REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is
made and entered into as of September 21, 2001, among Phoenix
International Industries, Inc., a Florida corporation (the "Company"),
and the investors signatory hereto (each such investor is a
"Purchaser" and all such investors are, collectively, the "Purchasers").
This Agreement is made pursuant to the Secured Convertible
Debenture Purchase Agreement, dated as of the date hereof among the
Company and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions
-----------
Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Additional Debenture"
-------------------- shall have the meaning set forth in
the Purchase Agreement.
"Affiliate"
--------- means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or
under common control with such Person. For the purposes of this
definition, "control," when used with respect to any Person, means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day"
------------ means any day except Saturday, Sunday and any
day which shall be a federal legal holiday in the United States or a
day on which banking institutions in the State of New York or Florida
generally are authorized or required by law or other government action
to close.
"Closing Date"
------------ shall have the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock"
------------ means the Company's common stock, $.001 par
value per share, or such securities in to which such stock shall hereafter
be reclassified.
"Debentures"
---------- means (i) the Closing Debentures, (ii) the Additional
Debentures and (iii) the Re-issued Debentures.
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"Effectiveness Date"
------------------ means, with respect to the initial Registration
Statement required to be filed hereunder, the 60th day following the Closing
Date and, with respect to any additional Registration Statements which may be
required pursuant to Section 3(c), the 60th day following the date that
notice of the requirement to be file such additional Registration Statement
is provided.
"Effectiveness Period"
-------------------- shall have the meaning set forth in Section 2(a).
"Exchange Act"
------------ means the Securities Exchange Act of 1934, as amended.
"Filing Date"
----------- means the 10th day following the Closing Date and, with
respect to any additional Registration Statements which may be required
pursuant to Section 3(c), the 20th day following the date that notice of the
requirement to be file such additional Registration Statement is provided.
"Holder" or "Holders"
------ ------- means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"Indemnified Party"
----------------- shall have the meaning set forth in Section 5(c).
"Indemnifying Party"
------------------ shall have the meaning set forth in Section 5(c).
"Losses"
------ shall have the meaning set forth in Section 5(a).
"Person"
------ means an individual or a corporation, partnership,trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding"
---------- means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such
as a deposition), whether commenced or threatened.
"Prospectus"
---------- means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Registrable Securities"
---------------------- means the shares of Common Stock issuable
upon conversion in full of the Debentures and exercise in full of the
Warrants.
"Registration Statement"
---------------------- means the registration statement and any
additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
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exhbits thereto, and all material incorporated
by reference or deemed to be incorporated reference in such registration
statement.
"Re-issued Debenture"
------------------- shall have the meaning set forth in the
purchase Agreement.
"Rule 144"
-------- means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415"
-------- means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 424"
-------- means Rule 424 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act"
-------------- means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Special Counsel"
--------------- means one special counsel to the Holders, for which
the Holders will be reimbursed by the Company pursuant to Section 4.
2. Shelf Registration
------------------
(a) On or prior to each Filing Date, the Company shall prepare
and file with the Commission a "Shelf" Registration Statement covering
the resale of all Registrable Securities for an offering to be made
on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form SB-2 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form SB-2,
in which case such registration shall be on another appropriate
form and shall contain (except if otherwise directed by the Holders)
the "Plan of Distribution" attached hereto as Annex A. The Company
shall use its best efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event prior to the Effectiveness
Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until the
date which is two years after the date that such Registration
Statement is declared effective by the Commission or such earlier date
when all Registrable Securities covered by such Registration Statement
have been sold or may be sold without volume restrictions pursuant to
Rule 144(k) (the "Effectiveness Period").
