Exhibit 5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") dated this 27th
day of March, 2002, is by and between Teltronics, Inc., a Delaware corporation
(the "Company") and XXXXXX CORPORATION, a Delaware corporation ("Xxxxxx", which,
together with any subsequent assignees subject to the provisions hereof, the
"Holder").
WITNESSETH:
WHEREAS, on the date hereof the Company has issued the Holder shares of
Series C Preferred Stock (the "Preferred Shares") effective the date hereof
which are initially convertible into an aggregate of 1,454,545 shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), subject
to the terms and conditions set forth in the Company's Certificate of
Designations creating the Preferred Shares (such shares of Common Stock being
the "Conversion Shares");
WHEREAS, none of the Conversion Shares have been registered under the
Securities Act (as defined below) and, as a inducement to Holder, the Company
has agreed to grant to Holder certain registration rights with respect to the
Conversion Shares as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEMAND REGISTRATION.
(a) Demand Right. If the Company shall receive from Initiating Holders
(as defined in Section 10) at any time or times a written request that the
Company effect any registration with respect to Registrable Securities (the
"Demand Request"), in an offering to be firmly underwritten by underwriter(s)
selected by the Initiating Holders (which underwriter(s) shall be reasonably
acceptable to the Company) the Company shall:
(i) promptly give written notice of the proposed registration to
all other holders of Registrable Securities ("Notice of Demand
Request"); and
(ii) as soon as practicable, use its best efforts to file a
registration statement covering the Registrable Securities so
requested to be registered and to effect such registration
(including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act
of 1933 (the "Securities Act") and as would permit or facilitate
the sale and distribution of all of such Registrable Securities as
are specified in such request, together with all or such portion of
the Registrable Securities of any other holders of Registrable
Securities joining in such request as are specified in a written
request received by the Company within twenty (20) days after the
date of the Notice of Demand Request.
The Company shall only be required to effect, pursuant to this Section
1, four (4) registrations of Registrable Securities. A requested registration
shall not count for these purposes unless (A) such registration statement has
been declared effective and an offering closed in which at least 90% of the
Registrable Securities requested to be included in such registration by the
Initiating Holders shall have been sold or (B) the registration has been
withdrawn by the Initiating Holders and the Initiating Holders have not paid the
Registration Expenses pursuant to Section 4 hereof in circumstances in which
they were required to bear such expenses.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Sections 1(b) and (7)
hereof and the prior written consent of the Initiating Holders, include other
securities of the Company, with respect to which registration rights have been
granted, and may include securities of the Company being sold for the account of
the Company, provided that all the Registrable Securities for which the
Initiating Holders have requested registration shall be covered by such
registration statement before any such other securities are included.
(b) Proviso. The Company shall not be obligated to effect, or to take
any action to effect, any such registration pursuant to this Section 1:
(i) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in
effecting such registration, qualification, or compliance, unless
the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act;
(ii) during the period starting with the date thirty (30) days
prior to the Company's good faith estimate of the date of filing
of, and ending on a date seventy-five (75) days after the effective
date of, a Company-initiated registration, provided that the
Company is actively employing in good faith all reasonable efforts
to cause such registration statement to become effective; or
(iii) if the Initiating Holders propose to dispose of shares of
Registrable Securities which may be immediately registered on Form
S-3 pursuant to a request made under Section 3 hereof.
(c) Deferral of Registration. If (i) in the good faith judgment of the
Board of Directors of the Company, the filing of a registration statement as
soon as practicable after receipt of the request of the Initiating Holders would
be materially detrimental to the Company because there exist bona fide
financing, acquisition or other activities of the Company and the Board of
Directors of the Company concludes, as a result, that it is essential to defer
the filing of such registration statement at such time, and (ii) the Company
shall furnish to the Initiating Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be materially detrimental to the Company for such
registration statement to be filed in the near future and that it is essential
to defer the filing of such registration statement, then the Company shall have
the right to defer
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such filing (except as provided in Subsection (b)(ii) above) for a period of not
more than ninety (90) days after receipt of the request of the Initiating
Holders, provided that the Company shall not defer its obligation in this manner
more than once in any twelve-month period, and provided further that the
Initiating Holders shall be entitled to withdraw the request for registration
and, if such request is withdrawn, such registration shall not count as a
permitted requested registration hereunder and the Company shall pay all
Registration Expenses incurred in connection with such withdrawn registration
request.
