EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of December 30, 2004 (the "EFFECTIVE DATE") among BPI Industries
Inc., a British Columbia corporation (the "COMPANY"), the parties set forth
Exhibit A hereto (each, a "PURCHASER" and collectively, the "PURCHASERS"), and
the parties set forth on the signature page.
RECITALS:
A. The Purchasers have purchased Units (the "UNITS") from the Company,
each Unit comprised of two shares of the Company's Common Stock and one Investor
Warrant (as defined below) pursuant to Subscription Agreements (each, a
"SUBSCRIPTION AGREEMENT" and collectively, the "SUBSCRIPTION AGREEMENTS") by and
between the Company and each Purchaser.
B. The Company has issued a warrant (the "PLACEMENT AGENT WARRANT") to
purchase shares of the Company's Common Stock to Xxxxxxx Xxxxxx Xxxxxx Inc., a
Texas corporation ("SMH").
C. The Company, the Purchasers, and SMH desire to set forth the
registration rights to be granted by the Company to the Purchasers and SMH.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth herein, in the Subscription
Agreements, or otherwise, the parties mutually agree as follows:
AGREEMENT:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Approved Market" means the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, Inc., the American Stock Exchange, Inc., or
the OTC Bulletin Board.
"Blackout Period" means, with respect to a registration, a period in each
case commencing on the day immediately after the Company notifies the Purchasers
and SMH that they are required, pursuant to Section 4(f), to suspend offers and
sales of Registrable Securities during which the Company, in the good faith
judgment of its Board of Directors, determines (because of the existence of, or
in anticipation of, any acquisition, financing activity, or other transaction
involving the Company, or the unavailability for reasons beyond the Company's
control of any required financial statements, disclosure of information which is
in its best interest not to publicly disclose, or any other event or condition
of similar significance to the Company) that the registration and distribution
of the Registrable Securities to be covered by such registration statement, if
any, would be seriously detrimental to the Company and its shareholders and
ending on the earlier of (1) the date upon which the material non-public
information commencing the Blackout Period is disclosed to the public or ceases
to be material and (2) such time as the Company notifies the selling Holders
that the Company will no longer
delay such filing of the Registration Statement, recommence taking steps to make
such Registration Statement effective, or allow sales pursuant to such
Registration Statement to resume; provided, however, that (a) the Company shall
limit its use of Blackout Periods, in the aggregate, to 60 Trading Days in any
12-month period and (b) no Blackout Period may commence sooner than 60 days
after the end of a prior Blackout Period.
"Business Day" means any day of the year, other than a Saturday, Sunday,
or other day on which the Commission is required or authorized to close.
"Closing Date" means December 31, 2004, or such other time as is mutually
agreed between the Company and the Purchasers for the closing of the sale
referred to in Recital A above.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, without par value, of the Company
and any and all shares of capital stock or other equity securities of: (i) the
Company which are added to or exchanged or substituted for the Common Stock by
reason of the declaration of any stock dividend or stock split, the issuance of
any distribution or the reclassification, readjustment, recapitalization or
other such modification of the capital structure of the Company; and (ii) any
other corporation, now or hereafter organized under the laws of any state or
other governmental authority, with which the Company is merged, which results
from any consolidation or reorganization to which the Company is a party, or to
which is sold all or substantially all of the shares or assets of the Company,
if immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other corporation.
"Equity Securities" means (i) any Common Stock, (ii) any security
convertible, with or without consideration, into any Common Stock (including any
option to purchase such a convertible security), (iii) any security carrying any
warrant or right to subscribe to or purchase any Common Stock, or (iv) any such
warrant or right.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Family Member" means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such individuals or by
any of such individuals together with any organization described in Section
501(0(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited
liability company all of the equity interests of which are owned by those above
described individuals, trusts or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
"Form S-1" means such form under the Securities Act as in effect on the
date hereof.
"Holder" means each Purchaser, SMH, or any successor or Permitted Assignee
of a Purchaser, or SMH who acquire rights in accordance with this Agreement with
respect to the
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Registrable Securities directly or indirectly from a Purchaser or SMH, including
from any Permitted Assignee.
