REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of June
28, 2002 between Allied Research Corporation, a Delaware corporation with
offices at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 (the
"Company") and Riverview Group LLC (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement by and between the
Company and the Purchaser (the "Purchase Agreement"), the Company has agreed to
sell and issue to the Purchaser, and the Purchaser has agreed to purchase from
the Company, an aggregate of $7.5 million principal amount of the Company's 8%
Convertible Debentures Series A (the "Debentures") on the terms and conditions
set forth therein;
WHEREAS, pursuant to the Purchase Agreement, and subject to the terms and
conditions thereof, the Purchaser has the option to purchase, and the Company
has the option to sell, up to $3.75 million principal amount of the Company's 8%
Convertible Debentures Series B (the "Additional Debentures");
WHEREAS, the Purchase Agreement contemplates that the Debentures and
Additional Debentures will be convertible into shares (the "Common Shares" and
"Additional Common Shares," respectively) of common stock, par value $.10, of
the Company ("Common Stock");
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Purchaser's agreement to enter into the Purchase Agreement, the Company has
agreed to issue warrants (the "Warrants") exercisable for shares of Common Stock
(the "Warrant Shares") in connection with the issuance of the Debentures;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Purchaser's agreement to enter into the Purchase Agreement, the Company has
agreed to issue, with the Additional Debentures, warrants (the "Additional
Warrants") exercisable for shares of Common Stock (the "Additional Warrant
Shares,") in connection with the issuance of the Additional Debentures;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Purchaser's agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Purchaser with certain registration rights with respect to
the Common Shares, Additional Common Shares, Warrant Shares, Additional Warrant
Shares, and certain other rights and remedies with respect to the Debentures and
Additional Debentures as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Purchase Agreement and
this Agreement, the Company and the Purchasers agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement, the
Warrants or the Debentures. As used in this Agreement, the following terms shall
have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such terms
in the Purchase Agreement.
"Conversion Price" shall have meaning ascribed to such term in Section 5(c)
of the Debenture.
"Commission" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Debenture Amount" shall mean the Outstanding Principal Amount of, the
accrued but unpaid interest on, and the accrued but unpaid Delay Payments on,
the Debentures.
"Delay Payment" shall mean a payment equal to 1% of the Debenture Amount
held by the relevant Holder. Delay Payments shall be pro-rated for periods of
less than 30 days.
"Effectiveness Deadline" shall have the meaning set forth in Section 2(a).
"Filing Deadline" shall have the meaning set forth in Section 2(a).
"Holder" and "Holders" shall mean the Purchaser, and any transferee or
transferees of the Debentures, Warrants, Warrant Shares, or Common Shares or
Registrable Securities which have not been sold to the public to whom the
registration rights conferred by this Agreement have been transferred in
compliance with this Agreement.
"Interfering Events" shall have the meaning set forth in Section 2(b).
"Market Price for Shares of Common Stock" shall have the meaning ascribed
to such term in the Debentures.
"Outstanding Principal Amount" shall have the meaning ascribed to such term
in the Debentures.
"Premium Redemption Price" shall mean 110% of the Debenture Amount.
"Put Notice" shall have the meaning set forth in Section 2(b)(i)(B).
"Registrable Securities" shall mean: (a) the Common Shares and Warrant
Shares issued or issuable to each Holder or its permitted transferee or designee
upon conversion of the Debentures or exercise of the Warrants, as applicable, or
upon any stock split, stock dividend, recapitalization or similar event with
respect to such Common Shares or Warrant Shares; (b) any securities issued or
issuable to each Holder upon the conversion, exercise or exchange of any
Debentures, Warrants, Warrant Shares or Common Shares; and (c) any other
security of the
2
Company issued as a dividend or other distribution with respect to, conversion
or exchange of, or in replacement of, Registrable Securities.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "Blue Sky"
fees and expenses, and the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company, which shall be paid in any event by the Company).