(b) The initial Registration Statement to be filed hereunder
shall include (but not be limited to) a number of shares of Common
Stock equal to no less than the sum of (i) 200% of the number of
shares of Common Stock issuable upon conversion in full of the
principal amount of Debentures assuming: (1) the full $300,000 of
Debentures is issued on the Closing Date, (2) the conversion of the
full $300,000 of Debentures occurred on the Closing Date, (3)
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one full year of interest had accrued on the Debentures and all such interest
is paid in shares of Common Stock and (4) the Conversion Price equaled
the lessor of (a) $0.08 and (b) 50% of the average of the lowest
three inter-day prices (which need not occur on consecutive Trading
Days) during the twenty Trading Days immediately preceding the Closing
Date and (ii) exercise in full of the Warrants.
(c) If (a) a Registration Statement is not filed on or prior to
its Filing Date (if the Company files such Registration Statement
without affording the Holder the opportunity to review and comment on
the same as required by Section 3(a) hereof, the Company shall not be
deemed to have satisfied this clause (a)), or (b) the Company fails to
file with the Commission a request for acceleration in accordance with
Rule 461 promulgated under the Securities Act, within five days of the
date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be
"reviewed," or not subject to further review, or (c) a Registration
Statement filed hereunder is not declared effective by the Commission
on or prior its Effectiveness Date, or (d) after a Registration
Statement is filed with and declared effective by the Commission, such
Registration Statement ceases to be effective as to all Registrable
Securities to which it is required to relate at any time prior to the
expiration of the Effectiveness Period without being succeeded within
ten days by an amendment to such Registration Statement or by a
subsequent Registration Statement filed with and declared effective
by the Commission, or (e) the Common Stock shall not be quoted on the
OTC Bulletin Board or shall be delisted or suspended from trading on
the New York Stock Exchange, American Stock Exchange, the Nasdaq
National Market or the Nasdaq Smallcap Market (each, a "Subsequent
Market") for more than three days (which need not be consecutive
days), or (f) the conversion rights of the Holders pursuant to the
Debentures are suspended for any reason, or (g) an amendment to a
Registration Statement is not filed by the Company with the Commission
within ten days of the Commission's notifying the Company that such
amendment is required in order for such Registration Statement to be
declared effective (any such failure or breach being referred to as an
"Event," and for purposes of clauses (a), (c), (f) the date on which
such Event occurs, or for purposes of clause (b) the date on which
such five day period is exceeded, or for purposes of clauses (d) and
(g) the date which such 10 day-period is exceeded, or for purposes of
clause (e) the date on which such three day-period is exceeded, being
referred to as "Event Date"), then, on each such Event Date and every
monthly anniversary thereof until the applicable Event is cured, the
Company shall pay to each Holder an amount in cash, as liquidated
damages and not as a penalty, equal to 2.0% of the purchase price paid
by such Holder pursuant to the Purchase Agreement, or at the Holder's
option, in shares of Common Stock. If the Holder elects to receive
such liquidated damages in shares of Common Stock, then the number of
shares issuable to such Holder shall be determined based upon a price
which is equal to the average of the three lowest inter-day trading
prices (as reported by Bloomberg Information Services) during the ten
Trading Days immediately preceding the Event Date or the monthly
anniversary thereof. If the Company fails to pay any liquidated
damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 15%
per annum (or such lesser maximum amount that is permitted to be paid
by applicable law) to the Holder, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The liquidated damages pursuant to the
terms hereof shall apply on a pro-rata basis for any portion of a
month prior to the cure of an Event.
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3. Registration Procedures
-----------------------
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Not less than five Business Days prior to the filing of each
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall,
(i) furnish to the Holders and their Special Counsel copies of all
such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders and their Special Counsel, and
(ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to conduct
a reasonable investigation within the meaning of the Securities Act.
The Company shall not file the Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the
Holders of a majority of the Registrable Securities and their Special
Counsel shall reasonably object, provided, the Company is notified of
such objection no later than 3 Business Days after the Holders have
been so furnished copies of such documents.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and
the Prospectus used in connection therewith as may be necessary to
keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus
to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible, and in any event
within ten Business days, to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply in
all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended
or in such Prospectus as so supplemented.
(c) File additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number of shares
of Common Stock then registered in all their existing Registration
Statements hereunder which additional Registration Statement shall
cover 120% or more of the number of unregistered Registrable
Securities.
