each provision of this Agreement shall be considered separable
and if for any reason any provision or provisions hereof are determined to be
invalid or contrary to applicable law, such invalidity shall not impair the
operation of or affect the remaining portions of this Agreement.
(v) This Agreement shall be construed in accordance with the laws of
the State of Maryland, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, the undersigned has executed and sealed this Agreement
as of this 23rd day of April, 2004.
KINDERHOOK PARTNERS, L.P.
By: /s/ .
----------------------------------------
Xxxxxxx X. Xxxxxxxx, its General Partner
/s/ .
----------------------------------------
Xx. Xxxxxxxx X. Xxxx
ACCEPTED THIS 23RD DAY OF APRIL, 2004
TARGET LOGISTICS, INC.
By: /s/ .
-----------------------------
Xxxxxx Xxxxxxxxx, President
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REGISTRATION RIGHTS ADDENDUM
1. Mandatory Registration.
1.1. Within 30 days following the filing by the Company of its
Annual Report on Form 10-K for the fiscal year ending June 30, 2004, the Company
will file a registration statement, on an applicable form, under and in
accordance with the provisions of the Securities Act (the "MANDATORY
REGISTRATION"), with respect to all of the Shares (the "MANDATORY SHARES"). If,
however, the Company shall furnish to each Investor a certificate signed by the
President of the Company stating that, in the good faith judgment of the Board
of Directors of the Company, a material acquisition or disposition by the
Company is being negotiated or has been publicly announced, the Company shall
have the right to defer such filing for a period of not more than 60 days;
provided, however, that the Company may not utilize this right more than once.
The Company shall cause the registration statement with respect to the Mandatory
Registration to be declared effective as soon as practically possible following
the filing, but in no event later than December 31, 2004.
1.2. In the event the Company does not file the registration
statement with respect to the Mandatory Registration or cause such registration
statement to be declared effective as required and at the times pursuant to
Section 1.1 hereof, then for each day beyond the required filing date that the
registration statement is not filed, or the required effectiveness date that the
registration statement is not declared effective, as the case may be, the
Company shall pay to each Investor, as exclusive and liquidated damages, an
amount equal to six percent (6%) multiplied by the Subscription Price, divided
by 360.
2. Right to Piggyback.
2.1. If, prior to the filing of the Mandatory Registration, the
Company proposes to register any securities of the Company under the Securities
Act on any registration form (otherwise than for the registration of securities
to be offered and sold by the Company pursuant to (i) an employee benefit plan,
(ii) a dividend or interest reinvestment plan, (iii) other similar plans or (iv)
reclassification of securities, mergers, consolidations and acquisitions of
assets), not less than 30 days prior to the filing of the registration statement
therefor the Company shall give to each Investor written notice of such proposal
which shall describe in detail the proposed registration and distribution and,
upon the written request of each Investor furnished within 30 days after the
date of any such notice, proceed to include in such registration such Shares
("PIGGY-BACK SHARES") as have been requested by each Investor to be included in
such registration. Each Investor shall in their request describe briefly the
proposed disposition of such Shares. The Company will in each instance cause all
such Piggy-Back Shares to be registered under the Securities Act, to the extent
necessary to permit the sale or other disposition thereof (in the manner stated
in such request) by each Investor.
2.2. Nothing in this Section shall be deemed to require the Company
to proceed with any registration (other than the Mandatory Registration) of its
securities after giving the notice as provided herein.
3. Selection of Underwriter; Participation in Underwritten Registrations.
Each Investor agrees to the selection by the Company of a
underwriter to manage any Mandatory Registration or registration which includes
the Piggy-Back Shares (provided that such underwriter shall be reasonably
acceptable to such Investor). Each Investor may not participate in any
registration hereunder which is underwritten unless each Investor (i) agrees to
sell its Mandatory Shares or Piggy-Back Shares, as the case may be (hereinafter,
the "REGISTERED SHARES"), on the basis provided in any underwriting arrangements
that are in customary form and approved by the Company, and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents customary for selling shareholders in like
transactions and reasonably requested by such underwriters subject, in each
case, to the completion and execution of the same by each other selling
shareholder, 10% shareholder, director and executive officer of the Company;
provided that each Investor shall not be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding each Investor and each Investor's intended method of
distribution.