"Registration Statement" shall have the meaning set forth in Section 2(a)
herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including without
limitation the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable "Blue Sky" or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) reasonably
requested by the Holder and in all U.S. jurisdictions. Such best efforts by the
Company shall include the following:
(a) The Company shall, as expeditiously as reasonably possible after
the Closing Date:
(i) But in any event within 240 days thereafter ("Filing Deadline"),
prepare and file a registration statement with the Commission on Form S-3 under
the Securities Act (or in the event that the Company is ineligible to use such
form, such other form as the Company is eligible to use under the Securities
Act) covering the Registrable Securities (such registration statement, including
any amendments or supplements thereto and prospectuses contained therein, is
referred to herein as the "Registration Statement"), which Registration
Statement, to the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), shall state that such Registration
Statement also covers such number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, stock dividends
or similar events. The Registration Statement shall identify the Holders as
selling securityholders and not as underwriters. The number of shares of Common
Stock initially included in such Registration Statement shall be no less than
the sum of (A) 2.0 times the sum of the number of Common Shares that are as of
the date of this Agreement issuable upon conversion of the Debentures plus (B)
the number of Warrant Shares issuable upon exercise of the Warrants in each case
without
3
regard to any limitation on the Purchaser's ability to convert the Debentures or
Warrants. Thereafter, the Company shall use its best efforts to cause such
Registration Statement to be declared effective as soon as practicable, and in
any event prior to the earlier of (i) 300 days following the Closing Date or
(ii) five days after SEC clearance to request acceleration (the "Effectiveness
Deadline"). The Company shall provide Holders and their legal counsel reasonable
opportunity to review any such Registration Statement or amendment or supplement
thereto prior to filing.
(ii) Prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
Registration Statement in accordance with the intended methods of disposition by
the seller thereof as set forth in the Registration Statement and notify the
Holders of the filing and effectiveness of such Registration Statement and any
amendments or supplements.
(iii) After the registration, furnish to each Holder such numbers of copies
of a current prospectus conforming with the requirements of the Act, copies of
the Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as such
Holder may reasonably require in order to facilitate the disposition of
Registrable Securities owned by such Holder.
(iv) Use its best efforts to register and qualify the securities covered
by such Registration Statement under such other securities or "Blue Sky" laws of
all U.S. jurisdictions; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(v) Notify each Holder immediately of the happening of any event as a
result of which the prospectus (including any supplements thereto or thereof and
any information incorporated or deemed to be incorporated by reference therein)
included in such Registration Statement, as then in effect, includes an untrue
statement of 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, and, pursuant to Section 2(f), use its
best efforts to promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by the Commission or
any state securities commission or agency of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use its best efforts to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible time.
(vii) Permit a single firm of counsel, designated as Holders' counsel by
the Holders of a majority of the Registrable Securities included in the
Registration Statement, to review the Registration Statement and all amendments
and supplements thereto within a reasonable period of time prior to each filing,
and shall not file any document containing information regarding one
4
or more Holders if such counsel reasonably objects to the form or substance of
such information concerning such Holders.
(viii) Use its best efforts to list the Registrable Securities covered by
such Registration Statement with all securities exchange(s) and/or markets on
which the Common Stock is then listed and prepare and file any required filings
with the National Association of Securities Dealers, Inc. or any exchange or
market where the Common Stock is then traded.
(ix) If applicable, take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Act.
(x) File and cause to become effective 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 the existing
Registration Statements hereunder.
(b) Set forth below in this Section 2(b) are (I) events that may
arise that the Purchaser considers will interfere with the full enjoyment of its
rights under the Debentures, the Purchase Agreement and this Agreement (the
"Interfering Events"), and (II) certain remedies applicable in each of these
events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Holders if an
Interfering Event occurs and provide that the Holders may require
that the Company redeem outstanding Debentures, Warrants, or
Registrable Securities at a specified price if certain Interfering
Events are not timely cured.
Paragraph (v) provides, inter alia, that each Holder shall have the
option as to whether it would like to receive any payment required
as a remedy in the case of certain of the Interfering Events in cash
or shares of Common Stock.
Paragraph (vi) provides, inter alia, that if payments required as
the remedy in the case of certain of the Interfering Events are not
paid when due, the Company may be required by the Holders to redeem
outstanding Debentures, Warrants, or Registrable Securities at a
specified price.
