REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July 12, 2000, (this
"Agreement"), is made by and between GLOBAL SOURCES LIMITED, a Delaware
corporation (the "Company"), and the person named on the signature page hereto
(the "Buyer").
WITNESETH:
WHEREAS, upon the terms and subject to the conditions of the Stock Purchase
Agreement of even date herewith, between the Buyer and the Company (the "Stock
Purchase Agreement"), the Company has agreed to issue and sell to the Buyer
shares (the "Shares") of Common Stock, $.001 par value (the "Common Stock"), of
the Company;
WHEREAS, to induce the Buyer to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws with respect to the Shares; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Investor" means the Buyer.
(ii) "Register," "Registered, " and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
(iii) "Registrable Securities" means the Shares purchased by the Buyer, which
amount shall be 400,000 shares of Common Stock.
(iv) "Registration Statement" means a registration statement of the Company
under the Securities Act.
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(b) Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Stock Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare, and within thirty (30)
calendar days after the Closing Date (as that term is defined in Section 9 of
the Stock Purchase Agreement) file with the SEC a Registration Statement
covering the Registrable Securities. Such Registration Statement shall state
that, in accordance with Rule 416 and Rule 457 under the Securities Act it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, stock dividends
or similar event.
(b) Payments by the Company. The Company shall pay, within thirty (30) calendar
days of receipt of written notice from the Buyer, a fee of 2% of the gross
purchase price of the Shares purchased by the Buyer, per each thirty day period,
on a pro rata basis, as long as the following obligations ("Events of Default")
remain unsatisfied:
(i) If the Registration Statement is not filed within thirty (30) calendar
days following the Closing Date, as that term is defined in the Stock
Purchase Agreement.
(ii) If the Registration Statement is not declared effective on or before the
ninetieth (90th) calendar day after the Closing Date;
(iii) If the Company does not file any acceleration request within five (5)
business days of receiving a "no review" from the SEC with regard to the
Registration Statement;
(iv) If trading is suspended for more than five (5) trading days due to the
fault of the Company .
(v) If the Registration Statement ceases to remain effective for more than
ten (10) business days;
(vi) If the Company fails to deliver free trading unlegended Shares after the
Registration Statement has been declared effective and within ten (10)
business days of the Company's receipt of the legended Shares from
Buyer;
(vii) If the Company fails to make a cash payment within any of the time
periods set forth in the Stock Purchase Agreement or this Agreement, as
the case may be.
The Company acknowledges that any of the above Events of Default will cause the
Buyer to suffer damages in an amount that will be difficult to ascertain.
Accordingly, the parties agree that it is appropriate to include in this
Agreement a provision for liquidated damages. The parties acknowledge and agree
that the liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form and amount of such liquidated damages are reasonable and will not
constitute a penalty. The payment of liquidated damages shall not relieve the
Company from its obligations to deliver free trading unlegended Shares and/or
make a cash payment in a timely manner pursuant to the terms of this Agreement.
Nothing contained in this Agreement shall be deemed to establish or require the
payment of interest to the Buyer at a
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rate in excess of the maximum rate permitted by governing law. In the event that
the rate of interest required to be paid exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing law and
such excess shall be returned with reasonable promptness by the Buyer to the
Company.
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following.
(a) Prepare promptly, and file with the SEC as soon as possible after the
Closing Date, a Registration Statement with respect to not less than the number
of Registrable Securities and thereafter use its reasonable best efforts to
cause the Registration Statement relating to Registrable Securities to become
effective not later than five (5) days after the Company is notified by the SEC
that the Registration Statement may be declared effective and keep the
Registration Statement effective pursuant to Rule 415 at all times until the
earliest of (i) the date that is one (1) year after the Closing Date (ii) the
date when the Investors may sell all Registrable Securities under Rule 144
without volume limitations or (iii) the date the Buyer no longer owns any of the
Registrable Securities (the "Registration Period"), which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any 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, in light of the circumstances in which they were made, not
misleading.
(b) Prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to keep
the Registration effective at all times during the Registration Period, and,
during the Registration Period, comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement.
(c) Furnish to Buyer and its legal counsel identified to the Company, (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as Buyer may reasonably request in order to facilitate the disposition of the
Registrable Securities;
(d) Use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Securities being offered reasonably request and in
which significant volumes of shares of Common Stock are traded, (ii) prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof at all times during the
Registration
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Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (A) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (B)
subject itself to general taxation in any such jurisdiction, (C) file a general
consent to service of process in any such jurisdiction, (D) provide any
undertakings that cause more than nominal expense or burden to the Company or
(E) make any change in its certificate of incorporation or by-laws, which in
each case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its stockholders;
(e) As promptly as practicable after becoming aware of such event, notify each
Investor of the happening of any event of which the Company has knowledge, as a
result of which the prospectus included in the 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, in light of the circumstances under which they were made, not
misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement or other appropriate filing with the SEC
to correct such untrue statement or omission, and deliver a number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request;
(f) As promptly as practicable after becoming aware of such event, notify each
Investor who holds Registrable Securities being sold of the issuance by the SEC
of any stop order or other suspension of the effectiveness of the Registration
Statement;
(g) Upon effectiveness of registration, and upon receipt of the legended Shares
from Buyer, the Company shall (i) instruct the transfer agent to remove all
restrictive legends from the Registrable Securities; (ii) instruct the transfer
agent to issue certificates in such denominations or amounts as the case may be,
as the Buyer may reasonably request and registered in such names as the Buyer
may request; and (iii) remove any stop transfer order instructions.