4. Registration and Qualification Procedures.
4.1. Whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any of its
securities under the Securities Act, the Company will, as expeditiously as
possible and subject to the provisions of Section 4.2 hereof:
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(i) prepare and file with the SEC a registration statement
with respect to such securities in the form of an appropriate registration
statement with respect to the Registered Shares and use its best efforts to
cause such registration statement to become and remain continuously effective
until the earlier of (a) all of the Registered Shares covered by such
registration statement having been sold in accordance with the intended methods
of disposition of the seller or sellers set forth in such registration
statement, and (b) two years after such registration statement has been declared
effective; provided, that if for any portion of such one year period the
registration statement is not effective, then such one year requirement for
maintaining the effectiveness of the registration statement shall be extended by
the length of such interruption(s), and the Company shall prepare and file with
the SEC such amendments to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such registration
statement effective and such registration statement and prospectus accurate and
complete during such period;
(ii) prior to any public offering of Shares, use its best
efforts to register or qualify or cooperate with the selling Investors and their
counsel in connection with the registration or qualification (or exemption from
such registration or qualification) of Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Investor requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the effectiveness period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Shares covered by a registration
statement; provided, however, that the Company shall not be required to qualify
as a foreign corporation or consent to a general and unlimited service of
process in any such jurisdiction, subject itself to any material taxation in any
such jurisdiction, or qualify as a dealer in securities;
(iii) subject to the execution of confidentiality agreements
in form and substance reasonably satisfactory to the Company, make available
upon reasonable notice and during normal business hours, for inspection by each
Investor and any attorney, accountant or other agent retained by each Investor
(collectively, the "INSPECTORS"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"RECORDS"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers, directors and
employees to supply all information (together with the Records, the
"INFORMATION") reasonably requested by any such Inspector in connection with
such registration statement;
(iv) furnish to each Investor such number of copies of
preliminary prospectuses and prospectuses and each supplement or amendment
thereto and such other documents as they may reasonably request in order to
facilitate the sale or other disposition of the securities owned by them in
conformity with (a) the requirements of the Securities Act and (b) the proposed
method of distribution;
(v) otherwise comply with all applicable rules and regulations
of the SEC;
(vi) cause all such Registered Shares to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and to be qualified for trading on each over-the-counter market or
trading system on which similar securities issued by the Company are from time
to time qualified or traded;
(vii) furnish to each prospective selling Investor a signed
counterpart, addressed to such Investor, of (i) an opinion of counsel for the
Company, dated the effective date of the registration statement, and, to the
extent available from the independent auditors of the Company, (ii) a "comfort"
letter signed by the independent public accountants who have certified the
Company's financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the "comfort" letter) with
respect to events subsequent to the date of the financial statements, as are
customarily covered (at the time of such registration) in opinions of issuer's
counsel and in "comfort" letters delivered to the underwriters in underwritten
public offerings of securities;
(vi) provide a transfer agent and registrar for all such
Registered Shares not later than the effective date of such registration
statement and thereafter maintain such a transfer agent and registrar; and
otherwise cooperate with each Investor and the managing underwriter to
facilitate the timely preparation and delivery of certificates representing
Registered Shares to be sold and not bearing any restrictive legends, and enable
such Registered Shares to be in such denominations and registered in such names
as the managing underwriter may reasonably request at least two business days
prior to any sale of Registered Shares to the underwriters;
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(vii) enter into and perform an underwriting agreement with
the managing underwriter, if any, containing customary (a) terms of offer and
sale of the securities, payment provisions, underwriting discounts and
commissions, and (b) representations, warranties, covenants, indemnities, terms
and conditions;
(viii) notify each Investor during any time when a prospectus
relating to the registration is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made, and at the request of each Investor promptly prepare and furnish to each
Investor a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include 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 in the
light of the circumstances under which they are made;
(ix) keep each Investor advised in writing as to the
initiation and progress of any registration under this Agreement.
4.2. Whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any of its
securities under the Securities Act, each Investor will, as expeditiously as
possible, furnish to the Company such information in writing regarding
themselves and the distribution of Registered Shares as the Company may from
time to time reasonably request in writing in order to comply with the
Securities Act. Each Investor agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information it has previously
furnished to the Company.
5. Registration Expenses.
The Company shall pay all expenses in connection with any
registration contemplated hereby, including, without limitation, (i) any
expenses incident to filing with the National Association of Securities Dealers,
Inc., (ii) registration fees, (iii) printing expenses, (iv) the Company's
accounting and legal fees and expenses, (v) any and all "road show" expenses,
and (vi) expenses of any special audits incident to or required by any such
registration or qualification; provided, however, the Company shall not be
liable for (a) any discounts or commissions to any underwriter attributable to
Registered Shares being sold; (b) any stock transfer taxes incurred in respect
of the Registered Shares being sold; or (c) the legal fees of each Investor.
6. Indemnification.
6.1. In connection with any registration or qualification of
securities under this Agreement, the Company agrees to indemnify each Investor
and each officer, director and controlling person of each Investor against all
losses, claims, damages, liabilities and expenses (including all costs of
investigation and any and all fees and expenses of counsel) caused by any
untrue, or alleged untrue, statement of a material fact contained in any
registration statement, preliminary prospectus, prospectus or notification or
offering circular (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) 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 not misleading, except insofar as
such losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged omission based upon
information furnished in writing to the Company by either Investor or any
underwriter expressly for use therein.
6.2. In connection with any registration or qualification of
securities under this Agreement, each Investor agrees to indemnify the Company
and each officer, director and controlling person of the Company against all
losses, claims, damages, liabilities and expenses (including the costs of
reasonable investigation) caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement, preliminary prospectus,
prospectus or notification or offering circular (as amended or supplemented if
such Investor shall have furnished information for any amendments or supplements
thereto) 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 not misleading, but only to the extent such losses, claims, damages,
liabilities or expenses are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished in
writing to the Company by each Investor expressly for use therein; provided,
however, that the liability of any Investor under this Section 6.2 shall be
limited to an amount equal to the proceeds to such Investor of Shares sold as
contemplated herein.
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6.3. Any person entitled to indemnification hereunder will (i) give
reasonably prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
6.4. The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the transfer of Registered Shares.
6.5. The parties agree to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
indemnification is unavailable for any reason. Such right to contribution shall
be in such proportion as is appropriate to reflect the relative fault of and
benefits to the Company on the one hand and each Investor on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits to the indemnifying party and
indemnified parties shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified parties in
connection with the offering to which such losses, claims, damages, liabilities
or expenses relate. The relative fault of the indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission or state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or the
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The parties
hereto agree that it would not be just or equitable if contribution pursuant
hereto were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.
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