Paragraph (viii) provides, inter alia, that the Holders have the
right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve
only as an introduction to this Section 2(b), are for convenience
only, and are not to be considered in applying, construing or
interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
(A) In the event that the Registration Statement has not been
filed by the Filing Deadline or been declared effective by the
Effectiveness Deadline, then the Company shall pay in cash or common
stock, as provided in Section 2(b)(v), to each Holder a Delay
Payment for each 30 day period (or portion thereof)
5
thereafter until the earliest of (i) the date on which a Holder's
Debentures have been redeemed pursuant to its delivery of a Put
Notice (as defined below) (with respect to that Holder only),
(ii) the first anniversary of the Closing Date, and (iii) the
date on which the Registration Statement is declared effective,
which Delay Payments shall not in the aggregate exceed the
maximum percentage permitted by law.
(B) If the Registration Statement has not been declared
effective within one (1) year of the Closing Date, then each
Holder shall have the right to require the Company to redeem the
Debentures in whole or in part at the Premium Redemption Price.
Each Holder shall exercise such right by providing the Company
with written notice thereof (the "Put Notice") no later than
forty-five (45) calendar days following the first anniversary of
the Closing Date, which such Put Notice shall include the amount
of Debentures that the Holder seeks to redeem and a date at least
ninety (90) days from the date thereof on which the Holder seeks
the redemption to occur (the "Redemption Date"). Nothing herein
shall be construed as precluding the Holder from exercising its
conversion rights under the Debenture unless the Company redeems
the Debenture and pays the Premium Redemption Price set forth
above in full pursuant to Section 2(b)(i)(B). Delay Payments
shall no longer accrue on Debentures after such Debentures have
been redeemed by the Company pursuant hereto. In lieu of
exercising the right to have its Debentures redeemed, a Holder
may elect to have the Conversion Price applicable to its
Debentures reduced by fifteen percent (15%) (subject to further
adjustment in accordance with the terms of the Debentures), which
election must be made during the forty-five calendar day period
referred to above. In such event, upon request by the Holder, the
Company shall issue to the Holder new Debentures reflecting the
reduced Conversion Price.
(ii) No Listing; Premium Price Redemption for Delisting of Class of
Shares.
In the event that (A) the Company fails, refuses or is
unable to cause the Registrable Securities covered by the
Registration Statement to be listed with the applicable Approved
Markets and each other securities exchange and market on which
the Common Stock is then traded at all times during the period
("Listing Period") commencing the earlier of the effective date
of the Registration Statement or the one year anniversary
following the Closing Date, and continuing thereafter for so long
as any Debentures are outstanding (but not more than three years
from the last Closing Date) or (B) shares of Common Stock of the
Company are delisted from the applicable Approved Markets at any
time following the Closing Date and prior to the earlier of (i)
the time at which there are no longer any outstanding Debentures
and (ii) the third (3rd) anniversary of the last Closing Date,
and remain delisted for 5 consecutive business days, then at the
option of each Holder and to the extent such Holder so elects,
the Company shall on 2 business days notice redeem the Debentures
held by such Holder, in whole or in part, at a redemption price
equal to the Premium Redemption Price (as defined above);
provided, however, that such Holder may revoke such request at
any time prior to receipt of payment of such Premium Redemption
Price.
6
(iii) Blackout Periods. In the event any Holder is unable to sell
Registrable Securities under the Registration Statement for more than (A) seven
(7) consecutive days or (B) an aggregate of twenty (20) days in any 12 month
period ("Suspension Grace Period"), including without limitation by reason of a
suspension of trading of the Common Stock on the Approved Market, any suspension
or stop order with respect to the Registration Statement or the fact that an
event has occurred as a result of which the prospectus (including any
supplements thereto) included in such Registration Statement then in effect
includes an untrue statement of 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, or the number of shares
of Common Stock covered by the Registration Statement is insufficient at such
time to make such sales (a "Blackout"), then a Holder shall have the right but
not the obligation to elect to have the Company redeem its Debentures at the
price equal to the Premium Redemption Price.