"Inspector" means any attorney, accountant, or other agent retained by a
Purchaser for the purposes provided in Section 4(j).
"Investor Warrants" means the warrants to purchase Common Stock of the
Company sold to Purchasers.
"Offering Price" means the Offering Price set forth in the Placement Agent
Agreement between the Company and SMH.
"Permitted Assignee" means (a) with respect to a partnership, its partners
or former partners in accordance with their partnership interests, (b) with
respect to a corporation, its shareholders in accordance with their interest in
the corporation, (c) with respect to a limited liability company, its members or
former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, or (f) a party to this Agreement.
The terms "register," "registered," and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (i) shares of Common Stock issued to each
Purchaser pursuant to the Subscription Agreements, including shares issued or
issuable under the Investor Warrants issued to each Purchaser, and (ii) shares
of Common Stock issued or issuable to SMH pursuant to the Placement Agent
Warrant, but in each case excluding (A) any Registrable Securities that have
been publicly sold or may be publicly sold immediately without registration
under the Securities Act either pursuant to Rule 144 of the Securities Act or
otherwise; (B) any Registrable Securities sold by a person in a transaction
pursuant to a registration statement filed under the Securities Act or (C) any
Registrable Securities that are at the time subject to an effective registration
statement under the Securities Act.
"Registration Default Date" means the date which is 180 days following the
Closing Date.
"Registration Default Period" means the period following the Registration
Default Date during which any Registration Event occurs and is continuing.
"Registration Event" means the occurrence of any of the following events:
(a) the Registration Statement covering Registrable Securities is
not declared effective by the Commission on or before the Registration
Default Date,
(b) after the SEC Effective Date, sales cannot be made pursuant to
the Registration Statement for any reason (including without limitation by
reason of a stop order, or the Company's failure to update the
Registration Statement) but except as excused pursuant to Section 3(a) or
for the reasons specified in clause (c), or
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(c) the Common Stock generally or the Registrable Securities
specifically are not listed or included for quotation on an Approved
Market, or trading of the Common Stock is suspended or halted on the
Approved Market, which at the time constitutes the principal market for
the Common Stock, for more than two full, consecutive Trading Days;
provided, however, a Registration Event shall not be deemed to occur if
all or substantially all trading in equity securities (including the
Common Stock) is suspended or halted on the Approved Market for any length
of time.
"Registration Statement" means the registration statement required to be
filed by the Company pursuant to Section 3(a).
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SEC Effective Date" means the date the Registration Statement is declared
effective by the Commission.
"Trading Day" means a day on whichever (a) the national securities
exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in
any such case which at the time constitutes the principal securities market for
the Common Stock, is open for general trading of securities.
"Warrants" means the Investor Warrants and the Placement Agent Warrants.
2. Term. This Agreement shall continue in full force and effect for a
period of two (2) years from the Effective Date, unless terminated sooner
hereunder.
3. Registration.
(a) Registration on Form S-l. As promptly as reasonably practicable
after the date hereof, the Company shall file with the Commission a shelf
registration statement on Form S-1, relating to the resale by the Holders
of all of the Registrable Securities; provided, however, that the Company
shall not be obligated to effect any such registration, qualification, or
compliance pursuant to this Section 3(a), or keep such registration
effective pursuant to Section 4: (i) in any particular jurisdiction in
which the Company would be required to qualify to do business as a foreign
corporation or as a dealer in securities under the securities or blue sky
laws of such jurisdiction or to execute a general consent to service of
process in effecting such registration, qualification or compliance, in
each case where it has not already done so; or (ii) during any Blackout
Period.
