Exhibit 4.2(a)
Instruments Defining the Rights of Security Holders
REGISTRATION RIGHTS AGREEMENT
This Agreement is made by and between Topro, Inc. (the "Company") and the
undersigned holder of securities of the Company (the "Shareholder"), who has
acquired Series A Convertible Preferred Stock (the "Preferred Stock"), which
is convertible into shares of the Company's $.0001 par value Common Stock (the
"Common Stock"), and Common Stock Purchase Warrants (the "Warrants")
exercisable to purchase 400,000 shares of Common Stock and who may, in certain
events acquire certain additional Common Stock Purchase Warrants described in
Section 2(b), below (the "Additional Warrants") (the Common Stock underlying
the Preferred Stock, the Warrants and the Additional Warrants collectively
referred to herein as "the Shares") in a non-public transaction (the "Private
Offering") and in accordance with the provisions of a Subscription Agreement
and Investment Letter dated June 25, 1997, to be effective as of the closing
date of the Private Offering (the "Closing Date").
WHEREAS, the Shareholder has purchased securities from the Company in a
private sale pursuant to exemptions from the registration requirements of the
Securities Act of 1933 (the "Act");
WHEREAS, the Preferred Stock, the Warrants, the Additional Warrants and
the Shares are "restricted securities" as that term is defined in Rule 144 of
the General Rules and Regulations promulgated under the Act; and
WHEREAS, the Shareholder's purchase of the securities was made with the
understanding that the Shareholder would receive the registration rights set
forth herein;
NOW, THEREFORE, in consideration for the purchase of the securities by
the Shareholder and the mutual promises and covenants set forth herein, the
Shareholder and the Company hereby mutually agree as follows:
So long as the Shareholder owns any of the Preferred Stock, Warrants,
Additional Warrants or Shares issued upon conversion or exercise thereof, the
Shareholder shall, subject to the terms and conditions set forth herein, have
the right to require that the Company register the Warrants and the Shares
under the Act as follows:
1. REGISTRATION RIGHT. The Company shall file a registration statement
(the "Registration Statement") with the Securities and Exchange Commission
(the "SEC") registering the shares of Common Stock underlying the Preferred
Stock and the Common Stock issuable upon exercise of the Warrants as soon as
possible, but not later than July 30, 1997, and shall use its best efforts to
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cause the Registration Statement to become effective as soon as possible
thereafter. The Company shall be required to file no more than one
registration statement pursuant to this paragraph.
2. ADDITIONAL WARRANTS ISSUABLE DUE TO COMPANY'S FAILURE TO FILE
REGISTRATION STATEMENT AND DELAY IN EFFECTIVENESS.
(a) If the registration Statement referred to in paragraph 1 above is
not declared effective by the SEC by September 30, 1997, the Company will
issue to the Shareholder 33,333 "Additional Warrants" (described below in
Section 2(b)) and thereafter shall grant to the Shareholder 33,333 Additional
Warrants on the last day of each following month if such registration
Statement is not effective by such date, until a maximum of 599,994 Additional
Warrants have been granted pursuant to this Section 2(a) (i.e., for a maximum
of 18 months).
(b) Each Additional Warrant shall be exercisable to purchase one share
of Common Stock at a price of $1.50 per share for a period of two years from
date of issuance. The Additional Warrants will not be redeemable by the
Company. The Additional Warrants will contain anti-dilution provisions
concerning mergers in which the Company is not the survivor, reclassifications
of securities, and other extraordinary corporate events.
3. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the Company is
required by the provisions of this Agreement to effect the registration of any
of the Shares under the Act, the Company will, as expeditiously as possible:
(a) Prepare and file with the U.S. Securities and Exchange Commission
("SEC") the proposed registration statement with respect to such
Warrants and/or Shares and use its best efforts: (i) to cause such
registration statement to become and remain effective to permit the
Shareholder to dispose of the Warrants and/or Shares in sales pursuant
to the registration statement; and (ii) to keep such registration
statement effective until the Shareholder has completed the
distribution of the securities registered (the "Selling Period") as
provided herein (including the taking of such steps as are necessary
to obtain the removal of any stop order);
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective throughout the Selling Period and to comply with the
provisions of the Act;
(c) Furnish to the Shareholder such number of copies of the prospectus
and preliminary prospectus in conformity with the requirements of the
Act and such other documents as the Shareholder may reasonably request
in order to facilitate the public sale or other disposition of the
Warrants and/or Shares;
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(d) Use its best efforts to register or qualify the Shares covered by
such registration statement under such securities or blue sky laws of
the states in which the Shareholder resides and do any and all other
acts and things which may be necessary or desirable to enable the
Shareholder to consummate the public sale or other disposition of such
Shares in such jurisdictions; and
(e) Promptly notify the Shareholder, at any time when a prospectus
relating to any of such Shares is required to be delivered under the
Act, of the occurrence 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
then existing. In the event the registration statement or prospectus
includes any 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 light of the circumstances then
existing, the Company shall file with the SEC a prospectus supplement
under Rule 424 or a post-effective amendment, as required, and shall
immediately notify the Shareholder of such filing. The Company agrees
to prepare and furnish to the Shareholder a reasonable number of
copies of any such supplement or amended prospectus as may be
necessary so that, as thereafter delivered to purchasers of the
Warrants and/or 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.
4. EXPENSES OF REGISTRATION. All expenses incurred by the Company
which are necessary in complying with this Agreement, including,
without limitation, (a) all registration and filing fees (including
all expenses incident to filing with the National Association of
Securities Dealers, Inc.), (b) all printing expenses, (c) all fees and
disbursements of counsel and accountants for the Company, and (d) all
blue sky fees and expenses, are herein called "Registration Expenses."
All underwriting discounts and selling commissions applicable to the
sale of the Warrants and Shares incident to any such registration are
herein called "Selling Expenses." "Selling Expenses" shall also
include the costs of any independent counsel which the Participating
Shareholder(s) may choose to represent the Shareholder(s) in
connection with the review of the registration. The Company will be
responsible for all Registration Expenses in connection with the
registration statement filed pursuant to this Agreement. All Selling
Expenses in connection with registration pursuant to this Agreement
shall be borne proportionately by the Company and by the Shareholder
in proportion to the number of shares included in the registration
statement for their respective accounts.
5. SHAREHOLDER OBLIGATIONS. The Company's contractual obligation to
include the Warrants and/or Shares on behalf of the Shareholder in a
registration statement filed on behalf of the Company shall be subject to the
reasonable cooperation of the Shareholder with counsel to the Company. The
Warrants and/or Shares held by the Shareholder may be excluded from a
registration statement at the election of the Company in the event all
information essential for the
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Company and its counsel to prepare the registration statement is not furnished
by the Shareholder, after the Shareholder, upon written request of the Company
or its counsel, has been given a reasonable amount of time (not less than ten
days from the date such request has been sent to the Shareholder) to transmit
the requested information to the Company and/or its counsel.
6. COMPANY'S INDEMNIFICATION. In the event of any registration under the
Act of any of the Warrants and/or Shares pursuant to this Agreement, the
Company (a) will indemnify and hold harmless each Shareholder and each
underwriter, and each other affiliate of a Shareholder or such underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which any Shareholder or such underwriter or
such controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in
any such registration statement, any preliminary prospectus or final
prospectus contained therein, or any amendment thereof or supplement thereto,
or any document incident to registration or qualification of the Warrants
and/or Shares covered thereby under state securities or blue sky laws, or
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or (iii) any violation by the Company of the
Act or state securities or blue sky laws applicable to the Company and
relating to any action or inaction required by the Company in connection with
such registration or qualification under such state securities or blue sky
laws, and (b) will reimburse each Shareholder and each such underwriter and
each such affiliate for any legal or any other expenses reasonably incurred by
each such Shareholder, each such underwriter and each such affiliate, in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to any indemnified person to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, said preliminary prospectus or said prospectus or said
amendment or supplement, or any document incident to registration or
qualification under state securities or blue sky laws, in reliance upon and in
conformity with any information furnished in writing to the Company or its
counsel by such indemnified person specifically for use in the preparation
thereof or if such loss, claim, damage, liability or action arose out of the
violation of any duty to which the Shareholder may be subject, including the
obligation to deliver a copy of any prospectus, supplement or amendment to a
purchaser of the Warrants and/or Shares and such prospectus, supplement or
amendment was made available to the Shareholder by the Company.