(iv) Conversion Deficiency; Premium Price Redemption for Conversion
Deficiency. In the event that the Company does not have a sufficient number of
Common Shares available to satisfy the Company's obligations to any Holder upon
receipt of a Conversion Notice (as defined in the Debenture) or is otherwise
unable or unwilling to issue such Common Shares in accordance with the terms of
the Debenture for any reason after receipt of a Conversion Notice, then: at any
time five days thereafter, at the request of any Holder pursuant to a redemption
notice, the Company promptly (1) shall purchase from such Holder, at a purchase
price equal to the Premium Redemption Price, the Debenture Amount of Debentures
equal to such Holder's pro rata share of the Deficiency (as such term is defined
below), if the failure to issue Common Shares results from the lack of a
sufficient number thereof and (2) shall purchase all (or such portion as such
Holder may elect) of such Holder's Debentures at such Premium Redemption Price
if the failure to issue Common Shares results from any other cause. The
"Deficiency" shall be equal to the Debenture Amount of Debentures that would not
be able to be converted for Common Shares, due to an insufficient number of
Common Shares available, if all the outstanding Debentures were submitted for
conversion at the Conversion Price set forth in the Debentures as of the date
such Deficiency is determined. Any request by a Holder pursuant to this
paragraph (iv)(B) shall be revocable by that Holder at any time prior to its
receipt of the Premium Redemption Price.
(v) Delay Payment and Put Terms; Status of Unpaid Delay Payments.
(A) All Delay Payments (which payments shall be pro rata on a
per diem basis for any period of less than 30 days) required to be
made in connection with the above provisions shall be paid at any
time upon demand, by the fifteenth (15th) day of each calendar
month for the partial or full calendar month occurring prior to
that date. Such Delay Payments shall be payable in cash or Common
Stock, as determined by each Holder in its sole discretion. If the
Holder elects to be paid in Common Stock, the Holder shall be
entitled to that number of shares of Common Stock as shall equal to
the amount of such Delay Payment multiplied by a fraction, the
numerator of which is one and the denominator of which is equal to
the average of the Market Price for Shares of Common Stock for the
three (3) business days prior to, but not including, the date upon
which such payments are due. Unless the Company shall receive
written notice to the contrary from the respective Holder, the
Delay Payments shall be paid in cash. Until paid as
7
required in this Agreement, Delay Payments shall be deemed added
to, and a part of, the Outstanding Principal Amount of a Holder's
Debentures.
(B) Any Debentures required to be redeemed under this Section
2(b) shall be redeemed by no later than five business days from
the delivery of the applicable redemption request. Until redeemed,
the Holder shall be permitted to exercise conversion and any other
rights under the Debentures. The Holder may withdraw a redemption
request if the Company does not timely redeem the Debentures
required to be redeemed.
(vi) Premium Price Redemption for Delay Payment Defaults. In the event
that the Company fails or refuses to pay any Delay Payment provided for in the
foregoing paragraphs (i) through (iv) when due, at any Holder's request and
option, the Company shall purchase all or a portion of the Debentures held by
such Holder (with Delay Payments accruing through the date of such purchase),
within five (5) days of such request, at a purchase price equal to the Premium
Redemption Price (as defined above); provided that such Holder may revoke such
request at any time prior to receipt of such payment of such purchase price.
Until such time as the Company purchases such Debentures at the request of such
Holder pursuant to the preceding sentence, at any Holder's request and option
the Company shall as to such Holder pay such amount by adding and including the
amount of such Delay Payment to the Outstanding Principal Amount of a Holder's
Debentures.
(vii) Cumulative Remedies. Each Delay Payment triggered by an
Interfering Event provided for in the foregoing paragraphs (ii) through (iv)
shall be in addition to each other Delay Payment triggered by another
Interfering Event; provided, however, that in no event shall the Company be
obligated to pay to any Holder Delay Payments in an aggregate amount greater
than one Delay Payment for any 30-day period (or portion thereof). The Delay
Payments and mandatory redemptions provided for above are in addition to and not
in lieu or limitation of any other rights the Holders may have at law, in equity
or under the terms of the Debentures, the Purchase Agreement, the Warrants or
this Agreement, including without limitation the right to specific performance.
Each Holder shall be entitled to specific performance of any and all obligations
of the Company in connection with the registration rights of the Holders
hereunder.