(b) Piggyback Registration. If prior to the date that the Company
files a registration pursuant to Section 3(a), the Company shall determine
to register for sale for cash any of its Common Stock, for its own account
or for the account of others (other than the Holders), other than (i) a
registration relating solely to employee benefit plans or securities
issued or issuable to employees, consultants (to the extent the securities
owned or to be owned by such consultants could be registered on Form S-8)
or any of their Family Members (including a registration on Form S-8),
(ii) a registration relating solely
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to a Commission Rule 145 transaction, a registration on Form S-4 in
connection with a merger, acquisition, divestiture, reorganization, or
similar event, or (iii) a registration in which the only Common Stock
being registered is Common Stock issuable upon conversion of debt
securities that are also being registered, the Company shall promptly give
to the Holders written notice thereof (and in no event shall such notice
be given less than 20 calendar days prior to the filing of such
registration statement), and shall, subject to Section 3(c), include in
such registration (and any related qualification under blue sky laws or
other compliance) (a "PIGGYBACK REGISTRATION"), all of the Registrable
Securities specified in a written request or requests, made within 30
calendar days after receipt of such written notice from the Company, by
any Holder or Holders. However, the Company may, without the consent of
the Holders, withdraw such registration statement prior to its becoming
effective if the Company or such other shareholders have elected to
abandon the proposal to register the securities proposed to be registered
thereby.
(c) Underwriting. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders in writing or as a part of the written notice given pursuant to
Section 3(b). In such event the right of any Holder to registration
pursuant to Section 3(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other shareholders
of the Company distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company
or selling shareholders, as applicable. Notwithstanding any other
provision of this Section 3(c), if the underwriter or the Company
determines that marketing factors require a limitation of the number of
shares to be underwritten, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting. The
Company shall so advise all Holders (except those Holders who failed to
timely elect to distribute their Registrable Securities through such
underwriting or have indicated to the Company their decision not to do
so), and the number of shares of Registrable Securities that may be
included in the registration and underwriting, if any, shall be allocated
among such Holders as follows:
(i) In the event of a Piggyback Registration that is initiated
by the Company, the number of shares that may be included in the
registration and underwriting shall be allocated first to the
Company and then, subject to obligations and commitments existing as
of the date hereof, to all selling shareholders, including the
Holders, who have requested to sell in the registration on a pro
rata basis according to the number of shares requested to be
included; and
(ii) In the event of a Piggyback Registration that is
initiated by the exercise of demand registration rights by a
shareholder or shareholders of the Company (other than the Holders),
then the number of shares that may be included in the registration
and underwriting shall be allocated first to such selling
shareholders who exercised such demand and then, subject to
obligations and commitments existing as of the date hereof, to all
other selling shareholders,
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including the Holders, who have requested to sell in the
registration, on a pro rata basis according to the number of shares
requested to be included.
No Registrable Securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the underwriter. The Registrable Securities
and/or other securities so withdrawn from such underwriting shall also be
withdrawn from such registration; provided, however, that, if by the
withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other Holders may be included in such registration (up
to the maximum of any limitation imposed by the underwriters), then the
Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the
same proportion used above in determining the underwriter limitation.
(d) Failure to File Registration Statement. If a Registration Event
occurs, then the Company will make payments to each Purchaser and SMH (to
the extent that it has exercised the Warrant)(a "QUALIFIED PURCHASER"), as
partial liquidated damages for the minimum amount of damages to the
Qualified Purchaser by reason thereof, and not as a penalty, at a rate
equal to one and one-half percent (1.5%) of the Offering Price per Unit
or, with respect to SMH, one-tenth of one and one-half percent (0.15%) of
the Offering Price for each share of Common Stock acquired upon exercise
of the Warrant, held by such Qualified Purchaser per month, for each
calendar month of the Registration Default Period (pro rated for any
period less than 30 days). Each such payment shall be due and payable
within five days after the end of each calendar month of the Registration
Default Period until the termination of the Registration Default Period
and within five days after such termination. Such payments shall be in
partial compensation to the Qualified Purchaser, and shall not constitute
the Qualified Purchaser's exclusive remedy for such events. The
Registration Default Period shall terminate upon (i) the SEC Effective
Date in the case of clause (a) of the definition of "Registration Event,"
(ii) the ability of the Qualified Purchaser to effect sales pursuant to
the Registration Statement in the case of clause (c) of the definition of
"Registration Event," and (iii) the listing or inclusion and/or trading of
the Common Stock on an Approved Market, as the case may be, in the case of
clause (c) of the definition of "Registration Event." The amounts payable
as partial liquidated damages pursuant to this paragraph shall be payable
in lawful money of the United States. Amounts payable as partial
liquidated damages to each Qualified Purchaser hereunder with respect to
each share of Registrable Securities shall cease when the Qualified
Purchaser no longer holds such share of Registrable Securities. SMH
acknowledges and agrees that the partial liquidated damages provided for
in this Section 3(f) shall apply to Registrable Securities of SMH only to
the extent SMH has exercised the Warrant.
