EXHIBIT 10.9
EXHIBIT A-3 (Debenture Purchase Agreement)
EXHIBIT C (Loan Agreement)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") dated
this 25th day of February, 1998, is by and between TELTRONICS,
INC., a Delaware corporation (the "Company") and SIRROM CAPITAL
CORPORATION d/b/a TANDEM CAPITAL, a Tennessee corporation
("Tandem", which, together with any subsequent assignees subject
to the provisions hereof, the "Holder").
WITNESSETH:
WHEREAS, on the date hereof the Company has granted the
Holder warrants (the "Warrants") and anything which is defined,
dated the date hereof, to purchase an aggregate of 890,000 shares
of the Company's common stock, par value $.001 per share (the
"Common Stock"), subject to the terms and conditions set forth in
the Warrants (such shares of Common Stock being the "Warrant
Shares");
WHEREAS, on the date hereof, the Company has sold to the
Holder, and the Holder has purchased from, the Company, an
aggregate of 25,000 shares of the Company's Series B Convertible
Preferred Stock (the "Series B Preferred Stock") of the Company,
which Series B Preferred Stock is convertible into shares of
Common Stock pursuant to the rights, preferences and limitations
of the Series B Preferred Stock (such shares of Common Stock
being the "Conversion Shares"); and
WHEREAS, none of the Warrant Shares or the Conversion Shares
have been registered under the Securities Act (as defined below)
and, as a inducement to Holder, the Company has agreed to grant
to Holder certain registration rights with respect to the Warrant
Shares and the Conversion Shares as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Demand Registration.
(a) Demand Right. If the Company shall receive from
Initiating Holders (as defined in Section 10) at any time or
times a written request that the Company effect any registration
with respect to Registrable Securities (the "Demand Request"), in
an offering to be firmly underwritten by underwriter(s) selected
by the Initiating Holders (which underwriter(s) shall be
reasonably acceptable to the Company).
(i) promptly give written notice of the proposed
registration to all other holders of Registrable
Securities ("Notice of Demand Request"); and
(ii) as soon as practicable, use its best efforts to
file a registration statement covering the Registrable
Securities so requested to be registered and to effect
such registration (including, without limitation,
filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the
Securities Act of 1933 (the "Securities Act") and as
would permit or facilitate the sale and distribution of
all of such Registrable Securities as are specified in
such request, together with all or such portion of the
Registrable Securities of any other holders of
Registrable Securities joining in such request as are
specified in a written request received by the Company
within twenty (20) days after the date of the Notice of
Demand Request.
The Company shall only be required to effect, pursuant to
this Section 1, four (4) registrations of Registrable Securities.
A requested registration shall not count for these purposes
unless (A) such registration statement has been declared
effective and an offering closed in which at least 90% of the
Registrable Securities requested to be included in such
registration by the Initiating Holders shall have been sold or
(B) the registration has been withdrawn by the Initiating Holders
and the Initiating Holders have not paid the Registration
Expenses pursuant to Section 4 hereof in circumstances in which
they were required to bear such expenses.
The registration statement filed pursuant to the request of
the Initiating Holders may, subject to the provisions of Sections
1(b) and (7) hereof and the prior written consent of the
Initiating Holders, include other securities of the Company, with
respect to which registration rights have been granted, and may
include securities of the Company being sold for the account of
the Company, provided that all the Registrable Securities for
which the Initiating Holders have requested registration shall be
covered by such registration statement before any such other
securities are included.
(b) Proviso. The Company shall not be obligated to effect,
or to take any action to effect, any such registration pursuant
to this Section 1:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent
to service of process in effecting such registration,
qualification, or compliance, unless the Company is
already subject to service in such jurisdiction and
except as may be required by the Securities Act;
(ii) during the period starting with the date thirty
(30) days prior to the Company's good faith estimate of
the date of filing of, and ending on a date seventy-
five (75) days after the effective date of, a Company-
initiated registration, provided that the Company is
actively employing in good faith all reasonable efforts
to cause such registration statement to become
effective; or
(iii) if the Initiating Holders propose to dispose
of shares of Registrable Securities which may be
immediately registered on Form S-3 pursuant to a
request made under Section 3 hereof.