(viii) Certain Acknowledgments. The Company acknowledges that any
failure, refusal or inability by the Company described in the foregoing
paragraphs (i) through (iv) and paragraph (vi) will cause the Holders to suffer
damages in an amount that will be difficult to ascertain, including without
limitation damages resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the Registrable
Securities. Accordingly, the parties agree that it is appropriate to include in
this Agreement the foregoing provisions for Delay Payments and mandatory
redemptions in order to compensate the Holders for such damages. The parties
acknowledge and agree that the Delay Payments and mandatory redemptions set
forth above represent the parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such Delay Payments and
mandatory redemptions are reasonable and will not constitute a penalty. The
parties agree that the provisions of this clause (viii) consist of certain
acknowledgments and agreements concerning the remedies of the Holders set forth
in clauses (i) through (iv) and paragraph (vi) of this paragraph; nothing in
this
8
clause (viii) imposes any additional default payments and mandatory redemptions
for violations under this Agreement.
(c) [Intentionally omitted.]
(d) [Intentionally omitted.]
(e) The Company shall make available for inspection, upon
reasonable written notice and during regular business hours, by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with such
Registration Statement, provided that such parties agree to keep such
information confidential.
(f) (i) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved shares, with respect to its
obligation to reserve or register Registrable Securities, within 30 days of any
corporate action authorizing or reserving same and shall file a Registration
Statement with respect to additional Registrable Securities within 30 days of
the occurrence of an event referred to in Section 2(a)(x) and shall use its best
efforts to cause, in either case, such Registration Statement to become
effective within seventy-five (75) days of such corporate action or such
occurrence, as the case may be. If the Holders become entitled, pursuant to an
event described in clause (iii) of the definition of Registrable Securities, to
receive any securities in respect of Registrable Securities that were already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (x) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (y) keep such additional Registration Statement effective
during the period described in Section 5 below. All of the registration rights
and remedies under this Agreement shall apply to the registration of such newly
reserved shares and such new Registrable Securities, including without
limitation the provisions providing for Delay Payments contained herein.
(ii) If the Company has issued Additional Debentures and Additional
Warrants, then all of the provisions of this Registration Rights Agreement shall
apply to such Additional Debentures and Additional Warrants, and the underlying
Additional Common Shares and Additional Warrant Shares, mutatis mutandis, as if
they were Debentures, Warrants, Common Shares and Warrant Shares, with the
following changes:
9
(A) References to the Closing and Closing Date shall refer to the
closing and closing dates of the purchases of the Additional Debentures
and Additional Warrants.
(B) References to the Effectiveness Deadline shall refer to 300
days from the second tranche (Additional Debentures/Additional
Warrants) closing, for the second tranche.
(C) References to the Filing Deadline for the registration
statement for the second tranche shall refer to 210 days from the
closing of the second tranche.
(D) References in the Registration Rights Agreement to Debentures,
Warrants, Common Shares and/or Warrant Shares, shall be deemed to refer
respectively, to Additional Debentures, Additional Warrants, Additional
Common Shares and Additional Warrant Shares.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company.
4. Registration on Form S-3; Other Forms. The Company shall use its best
efforts to qualify for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until the two year anniversary of effectiveness
date of the Registration Statement.
6. Indemnification.
(a) The Company Indemnity. The Company will indemnify each Holder,
each of its officers, directors and partners, and each person controlling each
Holder, within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each Holder, each of its officers, directors and partners, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
10
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to a Holder to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by such
Holder or the underwriter (if any) therefor and stated to be specifically for
use therein. The indemnity agreement contained in this Section 6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder(s), against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and will reimburse the Company and such other Holder(s)
and their directors, officers and partners, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this Section
6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim in any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article except to the extent
that the Indemnifying Party is materially and adversely affected by such failure
to provide notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or
11
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6 herein is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein (other than by reason of the exceptions
provided therein), then each such Indemnifying Party, in lieu of indemnifying
each of such Indemnified Parties, shall contribute to the amount paid or payable
by each such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to contribute
under this Section 7 exceed the amount that such Indemnifying Party would have
been obligated to pay by way of indemnification if the indemnification provided
for under Section 6(a) or 6(b) hereof had been available under the
circumstances.