4. Registration Procedures. In the case of each registration,
qualification, or compliance effected by the Company pursuant to Section 3
hereof, the Company will keep each Holder including securities therein
reasonably advised in writing (which may include e-mail) as to the initiation of
each registration, qualification, and compliance and as to the completion
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thereof. With respect to any registration statement filed pursuant to Section 3,
the Company will use its commercially reasonable best efforts to:
(a) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form S-1, or any other
form for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of
the Registrable Securities in accordance with the intended method(s) of
distribution thereof, and use its commercially reasonable efforts to cause
such registration statement to become and remain effective at least for a
period ending with the first to occur of (i) the sale of all Registrable
Securities covered by the registration statement, (ii) the availability
under Rule 144 for the Holder to immediately, freely resell without
restriction all Registrable Securities covered by the registration
statement, (iii) one year after expiration of the term of the Warrants, or
(iv) 90 days after a Piggyback Registration is declared effective by the
Commission (in each case, the "EFFECTIVENESS PERIOD"); provided, however,
if at the end of the one-year period referred to in clause (iii), any
Holder is not able to immediately, freely resell all Registrable
Securities that it owns, the Effectiveness Period shall continue until
terminated pursuant to clause (i) or (ii); and provided that no later than
two business days before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the
Company shall (i) furnish to (A) one special counsel ("HOLDERS COUNSEL")
selected by the Company for the benefit of the Holders (which Holders
Counsel initially shall be Xxxx X. Xxxxx of Xxxxxxxx & Xxxxxx LLP,
Houston, Texas), copies of all such documents proposed to be filed
(excluding any exhibits other than applicable underwriting documents), in
substantially the form proposed to be filed, which documents shall be
subject to the review of such Holders Counsel, and (ii) notify each Holder
of Registrable Securities covered by such registration statement of any
stop order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove it
if entered;
(b) if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue
resolution of any comments to the satisfaction of the Commission;
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective during the Effectiveness Period (but in any event at
least until expiration of the 90-day period referred to in Section 4(3) of
the Securities Act and Rule 174, or any successor thereto, thereunder, if
applicable), and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended method(s) of
disposition by the sellers thereof set forth in such registration
statement;
(d) furnish, without charge, to each Holder of Registrable
Securities covered by such registration statement (i) a reasonable number
of copies of such registration statement (including any exhibits thereto
other than exhibits incorporated by reference), each amendment and
supplement thereto as such Holder may request, (ii) such number of
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copies of the prospectus included in such registration statement
(including each preliminary prospectus and any other prospectus filed
under Rule 424 under the Securities Act) as such Holders may request, in
conformity with the requirements of the Securities Act, and (iii) such
other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Holder, but only during the Effectiveness Period;
(e) use its commercially reasonable best efforts to register or
qualify such Registrable Securities under such other applicable securities
or blue sky laws of such jurisdictions as any Holder of Registrable
Securities covered by such registration statement reasonably requests as
may be necessary for the marketability of the Registrable Securities (such
request to be made by the time the applicable registration statement is
deemed effective by the Commission) and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder; provided that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this paragraph (e), (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction;
(f) as promptly as practicable after becoming aware of such event,
notify each Holder of such Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event which comes to the Company's
attention if as a result of such event the prospectus included in such
registration statement contains 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 and the Company
shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports
under the Exchange Act) so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, unless suspension of the use of such prospectus otherwise
is authorized herein or in the event of a Blackout Period, in which case
no supplement or amendment need be furnished (or Exchange Act filing made)
until the termination of such suspension or Blackout Period;
(g) comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all
material respects with the Securities Act and the Exchange Act and with
all applicable rules and regulations of the Commission with respect to the
disposition of all securities covered by such registration statement, and
make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least 12 months, but not
more than 18 months, beginning with the first full calendar month after
