EXHIBIT 10.34
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REGISTRATION RIGHTS AGREEMENT
among
POLYPHASE CORPORATION,
XXXXXXX XXXXX WORLD INCOME FUND, INC.
and
CONVERTIBLE HOLDINGS, INC.
________________________________________
Dated as of December 1, 1995
________________________________________
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TABLE OF CONTENTS
1. Background................................. 1
2. Registration Under Securities Act, etc..... 1
2.1 Registration on Request................ 1
2.2 Incidental Registration................ 4
2.3 Registration Procedures................ 5
2.4 Underwritten Offerings................. 10
2.5 Preparation; Reasonable Investigation.. 10
2.6 Indemnification........................ 11
3. Definitions................................. 14
4. Rule 144 and Rule 144A...................... 15
5. Amendments and Waivers...................... 16
6. Nominees for Beneficial Owners.............. 16
7. Notices..................................... 16
8. Assignment.................................. 17
9. Calculation of Percentage Interests of
Registrable Securities..................... 17
10. No Inconsistent Agreements.................. 17
11. Remedies.................................... 17
12. Severability................................ 18
13. Entire Agreement............................ 18
14. Descriptive Headings........................ 18
15. Governing Law............................... 18
16. Counterparts................................ 18
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REGISTRATION RIGHTS AGREEMENT, dated as of December 1, 1995, by and among
POLYPHASE CORPORATION, a Nevada corporation (the "Company"), XXXXXXX XXXXX WORLD
INCOME FUND, INC., a Maryland corporation, and CONVERTIBLE HOLDINGS, INC., a
Maryland corporation (together, the "Purchasers").
1. Background.
(a) Pursuant to a Securities Purchase Agreement, dated as of the date
hereof between the Company and the Purchasers (the "Purchase Agreement), the
Purchasers have agreed to purchase from the Company, and the Company has agreed
to issue to the Purchasers, $1,500,000 in principal amount of the Company's 12%
Senior Convertible Debentures due December 1, 1997 (the "Bonds"). The Bonds are
convertible into shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"), pursuant to an Indenture dated as of December 1, 1995
between the Company and IBJ Xxxxxxxx Bank & Trust Company, as trustee (the
"Indenture"). Capitalized terms used herein but not otherwise defined shall
have the meanings given them in SECTION 3.
(b) As an inducement to the Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Company
under the Purchase Agreement, the Company has agreed to register the Bonds and
the shares of Common Stock issuable upon conversion of the Bonds upon the terms
and subject to the conditions contained herein.
2. Registration Under Securities Act, etc.
2.1 Registration on Request.
(a) Request. At any time, or from time to time, upon written
request of one or more holders (the "Initiating Holders") of Registerable
Securities representing not less than 50% of the Registrable Securities that the
Company effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities, the Company promptly will give
written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect, at the earliest possible date, the registration under the Securities
Act, including by means of a shelf registration on Form S-3 (or any successor
form) pursuant to Rule 415 under the Securities Act if so requested in such
request (but only if the Company is then eligible to use such a shelf
registration and if Form S-3 (or such successor form) is then available to the
Company, the Company hereby agreeing to use its best efforts to become and
remain eligible to use Form S-3 (or such successor form)) or any other form of
registration statement pursuant to such Rule, of
(i) the Registrable Securities that the Company has been so
requested to register by such Initiating Holders, and
(ii) all other Registrable Securities that the Company has
requested to register by the holders thereof (such holders together with
the Initiating
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Holders hereinafter are referred to as the "Selling Holders") by written
request given to the Company within 30 days after the giving of such
written notice by the Company, all to the extent requisite to permit the
disposition of the Registrable Securities (in accordance with the methods
of disposition thereof intended by the Selling Holders) so to be
registered.
(b) Registration of Other Securities. Whenever the Company shall
effect a registration pursuant to this SECTION 2.1 in connection with an
underwritten offering by one or more holders of Registrable Securities, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless (a) the managing underwriter of
such offering shall have advised each Selling Holder of Registrable Securities
to be covered by such registration in writing that the inclusion of such other
securities would not adversely affect such offering or (b) the Selling Holders
of not less than 50% of all Registrable Securities to be covered by such
registration shall have consented in writing to the inclusion of such other
securities.