7. SHAREHOLDER'S INDEMNIFICATION. In the event of any registration of
the Warrants and/or Shares under the Act pursuant to this Agreement, the
Shareholder will indemnify and hold harmless the Company and each affiliate
and controlling person, as defined by the Act, of the Company, each officer or
employee of the Company who signs the registration statement, each director of
the Company, any agent of the Company and each underwriter, and any and all
affiliates and controlling persons, as defined by the Act, of such persons
against any and all such losses, claims, damages or liabilities as the
Shareholder and others are indemnified against by the Company and will
reimburse the Company and each of the foregoing persons for any losses,
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claims, damages or liabilities (or actions in respect thereof) and for any
legal or any other expenses incurred by each such person, if the statement or
omission in respect of which such loss, claim, damage or liability is asserted
was made in reliance upon and in conformity with information furnished to the
Company in writing by such Shareholder specifically for use in connection with
the preparation of such registration statement or prospectus.
8. NOTICE REQUIRED IN CASES SUBJECT TO INDEMNIFICATION. Promptly after
receipt by a party entitled to indemnification of notice of the commencement
of any action involving a claim referred to in paragraphs 6 or 7, 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. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party for any legal or other expenses;
PROVIDED, HOWEVER, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to
it which are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred; PROVIDED, HOWEVER, that the indemnifying party shall be obligated to
pay such expenses and fees of only one such separate counsel of such
indemnified party for matters relating to any one such registration statement,
without regard to the number of defenses that may be available or the
interests of the parties that may conflict.
9. TERMINATION OF REGISTRATION RIGHTS. The rights granted pursuant to
this Agreement shall terminate at such time as all the securities required to
be registered hereunder are eligible for the termination of resale
restrictions afforded by Rule 144(k) of the Act (or its successor provision).
10. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter and may not be
modified or amended except by an instrument in writing signed by the party
against whom enforcement is sought.
11. AUTHORIZATIONS; BINDING EFFECT. The persons signing this Agreement
on behalf of the Company and the Shareholder have been duly authorized to so
execute this Agreement and this agreement constitutes the binding obligation
of the parties.
12. NOTICES. Any notice required to be given under the terms of this
Agreement shall, if given to the Company, be sent to Topro, Inc. at 0000 Xxxx
Xxxxx, Xxxxxx, Xxxxxxxx 00000, or at such subsequent address of which the
Shareholder may receive written notice, and if to the
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Shareholder at his or her address as set forth in the Subscription Documents
furnished by the Shareholder to the Company in connection with the purchase of
the Shares, or at such subsequent address of which the Company may receive
written notice. All notices shall be sent by certified or registered mail,
return receipt requested or by similar postal service, or by regularly
scheduled overnight courier service. Notices shall be deemed received upon
actual receipt if sent by certified or registered mail, or two days after
deposit with such courier service.
13. PARAGRAPH HEADINGS. The paragraph headings used herein are for
convenience only and shall not be deemed to be a substantive part of this
Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
15. SUPERSEDES PRIOR AGREEMENT. This Agreement shall supersede that
certain Registration Rights Agreement, dated as of the closing of the April,
1997 purchase and sale of securities between the parties hereto, which is
Exhibit B to the Subscription Agreement and Investment Letter dated April 28,
1997.
IN WITNESS WHEREOF, the undersigned parties have executed this
Registration Rights Agreement, to be effective as set forth above.
TOPRO, INC. (The Company) PROFUTURES BRIDGE CAPITAL FUND, L.P.
(The Shareholder)
By: /s/ Xxxx Xxxxxxx By: BRIDGE CAPITAL PARTNERS,
------------------------------ INC., General Partner
Xxxx Xxxxxxx, President
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx, President
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