the SEC Effective Date, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(h) as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities being offered or sold
pursuant to the Registration
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Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;
(i) permit the Holders of Registrable Securities being included in
the Registration Statement and their legal counsel, at such Holders' sole
cost and expense (except as otherwise specifically provided in Section 6)
to review and have a reasonable opportunity to comment on the Registration
Statement and all amendments and supplements thereto at least two Business
Days prior to their filing with the Commission;
(j) make available for inspection by any Holder and any inspector
retained by such Holder, at such Holder's sole expense, all Records as
shall be reasonably necessary to enable such Holder to exercise its due
diligence responsibility, and cause the Company's officers, directors, and
employees to supply all information which such Holder or any inspector may
reasonably request for purposes of such due diligence; provided, however,
that such Holder shall hold in confidence and shall not make any
disclosure of any record or other information which the Company determines
in good faith to be confidential, and of which determination such Holder
is so notified at the time such Holder receives such information, unless
(i) the disclosure of such record is necessary to avoid or correct a
misstatement or omission in the Registration Statement and a reasonable
time prior to such disclosure the Holder shall have informed the Company
of the need to so correct such misstatement or omission and the Company
shall have failed to correct such misstatement of omission, (ii) the
release of such record is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (iii) the
information in such record has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in
such records to any Inspector until and unless such Inspector shall have
entered into a confidentiality agreement with the Company with respect
thereto, substantially in the form of this Section 4(j), which agreement
shall permit such Inspector to disclose records to the Holder who has
retained such Inspector. Each Holder agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice
to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the records deemed confidential. The Company shall
hold in confidence and shall not make any disclosure of information
concerning a Holder provided to the Company pursuant to this Agreement
unless (i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) disclosure of such information to
the Staff of the Division of Corporation Finance is necessary to respond
to comments raised by the Staff in its review of the Registration
Statement, (iii) disclosure of such information is necessary to avoid or
correct a misstatement or omission in the Registration Statement, (iv)
release of such information is ordered pursuant to a subpoena or other
order from a court or governmental body of competent jurisdiction, or (v)
such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such
information concerning a Holder is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice
to such Holder and
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allow such Holder, at such Holder's expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information;
(k) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be listed or quoted on the
principal securities market on which securities of the same class or
series issued by the Company are then listed or traded;
(l) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(m) cooperate with the Holders of Registrable Securities being
offered pursuant to the Registration Statement to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such
denominations or amounts as the Holders may reasonably request and
registered in such names as the Holders may request; and
(n) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.
5. Suspension of Offers and Sales. Each Holder of Registrable Securities
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 4(f) hereof or of the commencement of an
Blackout Period, such Holder shall discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(f) hereof or notice of the end of
the Blackout Period, and, if so directed by the Company, such Holder shall
deliver to the Company (at the Company's expense) all copies (including, without
limitation, any and all drafts), other than permanent file copies, then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in Section 4(a)(iii) hereof shall be
extended by the greater of (i) ten business days or (ii) the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 4(1) hereof to and including the date when each Holder of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 4(f) hereof.
6. Registration Expenses. The Company shall pay all expenses in connection
with any registration, including, without limitation, all registration, filing,
stock exchange and NASD fees, printing expenses, all fees and expenses of
complying with securities or blue sky laws, the fees and disbursements of
counsel for the Company and of its independent accountants, and the reasonable
fees and disbursements of a Holders Counsel; provided that, in any underwritten
registration, each party shall pay for its own underwriting discounts and
commissions and transfer taxes. Except as provided above in this Section 6 and
Section 9, the Company shall not be responsible for the expenses of any attorney
or other advisor employed by a Holder of Registrable Securities.