(c) Deferral of Registration. If (i) in the good faith
judgment of the Board of Directors of the Company, the filing of
a registration statement as soon as practicable after receipt of
the request of the Initiating Holders would be materially
detrimental to the Company because there exist bona fidefinancing,
acquisition or other activities of the Company and the
Board of Directors of the Company concludes, as a result, that it
is essential to defer the filing of such registration statement
at such time, and (ii) the Company shall furnish to the
Initiating Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be materially detrimental to
the Company for such registration statement to be filed in the
near future and that it is essential to defer the filing of such
registration statement, then the Company shall have the right to
defer such filing (except as provided in Subsection (b)(ii)
above) for a period of not more than ninety (90) days after
receipt of the request of the Initiating Holders, provided that
the Company shall not defer its obligation in this manner more
than once in any twelve-month period, and provided further that
the Initiating Holders shall be entitled to withdraw the request
for registration and, if such request is withdrawn, such
registration shall not count as a permitted requested
registration hereunder and the Company shall pay all Registration
Expenses incurred in connection with such withdrawn registration
request.
(d) Underwriting. The right of any other holders of
Registrable Securities joining in a request for registration as
provided in Section 1(a)(ii) above to registration pursuant to
this Section 1 shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such
holder's Registrable Securities in the underwriting on the same
terms as those of the Initiating Holders (unless otherwise
mutually agreed by a majority in interest of the Initiating
Holders and such holder with respect to such participation and
inclusion).
(e) Procedures. In any registration pursuant to Section 1,
if the Company shall request inclusion of securities to be sold
for its own account, or if other persons entitled to incidental
registrations shall request inclusion in such registration
pursuant to Subsection (c) above, the Initiating Holders shall,
on behalf of all holders of Registrable Securities, offer to
include such securities in the underwriting and may condition
such offer on the acceptance by the Company or such other persons
of the further applicable provisions of this Section 1. The
Company shall (together with all Holders and such other persons
proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary
form with the representative(s) of the underwriter(s) selected
for such underwriting by a majority in interest of the Initiating
Holders. Notwithstanding any other provision of this Section, if
the representative of the underwriter(s) advises the Initiating
Holders of the need for an Underwriter's Cutback (as defined in
Section 10), the number of shares to be included in the
underwriting or registration shall be allocated as set forth in
Section 8 hereof. If a person who has requested inclusion in
such registration as provided in this Subsection (e) does not
agree to the terms of any such underwriting, such person shall be
excluded therefrom by written notice from the Company, the
underwriter or the Initiating Holders, and the securities owned
by such person(s) shall be withdrawn from registration (the
"Withdrawn Securities"). If there are any Withdrawn Securities
and if there was an Underwriter's Cutback, then the Company shall
offer to all holders who have retained rights to include
securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to
the number of Withdrawn Securities that would have been included
in the registration after giving effect to the Underwriter's
Cutback had such securities not been withdrawn, with such shares
to be allocated among such Holders requesting additional
inclusion in accordance with Section 8.
2. Piggyback Registration.
(a) Notice and Procedures. If the Company proposes to
register any of its Common Stock either for its own account or
the account of a security holder or holders exercising their
respective demand registration rights (other than pursuant to
Sections 1 or 3 hereof), the Company will:
(i) promptly give written notice thereof to the Holder
or, if different, to each holder of Registrable
Securities; and
(ii) use its best efforts to include in such
registration (and any related qualification under blue
sky laws or other compliance), except as set forth in
Section 2(b) below, and in any underwriting involved
therein, all the Registrable Securities specified in a
written request or requests, made by any holder of
Registrable Securities and received by the Company
within fifteen (15) days after the written notice from
the Company described in clause (i) above, which
written request may specify the inclusion of all or a
part of such holder's Registrable Securities.