(d) Notify the Holders of Registrable Securities to be sold and
their Special Counsel as promptly as reasonably possible (and, in the
case of (i)(A) below, not less than five Business Days prior to such
filing) and (if requested by any such Person) confirm such notice in
writing no later than one Business Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment
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to the Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof and all
written responses thereto to each of the Holders); and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other Federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of
the Company contained in any agreement contemplated hereby ceases to be
true and correct in all material respects; (v) of the receipt by the
Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening
of any Proceeding for such purpose; and (vi) of the occurrence of any event
or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement
made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(e) Promptly deliver to each Holder and their Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request. The Company hereby
consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with
the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
(f) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the registration
or qualification (or exemption from such registration or qualification)
of such Registrable Securities for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any
Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
a Registration Statement; provided, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.
(g) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the
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Purchase Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
such Holders may request.
(h) Upon the occurrence of any event contemplated by Section
3(d)(vi), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered,
neither the Registration Statement nor such Prospectus will contain 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,
in light of the circumstances under which they were made, not misleading.
(i) Comply with all applicable rules and regulations of the
Commission.
4. Registration Expenses.
--------------------- All fees and expenses incident to
performance of or compliance with this Agreement by the Company
shall be borne by the Company whether or not any Registrable Securities
are sold pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation,
(i) all registration and filing fees (including, without limitation, fees
and expenses (A) with respect to filings required to be made with any
Subsequent Market on which the Common Stock is then listed for trading,
and (B) in compliance with applicable state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as
requested by the Holders)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and
of printing prospectuses requested by the Holders), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the Company and Special Counsel for the Holders and (v) fees and expenses of
all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement.
5. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a
margin call of Common Stock), investment advisors and employees of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively,"Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form
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of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading, except to the extent, but only
to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to the extent
that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto or (2) in the case of an occurrence
of an event of the type specified in Section 3(d)(ii)-(vi),the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(e).
The Company shall notify the Holders promptly of the institution, threat
or assertion of any Proceeding of which the Company is aware in connection
with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and
not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees
of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses (as determined by a court
of competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading to the extent, but only
to the extent, that such untrue statement or omission is contained in
any information so furnished in writing by such Holder to the Company
specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder
or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such
Holder expressly for use in the Registration Statement, such Prospec-
tus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(d)(ii)-(vi), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in
Section 6(e). In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of
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its obligations or liabilities pursuant to this Agreement, except (and only)
to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; or (2) the
Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not
have the right to assume the defense thereof and such counsel shall be
at the expense of the Indemnifying Party). The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party. unless such
settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Business Days of written notice thereof
to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnifica-
tion hereunder; provided, that the Indemnifying Party may require such
Indemnified Party to undertake to reimburse all such fees and expenses
to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses,
in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or
made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include,
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subject to the limitations set forth in Section 5(c), any reasonable
attorneys'or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in accordance
with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder
shall be required to contribute, in the aggregate, any amount in excess of
the amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.
6. Miscellaneous
-------------
(a) Amendments and Waivers.
---------------------- The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by
the Company and the Holders of at least two-thirds of the then outstanding
Registrable Securities.Not withstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of at least a
majority of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(b) No Inconsistent Agreements.
-------------------------- Neither the Company nor any of
its subsidiaries has entered, as of the date hereof, nor shall the Company
or any of its subsidiaries, on or after the date of this Agreement, enter
into any agreement with respect to its securities that would have the effect
of impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as and to the extent specified
in Schedule 6(b) hereto, neither the Company nor any of its subsidiaries has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person.
(c) No Piggyback on Registrations.
----------------------------- Except as and to the extent
specified in Schedule 6(b) hereto, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other
than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right to any of its
security holders.
(d) Compliance.
---------- Each Holder covenants and agrees that it will
comply with
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the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
Registration Statement.
(e) Discontinued Disposition.
------------------------ Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Sections 3(d)(ii),
3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section
3(h), or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Pro-
spectus or Registration Statement. The Company may provide appropriate
stop orders to enforce the provisions of this paragraph.