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7. Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected in accordance with applicable securities laws; (b)
such transferee or assignee agrees in writing to become subject to the terms of
this Agreement; and (c) the Company is given written notice by such Holder of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.
8. Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing.
9. Indemnification.
(a) In the event of the offer and sale of Registrable Securities
held by Holders under the Securities Act, the Company shall, and hereby
does, indemnify and hold harmless, to the fullest extent permitted by law,
each Holder, its directors, officers, partners, each other person who
participates as an underwriter in the offering or sale of such securities,
and each other person, if any, who controls or is under common control
with such Holder or any such underwriter within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director,
officer, partner or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such shares were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or 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 in which they were made
not misleading, and the Company shall reimburse the Holder, and each such
director, officer, partner, underwriter and controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating, defending or settling any such loss, claim, damage,
liability, action or proceeding; provided that the foregoing shall not
apply to, and the Company shall not be liable, in any such case (i) to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon
an untrue statement or alleged untrue statement in or omission or alleged
omission from such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company through an instrument duly executed by or on behalf of such
Holder specifically stating that it is for use in the preparation thereof,
(ii) provided that the Company has complied with its obligations hereunder
to furnish such Holder with copies of the applicable prospectus, if the
person asserting any such loss, claim, damage, liability (or action or
proceeding in respect thereof) who purchased the Registrable Securities
that are the subject thereof did not
11
receive a copy of an amended preliminary prospectus or the final
prospectus (or the final prospectus as amended or supplemented) at or
prior to the written confirmation of the sale of such Registrable
Securities to such person because of the failure of such Holder or
underwriter to so provide such amended preliminary or final prospectus and
the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact made in such preliminary prospectus was
corrected in the amended preliminary or final prospectus (or the final
prospectus as amended or supplemented), or (iii) provided that the plan of
distribution mechanics described in the applicable prospectus are, in form
and substance, reasonable and customary for transactions of this type, to
the extent that the Holders failed to comply with the terms of such plan
of distribution mechanics. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Holders, or any such director, officer, partner, underwriter or
controlling person and shall survive the transfer of such shares by the
Holder.
(b) As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to this
Agreement, each such Holder agrees to be bound by the terms of this
Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, legal counsel and accountants for the Company, any
underwriter, any other Holder selling securities in such registration
statement and any controlling person within the meaning of the Securities
Act of any such underwriter or other Holder, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any such
director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon (i) an untrue statement
or alleged untrue statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information about such Holder as a Holder of the Company furnished to the
Company, (ii) provided that the Company has complied with its obligations
hereunder to furnish such Holder with copies of the applicable prospectus,
if the person asserting any such loss, claim, damage, liability (or action
or proceeding in respect thereof) who purchased the Registrable Securities
that are the subject thereof did not receive a copy of an amended
preliminary prospectus or the final prospectus (or the final prospectus as
amended or supplemented) at or prior to the written confirmation of the
sale of such Registrable Securities to such person because of the failure
of such Holder or underwriter to so provide such amended preliminary or
final prospectus and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus
(or the final prospectus as amended or supplemented), or (iii) provided
that the plan of distribution mechanics described in the applicable
prospectus are, in form and substance, reasonable and customary for
transactions of this type, to the extent that the Holders failed to comply
with the terms of such plan of distribution mechanics. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or on behalf of the Holders, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such
shares by
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the Holder, and such Holder shall reimburse the Company, and each such
director, officer, legal counsel and accountants, underwriter, other
Holder, and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating, defending, or settling
and such loss, claim, damage, liability, action, or proceeding; provided,
however, that such indemnity agreement found in this Section 9(b) shall in
no event exceed the gross proceeds from the offering received by such
Holder. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the transfer by
any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 9(a) or (b) hereof (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the indemnifying
party of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 9(a) or (b) hereof,
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses
not available to the indemnifying party in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties
arises in respect of such claim after the assumption of the defenses
thereof or the indemnifying party fails to defend such claim in a diligent
manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement
of any action or proceeding effected without its consent. No indemnifying
party shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement, which does not include
as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of
such claim or litigation. Notwithstanding anything to the contrary set
forth herein, and without limiting any of the rights set forth above, in
any event any party shall have the right to retain, at its own expense,
counsel with respect to the defense of a claim.