(c) Registration Statement Form. Registrations under this SECTION 2.1
shall be on such appropriate registration form of the Commission (i) as shall be
reasonably selected by the Company and as shall be reasonably acceptable to the
holders of more than 50% of the Registrable Securities so to be registered and
(ii) as shall permit the disposition of such Registrable Securities in
accordance with the method or methods of disposition intended by such holders.
The Company agrees to include in any such registration statement all information
that holders of Registrable Securities being registered shall reasonably
request.
(d) Effective Registration Statement. A registration requested
pursuant to this SECTION 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective and
remained effective in compliance with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement;
provided, that except with respect to any registration statement on Form S-3 (or
any successor or similar form) or any other form of registration statement filed
pursuant to Rule 415 under the Securities Act, such period need not exceed 120
days (which period shall be increased by the cumulative duration of all Blackout
Periods), (ii) with respect to any Selling Holder, if after it has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason not attributable to such Selling Holder, or (iii) with
respect to any Selling Holder, if the conditions to closing specified in the
purchase agreement or underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived, other than by reason of a
failure on the part of such Selling Holder.
(e) Selection of Underwriters. The underwriter or underwriters of
each underwritten offering of the Registrable Securities by one or more holders
of Registrable Securities in connection with a registration requested pursuant
to this SECTION 2.1 shall be
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reasonably selected by the Company and shall be reasonably acceptable to the
Selling Holders of at least 50% of the Registrable Securities to be included in
such registration.
(f) Priority in Requested Registration. If the managing underwriter
of any underwritten offering pursuant to this SECTION 2.1 shall advise the
Company in writing (and the Company shall so notify, in writing accompanied by a
copy of such advice, each Selling Holder of Registrable Securities requesting
registration of such advice) that, in its opinion, the number or principal
amount of securities requested to be included in such registration exceeds the
number or principal amount that can be sold in such offering within a price
range acceptable to the Selling Holders of more than 50% of the Registrable
Securities requested to be included in such registration, the Company, except as
provided in the following sentence, will include in such registration, to the
extent of the number or principal amount and type that the Company is so advised
can be sold in such offering, Registrable Securities requested to be included in
such registration, pro rata among the Selling Holders requesting such
registration on the basis of the estimated gross proceeds from the sale thereof.
In connection with any registration as to which the provisions of the preceding
sentence of this clause (f) apply, no securities other than Registrable
Securities shall be covered by such registration. If the total number of
Registrable Securities requested to be included as provided in such registration
cannot be included as provided in the next preceding sentence, holders of
Registrable Securities requesting registration thereof pursuant to this SECTION
2.1, representing not less than 15% of the Registrable Securities with respect
to which registration has been requested and constituting not less than 50% of
the Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 20 days after
receipt of such notice from the Company and, in the event of such withdrawal,
such requested registration shall not be counted for purposes of the requested
registrations to which holders of Registrable Securities are entitled pursuant
to this SECTION 2.1.
(g) Limitations on Registration on Request. The Company will not be
required to (i) effect, in the aggregate, more than two registrations pursuant
to this SECTION 2.1, or (ii) effect a registration pursuant to this SECTION 2.1
within the twelve-month period occurring immediately subsequent to the
effectiveness (within the meaning of SECTION 2.1(D)) of a registration statement
filed pursuant to this SECTION 2.1.