The provisions of this Section 2 shall not apply to any
registration relating solely to employee benefit plans (as
defined under Rule 405 of the Securities Act), or a registration
relating solely to a Rule 145 transaction, or a registration on
any registration form that does not permit secondary sales.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the holders of
Registrable Securities as a part of the written notice given
pursuant to Section 2(a)(i). In such event, the right of any
holders to registration pursuant to this Section 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 of
Registrable Securities proposing to distribute their securities
through such underwriting shall (together with the Company and
the other holders of securities of the Company with registration
rights to participate therein distributing their securities
through such underwriting) enter into an underwriting agreement
in customary form with the representative of the underwriter(s)
selected by the Company.
Notwithstanding any other provision of this Section 2, if
the representative of the underwriters advises the Company of the
need for an Underwriter's Cutback, the representative may
(subject to the limitations set forth below) limit the number of
Registrable Securities to be included in the registration and
underwriting; provided, however, that Registrable Securities
shall be included in any over-allotment option granted to the
underwriters before inclusion of any shares from the Company.
The Company shall advise all holders of securities requesting
registration of the Underwriter's Cutback, and the number of
shares of securities that are entitled to be included in the
registration and underwriting shall be allocated first to the
Company for securities being sold for its own account and
thereafter as set forth in Section 9. If any person does not
agree to the terms of any such underwriting, it shall be excluded
therefrom by written notice from the Company or the underwriter
and any securities so excluded or withdrawn from such underwriting
shall be withdrawn from such registration ("Withdrawn Securities").
If there are Withdrawn Securities and if there was an
Underwriter's Cutback, the Company shall then offer to all
persons who have retained the right to include securities in the
registration the right to include additional securities in the
registration in an aggregate amount equal to the number of shares
of Withdrawn Securities that would have been included in the
registration after giving effect to the Underwriter's Cutback had
such securities not been withdrawn, with such shares to be
allocated among such holders requesting additional inclusion in
accordance with Section 9.
(c) Lock Up Agreements. If requested in writing by the
Company and an underwriter of Common Stock for the Company, the
holders of Registrable Securities shall agree not to sell or
otherwise transfer or dispose of any Common Stock of the Company
held by such holder (other than those included in the
registration statement) for a period following the effective date
of a registration statement of the Company filed under the
Securities Act, provided that all officers and directors of the
Company, all holders of Registrable Securities, and all other
holders of rights to registration of any other security of the
Company enter into similar agreements identical in terms to that
of the holders of Registrable Securities.
3. Registration on Form S-3.
(a) After the Company has qualified for the use of Form S-3,
in addition to the rights contained in the foregoing provisions of
this Agreement, the holders of Registrable Securities shall have the
right to request registrations on Form S-3 or any comparable or successor
form. Each such request shall be in writing and shall state the
anticipated number of shares of Registrable Securities to be disposed
of and the anticipated gross proceeds of such shares, and the intended
methods of disposition of such shares by such holder or holders, including
whether such resales are to be made on a delayed or continuous
basis pursuant to Rule 415. The Company shall not be obligated
to effect any registration pursuant to this Section 3 if (i) the
holder of Registrable Securities, together with the holders of
any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such
other shares of Common Stock (if any) on Form S-3 at an aggregate
price to the public of less than $500,000, or (ii) in the event
that the Company shall furnish the certification described in
Subsection 1(b)(ii) or Subsection 1(c) (but subject to the
limitations set forth therein), or (iii) the Company will be
required to obtain an audit (other than for its normal year-end
audit) for such registration to become effective. The Company
shall only be required to effect two (2) registrations of
Registrable Securities pursuant to this Section 3 in each
calendar year, provided, however, that if the offering is to be
effected on a continuous or delayed basis pursuant to Rule 415
(or any successor rule), and the registration statement is kept
effective for a period in excess of 180-days, then the Company
shall not be required to effect another registration in that
calendar year.
(b) If a request complying with the requirements of Section
3(a) hereof is delivered to the Company, the provisions of
Sections 1(a)(i) and (ii) and Section 1(b) hereof shall apply to
such registration. If the registration is for an underwritten
offering, the provisions of Sections 1(d) and 1(e) hereof shall
also apply to such registration.