(d) In the event that an indemnifying party does or is not permitted
to assume the defense of an action pursuant to Section 9(c) or in the case
of the expense reimbursement obligation set forth in Section 9(a) and (b),
the indemnification required by Section 9(a) and (b) hereof shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills received or expenses, losses,
damages, or liabilities are incurred.
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(e) If the indemnification provided for in this Section 9 is held by
a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall (i) contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability,
claim, damage or expense as is appropriate to reflect the proportionate
relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or
the indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement
or omission), or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the indemnified
party, but also the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other, as well as any
other relevant equitable considerations. No indemnified party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying
party who was not guilty of such fraudulent misrepresentation.
(f) Other Indemnification. Indemnification similar to that specified
in the preceding subsections of this Section 9 (with appropriate
modifications) shall be given by the Company and each Holder of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation
or governmental authority other than the Securities Act.
10. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas and the United States of
America, both substantive and remedial. Any judicial proceeding brought
against either of the parties to this agreement or any dispute arising out
of this Agreement or any matter related hereto shall be brought in the
courts of the State of Texas, Xxxxxx County, or in the United States
District Court for the Southern District of Texas and, by its execution
and delivery of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction shall
not be deemed to confer rights on any person other than the parties to
this Agreement.
(b) Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, Permitted Assigns, executors and administrators of the parties
hereto. In the event the Company merges with, or is otherwise acquired by,
a direct or indirect subsidiary of a publicly traded company, the Company
shall condition the merger or acquisition on the assumption by such parent
company of the Company's obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the
subjects hereof.
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(d) Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and
sufficient if delivered by hand, by facsimile transmission, by registered
or certified mail, postage pre-paid, by electronic mail, or by courier or
overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
If to the Company: BPI Industries Inc.
Suite 1500, 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxx
Facsimile: 000-000-0000
e-mail: xxxxx@xxx-xxxxxxxxxx.xxx
If to the Purchasers: To each Purchaser at the address
set forth on Exhibit A
with a copy to: Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
e-mail: xxx.xxxxxx@xxxxxx.xxx
or at such other address as any party shall have furnished to the other parties
in writing.
(e) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Holder of any Registrable Securities, upon
any breach or default of the Company under this Agreement, shall impair
any such right, power or remedy of such Holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein,
or of or in any similar breach or default thereunder occurring; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Holder of
any breach or default under this Agreement, or any waiver on the part of
any Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement, or by law or
otherwise afforded to any holder, shall be cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(g) Severability. In the case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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(h) Amendments. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this
Agreement may be waived, with and only with an agreement or consent in
writing signed by the Company and by the holders of a majority of the
number of shares of Registrable Securities outstanding as of the date of
such amendment or waiver. The Purchasers acknowledge that by the operation
of this Section 10(h), the holders of a majority of the outstanding
Registrable Securities may have the right and power to diminish or
eliminate all rights of the Purchasers under this Agreement.
(i) Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written consent
of the Holders of at least a majority of the Registrable Share then
outstanding, enter into any agreement with any holder or prospective
holder of any securities of the Company that would grant such holder
registration rights senior to those granted to the Holder hereunder.
This Registration Rights Agreement is hereby executed as of the date first
above written.
COMPANY:
BPI INDUSTRIES INC.
By:________________________________
Name: Xxxxx X. Xxxxxx
Title: President
XXXXXXX XXXXXX XXXXXX INC.,
Individually and as Agent and Attorney in Fact for
the Purchasers listed on Exhibit A attached hereto
By:________________________________
Name:______________________________
Title:_____________________________
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