The Company and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall
12
remain operative and in full force and effect regardless of (i) any termination
of this Agreement or the Purchase Agreement or any underwriting agreement, (ii)
any investigation made by or on behalf of any Indemnified Party or by or on
behalf of the Company, and (iii) the consummation of the sale or successive
resales of the Registrable Securities.
9. Information by Holders. Each Holder shall reasonably promptly furnish
to the Company such information regarding such Holder and the distribution
and/or sale proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement. The intended method
or methods of disposition and/or sale (Plan of Distribution) of such securities
as so provided by such Purchaser shall be included without alteration in the
Registration Statement covering the Registrable Securities and shall not be
changed without written consent of such Holder, except that such Holder may not
require an intended method of disposition which violates applicable securities
law.
10. [Intentionally omitted.]
11. Replacement Certificates. The certificate(s) representing the Common
Shares or Warrant Shares held by the Purchaser (or then Holder) may be exchanged
by the Purchaser (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares or Warrant Shares, as reasonably requested by the Purchaser (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchasers by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Debentures or Warrants, and all other rights granted to the
Purchasers by the Company hereunder may be transferred or assigned to any
transferee or assignee of any Debentures or Warrants; provided in each case
that: (i) any transfer of Debentures shall be for at least $500,000 in principal
amount thereof; and (ii) the Company must be given written notice by the such
Purchaser at the time of or within a reasonable time after said transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned; provided that the transferee or assignee of such
rights agrees in writing to be bound by the provisions of this Agreement.
13. Miscellaneous.
(a) Remedies. The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
13
(b) Jurisdiction. EACH OF THE COMPANY AND THE PURCHASER (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE DELAWARE XXXXX XXXXXX XXX XXXXX XXXXXX XX XXX XXXXXX XXXXXX SITTING
IN THE STATE OF DELAWARE FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY WAIVES, AND AGREES
NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH OF THE COMPANY AND THE PURCHASER CONSENTS
TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF 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 PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR
LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by facsimile, mail or personal delivery
and shall be effective upon actual receipt of such notice. The addresses for
such communications shall be:
to the Company:
Allied Research Corporation
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxxx Xxxx & Xxxxx, X.X.
Xxxxxxxx Xxxxxxxx, Xxxxx 0000
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Xx., Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
to the Purchaser:
Riverview Group, LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 000000
14
Attention: Xxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Any party hereto may from time to time change its address for notices by
giving at least 10 days' written notice of such changed address to the other
parties hereto.
(d) Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Purchaser contained herein shall survive the
Closing.
(f) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(g) Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of any Purchaser without its
express written approval, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement. The
Company agrees to deliver a copy of any public announcement regarding the
matters covered by this Agreement or any agreement or document executed herewith
to each Purchaser and any public announcement including the name of an Purchaser
to such Purchaser, prior to the publication of such announcements.
(h) No Piggyback on Registration. Neither the Company nor any of its
security holders (other than the holders of up to 400,000 shares of Common Stock
that the Company agreed to register for resale pursuant to its acquisitions) 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.
15
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement, the Debentures, the Warrants and the agreements and documents
contemplated hereby and thereby, contains the entire understanding and agreement
of the parties, and may not be modified or terminated except by a written
agreement signed by both parties.
(j) Governing Law. THIS AGREEMENT AND THE VALIDITY AND PERFORMANCE OF
THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED
AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
(k) Severability. The parties acknowledge and agree that the
Purchasers are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Purchasers
hereunder are several and not joint, that no Purchaser shall have any
responsibility or liability for the representations, warrants, agreements, acts
or omissions of any other Purchaser, and that any rights granted to "Purchasers"
hereunder shall be enforceable by each Purchaser hereunder.
(l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.
(m) Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
(n) 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 a majority of the then issued or issuable
Registrable Securities; provided, however, that, for the purposes of this
sentence, Registrable Securities that are owned, directly or indirectly, by the
Company, or an affiliate of the Company are not deemed outstanding.
Signature page follows
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ALLIED RESEARCH CORPORATION
By:_____________________________________
Name:
Title:
PURCHASER:
RIVERVIEW GROUP LLC
By:_____________________________________
Name:
Title:
[Signature page to Registration Rights Agreement]
17