(h) Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants. If, prior to the effectiveness of any registration
statement otherwise required to be prepared and filed by the Company pursuant to
this SECTION 2.1, the Board of Directors of the Company determines in good faith
either (i) that the sale of the Registrable Securities pursuant to such
registration statement would require disclosure of material non-public
information, the disclosure of which would have a material adverse effect on the
Company (an "Information Blackout") or (ii) that the Company is required,
pursuant to the Exchange Act, to prepare financial statements in connection with
a material acquisition or other event (a "Financial Statement Blackout"), and in
either such case shall furnish to each holder of Registrable Securities a
certificate regarding such determination, then the Company's obligation to
effect such registration hereunder shall be deferred for a period not to exceed
the earliest of (x) the date upon which such material information is disclosed
to the public or ceases to be material,
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in the case of an Information Blackout, or the date on which the preparation of
such financial statements is complete, in the case of a Financial Statement
Blackout, (y) 90 days after the Company's Board of Directors makes such good
faith determination and (z) the date on which the Company files or is required
to file (whichever first occurs) with the Commission its next periodic report on
Form 10-K or Form 10-Q (or any successor form) under the Exchange Act, in the
case of an Information Blackout, or the first date on which the Company is
required to file with the Commission a report on Form 10-K, Form 10-Q or Form 8-
K under the Exchange Act that includes such financial statements, in the case of
a Financial Statement Blackout (a "Blackout Period"); provided, that if any such
registration statement is effective, the Company may, upon written notice of an
Information Blackout or a Financial Statement Blackout, as the case may be, to
each holder of Registrable Securities, suspend sales of Registrable Securities
pursuant to such registration statement for the Blackout Period; provided,
further, that the cumulative duration of all Blackout Periods shall not in any
event exceed 90 days during any twelve-month period. If the Company shall
postpone the filing of a registration statement pursuant to the preceding
provisions of this paragraph, holders of Registrable Securities with respect to
which registration has been requested and constituting not less than 15% of the
Registrable Securities with respect to which registration has been requested and
constituting not less than 50% of the Initiating Holders, shall have the right
to withdraw the request for registration by giving written notice to the Company
within 30 days after receipt of the notice of postponement and, in the event of
such withdrawal, such requested registration shall not be counted for purposes
of the requested registrations to which holders of Registrable Securities are
entitled pursuant to this SECTION 2.1. The Company acknowledges that the
provisions of this SECTION 2.1(H) shall not in any way affect the interest rate
provisions of the Bonds.
(i) Expenses. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to this SECTION 2.1.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any
time proposes to register any of its securities under the Securities Act by
registration on Forms X-0, X-0 or S-3 or any successor or similar form(s)
(except registrations on such Forms or similar form(s) solely for registration
of securities in connection with an employee benefit plan or dividend
reinvestment plan or a merger or consolidation, or solely with respect to any
securities to be exchanged for partnership interests and except for
registrations pursuant to SECTION 2.1), whether or not for sale for its own
account, it will each such time give prompt written notice to all registered
holders of Registerable Securities of its intention to do so and of such
holders' rights under this SECTION 2.2. Upon the written request of any such
holder (each, a "Requesting Holder") made as promptly as practicable and in any
event within 30 days after the receipt of any such notice (20 days if the
Company states in such written notice or gives telephonic notice to all
registered holders of Registrable Securities, with written confirmation to
follow promptly thereafter, stating that (i) such registration will be on Form
S-3 and (ii) such shorter period of time is required because of a planned filing
date) (which request shall specify the Registrable Securities intended to be
disposed of by such Requesting Holder), the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable Securities
that the
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Company has been so requested to register by the Requesting Holders thereof to
the extent requisite to permit the disposition thereof in accordance with the
method or methods of disposition intended by such holders; provided, however,
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each holder
of Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to cause such registration to be effected as a
registration under SECTION 2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. No
registration effected under this SECTION 2.2 shall relieve the Company of its
obligation to effect any registration upon request under SECTION 2.1.
(b) Priority in Incidental Registrations. If (i) a registration
pursuant to this SECTION 2.2 involves an underwritten offering of the securities
so being registered, whether or not for sale for the account of the Company, to
be distributed (on a firm commitment basis) by or through one or more
underwriters of recognized standing under underwriting terms appropriate for
such a transaction, (ii) the Registrable Securities requested to be registered
in such registration pursuant to SECTION 2.2(A) for sale for the account of
holders of Registrable Securities are not also to be included in such
underwritten offering (because the Company has not been requested so to include
such Registrable Securities pursuant to SECTION 2.4(B)) and (iii) the managing
underwriter of such underwritten offering shall inform the Company by letter of
its opinion that the number or principal amount or type of Registrable
Securities requested to be included in such registration exceeds the number or
principal amount or type that can be sold in (or during the time of) such
offering, and the Company has so advised the Requesting Holders in writing with
a copy of such opinion, then the Company will include in such registration, to
the extent of the number or principal amount and type that the Company is so
advised can be sold in (or during the time of) such offering, the securities
proposed by the Company to be sold for its own account and such Registrable
Securities requested to be included in such registration pursuant to this
SECTION 2.2, pro rata among the Company and each of the Requesting Holders on
the basis of the estimated gross proceeds from the sale thereof.