4. Expenses of Registration.
All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Sections 1,
2, and 3 hereof, shall be borne by the Company; provided,
however, that a holder of Registrable Securities shall bear the
Registration Expenses for any registration proceeding begun
pursuant to Section 1 and subsequently withdrawn by that holder
registering shares therein, unless such withdrawal is based upon
(a) material adverse information relating to the Company that is
different from the information known or available (upon request
from the Company or otherwise) to the Initiating Holders at the
time of their request for registration under Section 1, or
(b) material adverse changes in the financial markets which
result in a significant decline in the public market price for
the Company's Common Stock of at least twenty percent (20%) from
the date such registration proceeding is begun to the date of
such withdrawal. All Selling Expenses relating to securities
registered pursuant to Sections 1, 2, and 3 hereof, shall be
borne by the holders of such securities pro rata on the basis of
the number of shares of securities so registered on their behalf.
5. Registration Procedures.
In the case of each registration effected by the Company
pursuant to this Agreement, the Company will use its best efforts
to effect the registration and sale of Registrable Securities in
accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a registration statement
with respect to the securities to be registered on such form as
the Company deems appropriate and is permitted or qualified to
use, and shall use all reasonable efforts to cause such
registration statement to become and remain effective for a
period of ninety (90) days or until the holders have completed
the distribution described in the registration statement relating
thereto, whichever first occurs or, in the case of any
registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, for such
period as shall be necessary to keep the registration statement
effective until all such Registrable Securities are sold;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to the holders of Registrable Securities to be
included in a registration statement, at a reasonable time prior
to the filing thereof with the SEC, a copy of the registration
statement (and each amendment or supplement thereto) in the form
the Company proposes to file the same; and furnish such number of
prospectuses and other documents incident thereto, including any
amendment of or supplement to the prospectus, as such holder of
Registrable Securities from time to time may reasonably request
in order to facilitate the disposition of such Registrable
Securities owned by such Seller;
(d) 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, of 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 a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances, and prepare and furnish to such
seller 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 shares, 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 then existing;
(e) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on
which similar securities issued by the Company are then listed;
and provide a transfer agent and registrar and a CUSIP number for
all such Registrable Securities, in each case not later than the
effective date of such registration;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, 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 (18) months, beginning with the first
day of the Company's first full fiscal quarter after the
effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(g) in connection with any underwritten offering pursuant
to a registration statement filed pursuant to Section 1 or 3
hereof, enter into an underwriting agreement containing customary
underwriting provisions so as to effect the offer and sale of the
Registrable Securities.
6. Indemnification.
(a) The Company will indemnify each holder of Registrable
Securities, each of its officers, directors and partners, and
each person controlling such holder within the meaning of Section
15 of the Securities Act, with respect to which registration has
been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls within the meaning of
Section 15 of the Securities Act any such underwriter, against
all expenses, claims, losses, damages, and liabilities (or
actions, proceedings, or settlements in respect thereof) arising
out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus
(including any related registration statement, notification, or
the like) incident to any registration under this Agreement, or
based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such
registration, and will reimburse each such holder, each of its
officers, directors, partners, and each person controlling such
holder, each such underwriter, and each person who controls any
such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability, or action,
provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company
by such holder or underwriter and stated to be specifically for
use therein. It is agreed that the indemnity agreement contained
in this Section shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld).
(b) In connection with the registration or sale of shares
of Registrable Securities pursuant to this Agreement, each holder
whose Registrable Securities are included in such registration
being effected under this Agreement, will indemnify the Company,
each of its directors, officers, partners, and each underwriter,
if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or
such underwriter within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement or
prospectus, 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 will
reimburse the Company and such directors, officers, partners,
underwriters, or control person for any legal or any other
expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action, in
each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or prospectus,
in reliance upon and in conformity with written information
furnished to the Company by such holder of the Registrable
Securities, and stated to be specifically for use therein;
provided, however, that the obligations of such holder hereunder
shall not apply to amounts paid in settlement of any such claims,
losses, damages, or liabilities if such settlement is effected
without the consent of such holder, which consent shall not be
unreasonably withheld; and provided that in no event shall any
indemnity under this Section exceed the net amount of proceeds
from the offering received by such holder.