(f) Piggy-Back Registrations.
------------------------ If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of
the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act of
any of its equity securities,other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating
to equity securities to be issued solely in connection with any acquisition
of any entity or business or equity securities issuable in connection with
stock option or other employee benefit plans, then the Company shall send to
each Holder written notice of such determination and,if within fifteen days
after receipt of such notice, any such Holder shall so request in writing,
the Company shall include in such registration statement all or any part
of such Registrable Securities such holder requests to be registered.
(g) Notices.
------- Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be
in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this Section
prior to 6:30 p.m. (New York City time) on a Business Day, (ii) the Business
Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date and earlier
than 11:59 p.m. (New York City time) on such date, (iii) the Business Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice
is irequired to be given. The address for such notices and communications
shall be as follows:
If to the Company: Phoenix International Industries, Inc.
0000 Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: X. Xxx Xxxxxxxx, Esq.
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0000 Xxxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature pages
hereto.
If to any other Person who is then the registered Holder:
To the address of such Holder as it
appears in the stock transfer books of
the Company
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(h) Successors and Assigns.
---------------------- This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder.
The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
(i) Counterparts.
------------ This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed
to be an original and, all of which taken together shall constitute
one and the same Agreement. In the event that any signature is delivered
by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) Governing Law.
------------- All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated
by this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the City
of New York, Borough of Manhattan. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of this Agreement), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
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process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Each
party hereto (including its affiliates, agents, officers, directors and
employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys fees
and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(k) Cumulative Remedies.
------------------- The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) Severability.
------------ If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(m) Headings.
-------- The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(n) Independent Nature of Purchasers'Obligations and Rights.
-------------------------------------------------------
The obligations of each Purchaser hereunder is several and not joint with
the obligations of any other Purchaser hereunder, and no Purchaser shall
be responsible in any way for the performance of the obligations of any
other Purchaser hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to protect
and enforce its rights, including without limitation the rights arising out
of this Agreement, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
PHOENIX INTERNATIONAL INDUSTRIES, INC.
By:_____________________________________
Name:/S/Xxxxxx Xxxxxxx
Title: Chief Executive Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASER TO FOLLOW]
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AJW PARTNERS, LLC
By: SMS Group, LLC
By:_____________________________________
Name:/S/Xxxxx X. Xxxxxxxx
Title:
Address for Notice:
AJW Partners, LLC
000 Xxxxx Xxxxxx
Xxxxx X
Xxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and
(000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
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NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By:_____________________________________
Name:/S/Xxxxx X. Xxxxxxxxx
Title:
Address for Notice:
New Millennium Capital Partners II, LLC
000 Xxxxx Xxxxxx
Xxxxx X
Xxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and
(000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
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Annex A
Plan of Distribution
--------------------
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of
their shares of Common Stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions.
These sales may be at fixed or negotiated prices. The Selling Stockholders
may use any one or more of the following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144
under the Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against
the box, puts and calls and other transactions in securities of the
Company or derivatives of Company securities and may sell or deliver
shares in connection with these trades. The Selling Stockholders may
pledge their shares to their brokers under the margin provisions of
customer agreements. If a Selling Stockholder defaults on a margin
loan, the broker may, from time to time, offer and sell the pledged
shares. The Selling Stockholders have advised the Company that they
have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their
shares other than ordinary course brokerage arrangements, nor is there
an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the Selling Stockholders.
Broker-dealers engaged by the Selling Stockholders may arrange
for other brokers-dealers to participate in sales. Broker-dealers may
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receive commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser)
in amounts to be negotiated. The Selling Stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The Selling Stockholders and any broker-dealers or agents that
are involved in selling the shares may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales.
In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.
The Selling Stockholder may from time to time pledge or grant a
security interest in some or all of the Shares or common stock or Warrants
owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer
and sell the shares of common stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
The Company is required to pay all fees and expenses incident to
the registration of the shares, including fees and disbursements of
counsel to the Selling Stockholders. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
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