(c) Expenses. The Company will pay all Registration Expenses in
connection with any registration effected pursuant to this SECTION 2.2.
2.3 Registration Procedures. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in SECTIONS 2.1 and 2.2, the Company will,
as expeditiously as possible:
(i) prepare and (as soon as possible but in any event no later
than 60 days after the end of the period within which requests for
registration may be given to
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the Company pursuant to SECTION 2.1(A) or 2.2(A), as applicable) file with
the Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that the Company may
discontinue any registration of its securities that are not Registrable
Securities (and, under the circumstances specified in SECTION 2.2(A), its
securities that are Registrable Securities) at any time prior to the
effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such amendments,
supplements and post-effective amendments to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of
Registrable Securities covered by such registration statement have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement;
provided, that except with respect to any such registration statement on
Form S-3 (or any successor or similar form) or any other form of
registration statement filed pursuant to Rule 415 under the Securities Act,
such period need not exceed 120 days (which period shall be increased by
the cumulative duration of all Blackout Periods); provided further, that
the Company shall (y) use its best efforts to keep any such registration
statement on Form S-3 or such other form continuously effective for a
period of at least three years (which period shall be increased by the
cumulative duration of all Blackout Periods) after the effective date of
such registration statement (or such shorter period terminating on the date
when all Registrable Securities have been disposed of) and (z) prepare and
file with the Commission, within 30 days following receipt by the Company
from any holder of Registrable Securities of written notice that such
holder wishes to include in such registration any Registrable Securities or
additional Registrable Securities, such amendments, supplements and post-
effective amendments to such registration statement and the related
prospectus as is necessary to effect the registration under the Securities
Act of such Registrable Securities and to permit the disposition thereof in
accordance with the method of disposition intended by such holder;
(iii) furnish to each seller of Registrable Securities covered
by such registration statement, such number of conformed copies of such
registration statement and of each such amendment, supplement and post-
effective amendment thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(iv) use its best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such states,
possessions and territories of the United States
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of America where an exemption is not available and as each seller of
Registrable Securities covered by such registration statement shall
reasonably request, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and
(z) to take any other action that may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such jurisdictions
of the securities to be sold by such seller, except that the Company shall
not for any such purpose be required to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not be but for
the requirements of this subdivision (iv) be obligated to be so qualified
or to consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other federal, state or local governmental agencies or authorities as
may be necessary in the opinion of counsel to the Company, to the seller or
sellers of Registrable Securities or to the underwriters to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Securities in accordance with the method or methods of disposition intended
by such seller or sellers;
(vi) furnish to each seller of Registrable Securities, and each
such seller's underwriters, if any, a signed counterpart of
(x) an opinion of counsel for the Company (which counsel
shall be reasonably satisfactory to the holders of at least 50%
of the Registrable Securities covered by such registration
statement), dated the effective date of such registration
statement and, if applicable, the date of the closing under the
underwriting agreement, reasonably satisfactory in form and
substance to such seller, and
(y) a "comfort" letter, dated the effective date of such
registration statement and, if applicable, the date of the
closing under the underwriting agreement, signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in
such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters, and,
in the case of the legal opinion, such other legal matters, as the sellers
of the Registrable Securities covered by such registration statement, or
the underwriters, if any, may reasonably request;
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(vii) promptly notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto 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 any such seller promptly
prepare and furnish to it 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 were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and furnish to each such seller of
Registrable Securities at least five business days prior to the filing
thereof a copy of any amendment, supplement or post-effective amendment to
such registration statement or prospectus and shall not file any thereof to
which any such seller shall have reasonably objected on the grounds that
such amendment, supplement or post-effective amendment does not comply in
all material respects with the requirements of the Securities Act;
(ix) provide and cause to be maintained a transfer agent and
registrar (which, in the case of the Bonds, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration
statement;
(x) use its best efforts to list all Registrable Securities
covered by such registration statement on any national securities exchange
or national market system on which Registrable Securities of the same class
and, if applicable, series, covered by such registration statement are then
listed or, if such securities are not so listed, on the principal national
securities exchange or national market system on which the Common Stock is
then listed;
(xi) enter into such agreements and take such other actions as
any seller of Registrable Securities covered by such registration statement or
any underwriter shall reasonably request in order to effect, expedite or
facilitate the disposition of such Registrable Securities in accordance with the
method or methods of distribution intended by the Selling Holders thereof;
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(xii) not later than the effective date of such registration
statement, provide a CUSIP number for all Registrable Securities and provide the
applicable transfer agent or trustee with printed certificates for the
Registrable Securities that are in a form eligible for deposit with the
Depositary Trust Company;
(xiii) cause the Indenture to be qualified under the Trust Indenture
Act and, in connection therewith, cooperate with the trustee under the Indenture
and the holders of the Bonds to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the Trust Indenture Act and execute, and use its best efforts to cause the
trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the Commission to enable
the Indenture to be so qualified in a timely manner;
(xiv) in the event of the issuance of any stop order suspending the
effectiveness of such registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities for sale in any jurisdiction, promptly notify each
holder of Registrable Securities in writing of such occurrence and use its best
efforts promptly to obtain the withdrawal of such order;
(xv) promptly notify each seller of Registrable Securities covered by
such registration statement (i) when such registration statement or any post-
effective amendment thereto has become effective under the Securities Act and
each applicable state law and (ii) of any request by the Commission or any other
federal or state governmental authority for amendments or supplements to a
registration statement or the related prospectus or for additional information;
and
(xvi) cause any Bonds covered by the Registration Statement to be
rated with the appropriate rating agencies, if so requested by the holders of a
majority of such Registrable Securities or the managing underwriters, if any.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities by such seller as the
Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of any kind described in subdivision (vii) of this
SECTION 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
SECTION 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
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2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offerings by holders of Registrable Securities
pursuant to a registration requested under SECTION 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to each such
holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to the
extent provided in SECTION 2.6. Such holders of Registrable Securities to be
sold by such underwriters shall be parties to such underwriting agreement and
may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution or any other representations required by
applicable law.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by SECTION 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. Any such Requesting
Holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Requesting Holder, such Requesting Holder's Registrable Securities and such
Requesting Holder's intended method of distribution or any other representations
required by applicable law.
2.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will (i) give the holders of Registrable
Securities registered or to be registered under such registration statement,
their underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each
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prospectus included therein or filed with the Commission, and each amendment,
supplement or post-effective amendment thereto, (ii) prior to the filing of any
document that is to be incorporated by reference into any such registration
statement or prospectus (after initial filing of the registration statement),
promptly provide copies of such document to the holders of Registrable
Securities covered by such registration statement and to the managing
underwriters, if any, (iii) make the Company's representatives available for
discussion of any such document referred to in the preceding clauses (i) or (ii)
and make such changes in such document (other than any exhibits thereto) prior
to the filing thereof as such selling holders or underwriters may reasonably
request and (iv) give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.6 Indemnification.
(a) Indemnification by the Company. The Company will, and hereby
does, indemnify and hold harmless, in the case of any registration statement
filed pursuant to SECTION 2.1 or 2.2, each seller of any Registrable Securities
covered by such registration statement and each other Person who participates as
an underwriter in the offering or sale of securities of the Company covered by
such registration statement and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act, and
their respective directors, officers and partners, against any losses, claims,
damages or liabilities, joint or several, to which such seller, underwriter or
controlling person or any such director, officer or partner may become subject
under the Securities Act or otherwise, including, without limitation, the fees
and expenses of legal counsel, 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 any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment, supplement or post-effective amendment 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 not misleading, and
the Company will reimburse each such seller, underwriter and controlling person
and each such director, officer and partner for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding; provided, that the Company
shall not be liable in any such case 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 or
omission or alleged omission made in such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment, supplement or post-
effective amendment in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and provided, further, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such
11
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any such
seller, underwriter or controlling Person or any such director, officer or
partner and shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. As a condition to including any
Registrable Securities in any registration statement, the Company shall have
received an undertaking satisfactory to it from the prospective seller of such
Registrable Securities, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in subdivision (a) of this SECTION 2.6) the
Company, and each director of the Company, each officer of the Company and each
other Person, if any, who participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act, with respect to
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities 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 not misleading, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
under this SECTION 2.6(B) shall be limited to the amount of proceeds received by
such indemnifying party in the offering giving rise to such liability. 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 of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this SECTION 2.6, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this SECTION 2.6, 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,
the indemnifying party shall be entitled to participate in and, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel
12
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 other than reasonable costs of
investigation. If, in the reasonable judgment of any indemnified party, a
conflict of interest may exist between such Person and the indemnifying party
with respect to such claim, the indemnifying party shall not have the right to
assume the defense of such claim on behalf of such Person if such Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party. An indemnifying
party that 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, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional counsel
or counsels. No indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or that requires action other than the payment of money by the
indemnifying party.