(c) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party
or parties required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of such
claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section, to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into
any settlement 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. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim
and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 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 therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim,
damage, or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with
the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party and the
parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
7. Information by Holder.
Each holder of Registrable Securities shall furnish to the
Company in writing such information regarding such holder and the
distribution proposed by such holder as the Company or
underwriters may reasonably request in writing and as shall be
reasonably required in connection with any registration,
qualification, or compliance referred to in this Agreement.
8. Allocation of Registration Opportunities.
In any circumstance in which all of the Registrable
Securities and other shares Common Stock of the Company with
registration rights (the "Other Shares") requested to be included
in a registration on behalf of the holders of Registrable
Securities or other selling stockholders cannot be so included as
a result of limitations of the aggregate number of shares of
Registrable Securities and Other Shares that may be so included,
the number of shares of Registrable Securities and Other Shares
that may be so included shall be allocated among the holders of
Registrable Securities and other selling stockholders requesting
inclusion of shares pro rata on the basis of the number of shares
of Registrable Securities and Other Shares that would be held by
such holders and other selling stockholders. If any holder of
Registrable Securities or other selling stockholder does not
request inclusion of the maximum number of shares of Registrable
Securities and Other Shares allocated to him pursuant to this
procedure, the remaining portion of his allocation shall be
reallocated among those requesting holders of Registrable
Securities and other selling stockholders whose allocations did
not satisfy their requests pro rata on the basis of the number of
shares of Registrable Securities and Other Shares which would be
held by such holders and other selling stockholders, and this
procedure shall be repeated until all of the shares of
Registrable Securities and Other Shares which may be included in
the registration on behalf of the holders of Registrable
Securities and other selling stockholders have been so allocated.
The Company shall not limit the number of Registrable Securities
to be included in a registration pursuant to this Agreement in
order to include shares held by stockholders with no registration
rights or to include in that registration shares of stock issued
to employees, officers, directors, or consultants pursuant to the
Company's stock option plan, or in order to include in such
registration securities registered for the Company's own account.
9. Survival of Rights; Termination of Registration Rights.
The provisions of this Agreement shall survive the
conversion of the Series B Preferred Stock and/or the exercise of
the Warrants. The right of any holder of Registrable Securities
to request registration or inclusion in any registration pursuant
to this Agreement shall terminate on such date as all shares of
Registrable Securities held or entitled to be held upon
conversion by such holder shall equal less than one percent
(1.00%) of the Company's outstanding Common Stock.
10. Definitions.
Unless the context otherwise requires, the terms hereinafter
set forth when used herein shall have the following meanings:
"Holder" shall mean any Person who holds Registrable
Securities and any holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been
transferred in compliance herewith.
"Initiating Holders" shall mean holders of the Registrable
Securities who in the aggregate hold not less than twenty five
percent (25%) of the aggregate of the original Registrable
Securities, and who exercise rights to request registration under
Section 1.
"Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, sole proprietorship,
trust or other entity, business association or organization.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering
of the effectiveness of such registration statement and such
other action as might be required with respect to registration,
qualification or compliance under applicable state securities
laws.
"Registration Expenses" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing
fees, printing expenses, escrow fees, fees and disbursements of
custodians, fees and disbursements of counsel for the Company and
its independent certified public accountants, blue sky fees and
expenses, and reasonable fees and disbursements of one counsel
for the holders or selling stockholders, which counsel shall be
chosen by the holders of a majority of the Registrable Securities
included in such registration, but shall not include Selling
Expenses.
"Registrable Securities" shall mean (i) shares of Common
Stock issued or issuable upon conversion of the Series B
Preferred Stock or upon exercise of the Warrants, and (ii) any
Common Stock issued as a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the shares
referred to in clause (i); provided, however, that Registrable
Securities shall not include any securities which have been
distributed to the public pursuant to an offering registered
under the Securities Act, or sold to the public through a broker,
dealer or market maker in compliance with Rule 144.
"Rule 144" shall mean Rule 144 as promulgated by the SEC
under the Securities Act, as such Rule may be amended from time
to time, or any similar successor rule that may be promulgated by
the SEC.