(h) Take all other reasonable actions necessary to expedite and facilitate
disposition by the Buyer of the Registrable Securities pursuant to the
Registration Statement.
4. Obligations of the Investor. In connection with the registration of the
Registrable Securities, each Investor signing this Agreement shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of Investor that Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least five (5) days prior to the
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first anticipated filing date of the Registration Statement, the Company shall
notify each Investor of the information the Company requires from each such
Investor (the "Requested Information") if such Investor elects to have any of
such Investor's Registrable Securities included in the Registration Statement.
If at least two (2) business days prior to the filing date the Company has not
received the Requested Information from an Investor (a "Non-Responsive
Investor"), then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Investor.
Notwithstanding the foregoing, each Investor elects to have its securities
included in the Registration Statement to be filed by the Company, pursuant to
Section 3(a) above, within five (5) days of the date hereof.
(b) Each Investor by such Investor's acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable Securities
from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(e) or 3(f), above,
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or 3(f) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Expenses of Registration. All reasonable expenses, other than underwriting
discounts and commissions and other fees and expenses of investment bankers and
other than brokerage commissions, incurred in connection with registrations,
filings or qualifications pursuant to Section 3 shall be borne by the Company,
however; if Investor decides to retain counsel, it shall do so at its own
expense.
6. Indemnification. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold harmless
each Investor who holds such Registrable Securities, the directors, if any, of
such Investor, the officers, if any, of such Investor, each person, if any, who
controls any Investor within the meaning of the Securities Act or the Exchange
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred (collectively, "Claims") to
which any of them may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the Registration Statement,
prospectus, or any post-effective amendment thereof or the omission to state
therein a material fact
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required to be stated therein necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or cause to be delivered the
prospectus made available by the Company; or apply to amounts paid in settlement
of any Claim if such settlement is effected without the Company being a party
thereto. Each Investor will indemnify the Company and its officers, directors
and agents against any claims arising out of or based upon a claim which occurs
in reliance upon and in conformity with information furnished in writing to the
Company, by or on behalf of such Investor, expressly for use in connection with
the preparation of the Registration Statement, subject to such limitations and
conditions as are applicable to the Indemnification provided by the Company to
this Section 6. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person.
(b) Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. In such event, the Company shall pay for only one separate legal
counsel for the Investors; such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. Reports under Exchange Act. With a view to making available to the Investors
the benefits of Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without registration ("Rule
144"), the Company agrees to:
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(a) make and keep public information available, as those terms are understood
and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
8. Amendment of Registration Rights. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold an 80% interest in the
Registrable Securities not resold to the public. Any amendment or waiver
effected in accordance with this Section 8 shall be binding upon each Investor
and the Company.
9. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered (by hand, by
courier, by telephone line facsimile transmission, receipt confirmed, or other
means) or sent by certified mail, return receipt requested, properly addressed
and with proper postage pre-paid (i) if to the Company, at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, fax number (000) 000-0000 with a copy to Xxxxxx Xxxx
Xxxxxxxx, Esq., Xxxxxx Xxxxxx LLP, The Chrysler Building, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, fax number (000) 000-0000; (ii) if to the Buyer, at
the address set forth under its name in the Stock Purchase Agreement, and (iii)
if to any other Investor, at such address as such Investor shall have provided
in writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 9(b), and shall be effective,
when personally delivered, upon receipt and, when so sent by certified mail,
four (4) calendar days after deposit with the United States Postal Service.
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(c) Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Delaware. The parties agree that any dispute arising under
or with respect to or in connection with this Agreement, whether during the term
of this Agreement or at any subsequent time, shall be resolved fully and
exclusively by binding arbitration in accordance with the commercial rules then
in force of the American Arbitration Association and the proceedings taking
place in New York, New York. The parties agree to a panel of three arbitrators
and reasonable attorneys fees and costs shall be awarded to Buyer in the event
that the Company is in default under the terms of this Agreement or the Stock
Purchase Agreement.
(e) This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
(f) This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of reference only and
shall not affect the meaning thereof.
(i) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by telephone line facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
GLOBAL SOURCES LIMITED
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: President
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BUYER:
By: /s/ Xxx Xxxx
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Name: Xxx Xxxx
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Title:
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