(d) Contribution. If the indemnification provided for in this SECTION
2.6 shall for any reason be held by a court to be unavailable to an indemnified
party under subparagraph (a) or (b) hereof in respect of any loss, claim, damage
or liability, or any action or proceeding in respect thereof, then, in lieu of
the amount paid or payable under subparagraph (a) or (b) hereof, the indemnified
party and the indemnifying party under subparagraph (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending the same), (i) in such proportion as is appropriate to reflect the
relative fault of the indemnified party and the indemnifying party that resulted
in such loss, claim, damage or liability, or action or proceeding in respect
thereof, with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action or proceeding in respect thereof, as well
as any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the indemnified party and the indemnifying party from the offering of the
securities covered by such registration statement. Notwithstanding the
provisions of this SECTION 2.6(D), no seller of Registrable Securities shall be
required to contribute any amount in excess of the amount by which the proceeds
received by such Person in the offering giving rise to such indemnification
exceeds the amount which such Person has otherwise been required to pay in
respect of such losses, claims, damages or liabilities. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this subparagraph (d) are several and
not joint. In addition, no Person shall be obligated to
13
contribute hereunder any amounts in payment for any settlement of any action or
claim effected without such Person's consent, which consent shall not be
unreasonably withheld.
(e) Other Indemnification. Indemnification and contribution similar
to that specified in the preceding subdivisions of this SECTION 2.6 (with
appropriate modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and contribution
required by this SECTION 2.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
"Blackout Period" is defined in SECTION 2.1.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Conversion Shares" means the shares of Common Stock issued or issuable
upon conversion of the Bonds (including any additional shares of Common Stock
that may be issued pursuant to adjustments to the terms of the conversion of the
Bonds).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such similar
federal statute.
"Initiating Holder" is defined in SECTION 2.1.
"Person" means any individual, corporation, partnership, trust, estate,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Registrable Securities" means $1,500,000 aggregate principal amount of the
Bonds, the Conversion Shares and all Related Registrable Securities. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold to the public as permitted by Rule 144
(or any successor provision) under the Securities Act, (c) they shall have been
otherwise transferred,
14
new certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent distribution of them
shall not require registration or qualification of them under the Securities Act
or any similar state law then in force, (d) they shall have ceased to be
outstanding or (e) in the case of the Bonds, they shall have been redeemed by
the Company or otherwise acquired by the Company or any of its affiliates. All
references to percentages of Registrable Securities shall be calculated pursuant
to SECTION 9.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with SECTION 2, including, without limitation, all
registration, filing, NASD, listing and rating agency fees, all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance and compliance, and any fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions with respect to
the Registrable Securities); provided that, with respect to an underwritten
offering, if counsel for the underwriter requests that the Selling Holders be
represented by counsel, "Registration Expenses" shall include the reasonable
fees and disbursements of one counsel to the Selling Holders (selected by
Selling Holders representing at least 50% of the Registrable Securities covered
by such registration); provided, further, that in the event the Company shall,
in accordance with SECTION 2.1(H) or SECTION 2.2(A), not register any securities
with respect to which it had given written notice of its intention to so
register to holders of Registrable Securities, notwithstanding anything to the
contrary in the foregoing, all of the costs incurred by Requesting Holders in
connection with such registration shall be deemed Registration Expenses.
"Related Registrable Securities" means with respect to Conversion Shares,
any securities of the Company issued or issuable with respect to any Conversion
Shares by way of a dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such similar federal statute.