"Rule 145" shall mean Rule 145 as promulgated by the SEC
under the Securities Act, as such Rule may be amended from time
to time, or any similar successor rule that may be promulgated by
the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Security" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the
sale of Registrable Securities and fees and disbursements of
counsel for any stockholder (other than the fees and
disbursements of one counsel for the holders of Registrable
Securities, as selling stockholders, included in Registration
Expenses).
"Underwriter's Cutback" shall mean a reduction in the number
of shares to be included in any underwritten offering as the
result of receipt of written notice from the representative(s) of
the underwriters to the effect that the number of shares
requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a
price range acceptable to either the Company (in a primary
registration) or the majority of the holders initially requesting
such registration (in a secondary registration).
11. Other Registration Rights.
Except as provided in this Agreement, the Company shall not
hereafter grant to any person the right to request the Company to
register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such
securities, without the prior written consent of the holders of a
majority of the Registrable Securities, provided that the Company
may grant rights to other persons to participate in piggyback
registrations as provided in Section 2 hereof so long as such
rights are subordinate to the rights of the holders of
Registrable Securities with respect to such piggyback
registrations.
12. Notice.
All notices, demands or other communications to be given or
delivered under this Agreement shall be in writing, signed by the
party giving such notice, demand or communication and shall be
deemed to have been given (i) when delivered personally to the
recipient, (ii) one (1) day after being sent to the recipient by
a nationally recognized overnight courier service (charges
prepaid) or sent by facsimile transmission, or (iii) three (3)
business days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to
each party at the address set forth below, or at such other
address as may have been previously supplied by written notice to
the sending party:
Holder: Tandem Capital, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx I. N. XxXxxxxx, Esq.
Fax: (000) 000-0000
The Company: Teltronics, Inc.
0000 Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, President
with a copy to: Xxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
13. Miscellaneous.
(a) Remedies. Any person having rights under any provision
of this Agreement will be entitled to enforce such rights
specifically to recover damages caused by reason of any breach of
any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may at its sole
discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for
specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived
only upon the prior written consent of the Company, the Holder
(as long as the Holder holds any Registrable Securities) and
holders of at least a majority of any other outstanding
Registrable Securities and any such amendment or waiver shall be
binding on all Holders, provided that in no event shall the
obligation of any Holder hereunder be materially increased except
with the written consent of such Holder.
(c) Successors and Assigns. All covenants and agreements
in this Agreement by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the respective successors
and assigns of the parties hereto whether so expressed or not.
In addition, whether or not any express assignment has been made,
provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of
Registrable Securities.
(d) Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be in effect only to the
extent that such prohibition or invalidity, without invalidating
the remainder of this Agreement.
(e) Counterparts. This Agreement may be executed
simultaneously in counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts
taken together will constitute one and the same Agreement.
(f) Descriptive Headings. The section numbers and
descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
(g) Governing Law. The Delaware General Corporation Law
shall govern all issues and questions concerning the relative
rights of the Company and its stockholders. All other issues and
questions concerning the construction, validity, interpretation
and enforcement of this Agreement shall be governed by and
construed in accordance with the laws of the state of Tennessee,
without giving effect to any choice of law or conflict of law
rules or provisions that would cause the application of the laws
of any jurisdiction other than the state of Tennessee.
(h) Jurisdiction and Venue. The Company and Holder hereby
consent to the jurisdiction of the courts of Davidson County in
the State of Tennessee and the United States District Court for
the Middle District of Tennessee, as well as to the jurisdiction
of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising
out of any of its obligations arising under this Agreement or
with respect to the transactions contemplated hereby, and
expressly waives any and all objections it may have as to venue
in any of such courts.
(i) Notice of Transfer. The Holder and any other
holder of Registrable Securities agrees to notify the Company of
any transfers of Registrable Securities; provided, however, that
any failure to give such notice shall not adversely effect the
rights to which any holder or transferee of Registrable
Securities would otherwise be entitled hereunder.
[Remainder of page left intentionally blank.]
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be executed by their duly
authorized officers as of the date first above written.
COMPANY:
TELTRONICS, INC.
By: Xxxx X. Xxxxxxx
President
HOLDER:
SIRROM CAPITAL CORPORATION
d/b/a TANDEM CAPITAL
By: Xxxxx Xxxxxx
Its: Vice President