"Selling Holder" is defined in SECTION 2.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Trust Indenture Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
4. Rule 144 and Rule 144A. The Company shall take all actions necessary
or reasonably requested by any holder of Registrable Securities to enable
holders of Registrable
15
Securities to sell such securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, (b) Rule 144A
under the Securities Act, as such Rule may be amended from time to time, and (c)
any similar rules or regulations hereafter adopted by the Commission, including,
without limiting the generality of the foregoing, filing on a timely basis all
reports required to be filed by the Exchange Act (or, if the Company is not
required to file such reports, making publicly available, at the request of any
holder of Registrable Securities, other information necessary to enable such
holder to sell such securities pursuant to such rule); provided that this
provision will not prohibit the Company from ceasing to be registered pursuant
to Section 12 of the Exchange Act. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 50% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder
of any Registrable Securities at the time or thereafter outstanding shall be
bound by any consent authorized by this SECTION 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder and as the registered holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities. The Company acknowledges that the
Bonds being acquired by each Purchaser pursuant to the Purchase Agreement are
initially being registered in the name of a nominee for such Purchaser, and
agrees that each Purchaser shall be treated as the holder and the registered
holder of the Bonds so acquired by it for all purposes of this Agreement.
7. Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telex, telegram,
telecopier, courier service or personal delivery:
(a) if to the Purchasers, addressed to them in the manner set forth in
the Purchase Agreement, or at such other address as they shall have furnished to
the Company in writing;
16
(b) if to any other holder of Registrable Securities, at the address
that such holder shall have furnished to the Company in writing, or, until any
such other holder so furnishes to the Company an address, then to and at the
address of the last holder of such Registrable Securities who has furnished an
address to the Company; or
(c) if to the Company, addressed to it in the manner set forth in the
Purchase Agreement, or at such other address as the Company shall have furnished
to each holder of Registrable Securities at the time outstanding.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; and when receipt is confirmed, if telecopied.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and assigns and, with respect to each
Purchaser, its successors and assigns, including any holder of any Registrable
Securities, subject to the provisions respecting the minimum numbers of
percentages of shares of Registrable Securities required in order to be entitled
to certain rights, or take certain actions, contained herein. The Purchasers
named in the first paragraph of this Agreement (and not any other holder of
Registrable Securities or any other Person other than a successor of either such
Purchaser) shall be permitted, in connection with a transfer or disposition of
Registrable Securities in compliance with SECTION 4.1 of the Purchase Agreement,
to impose conditions or constraints on the ability of the transferee, as a
holder of Registrable Securities, to request a registration pursuant to SECTION
2.1 and shall provide the Company with copies of such conditions or constraints
and the identity of such transferees.
9. Calculation of Percentage Interests of Registrable Securities. For
purposes of this Agreement, all references to a percentage of the Registrable
Securities shall be calculated based upon the number of shares of the
Registrable Securities with respect to which such calculation is required to be
made, assuming the conversion of all Bonds included in such Registrable
Securities into shares of Common Stock at the then-current conversion price.
10. No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities that is inconsistent or conflicts
with this Agreement or the rights granted to the holders of Registrable
Securities in this Agreement.
11. Remedies. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by any holder of Registrable Securities by reason of a breach
by the Company of the provisions of this Agreement and that each such holder
would sustain irreparable harm, and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
17
12. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any jurisdiction, in any respect and for
any reason, the validity, legality and enforceability of any such provision in
every other respect, and in any other jurisdiction, and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the Purchasers shall be
enforceable to the fullest extent permitted by law.
13. Entire Agreement. This Agreement, together with the Purchase
Agreement (including the schedules and exhibits thereto), the Indenture and the
Bonds is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein or therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, the Purchase Agreement (including the schedules and exhibits
thereto), the Indenture and the Bonds supersede all prior agreements and
understandings between the parties hereto with respect to such subject matter.
14. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
15. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York applicable to agreements made and to be performed entirely
within such State.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
COMPANY:
POLYPHASE CORPORATION
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: XXXXX XXXXX
----------------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------------
PURCHASERS:
XXXXXXX XXXXX WORLD INCOME FUND, INC.
By: /s/ Xxx Xxxxxxxxx
------------------------------------
Name: XXX XXXXXXXXX
----------------------------------
Title: VICE PRESIDENT
---------------------------------
CONVERTIBLE HOLDINGS, INC.
By: /s/ Xxx Xxxxxxxxx
------------------------------------
Name: XXX XXXXXXXXX
----------------------------------
Title: VICE PRESIDENT
---------------------------------