(d) Underwriting. The right of any other holders of Registrable
Securities joining in a request for registration as provided in Section 1(a)(ii)
above to registration pursuant to this Section 1 shall be conditioned upon such
holder's participation in such underwriting and the inclusion of such holder's
Registrable Securities in the underwriting on the same terms as those of the
Initiating Holders (unless otherwise mutually agreed by a majority in interest
of the Initiating Holders and such holder with respect to such participation and
inclusion).
(e) Procedures. In any registration pursuant to Section 1, if the
Company shall request inclusion of securities to be sold for its own account, or
if other persons entitled to incidental registrations shall request inclusion in
such registration pursuant to Subsection (c) above, the Initiating Holders
shall, on behalf of all holders of Registrable Securities, offer to include such
securities in the underwriting and may condition such offer on the acceptance by
the Company or such other persons of the further applicable provisions of this
Section 1. The Company shall (together with all Holders and such other persons
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative(s) of the
underwriter(s) selected for such underwriting by a majority in interest of the
Initiating Holders. Notwithstanding any other provision of this Section, if the
representative of the underwriter(s) advises the Initiating Holders of the need
for an Underwriter's Cutback (as defined in Section 10), the number of shares to
be included in the underwriting or registration shall be allocated as set forth
in Section 8 hereof. If a person who has requested inclusion in such
registration as provided in this Subsection (e) does not agree to the terms of
any such underwriting, such person shall be excluded therefrom by written notice
from the Company, the underwriter or the Initiating Holders, and the securities
owned by such person(s) shall be withdrawn from registration (the "Withdrawn
Securities"). If there are any Withdrawn Securities and if there was an
Underwriter's Cutback, then the Company shall offer to all holders who have
retained rights to include securities in the registration the right to include
additional securities in the registration in an aggregate amount equal to the
number of Withdrawn Securities that would have been included in the registration
after giving effect to the Underwriter's Cutback had such securities not been
withdrawn, with such shares to be allocated among such Holders requesting
additional inclusion in accordance with Section 8.
2. PIGGYBACK REGISTRATION.
(a) Notice and Procedures. If the Company proposes to register any of
its Common Stock either for its own account or the account of a security holder
or holders exercising their respective demand registration rights (other than
pursuant to Sections 1 or 3 hereof), the Company will:
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(i) promptly give written notice thereof to the Holder or, if
different, to each holder of Registrable Securities; and
(ii) use its best efforts to include in such registration (and any
related qualification under blue sky laws or other compliance),
except as set forth in Section 2(b) below, and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests, made by any holder of Registrable
Securities and received by the Company within fifteen (15) days
after the written notice from the Company described in clause (i)
above, which written request may specify the inclusion of all or a
part of such holder's Registrable Securities.
The provisions of this Section 2 shall not apply to any registration
relating solely to employee benefit plans (as defined under Rule 405 of the
Securities Act), or a registration relating solely to a Rule 145 transaction, or
a registration on any registration form that does not permit secondary sales.
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the holders of Registrable Securities as a part of the written notice
given pursuant to Section 2(a)(i). In such event, the right of any holders to
registration pursuant to this Section shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Securities in the underwriting to the extent provided herein. All
holders of Registrable Securities proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
of securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter(s) selected by the Company.
Notwithstanding any other provision of this Section 2, if the
representative of the underwriters advises the Company of the need for an
Underwriter's Cutback, the representative may (subject to the limitations set
forth below) limit the number of Registrable Securities to be included in the
registration and underwriting; provided, however, that Registrable Securities
shall be included in any over-allotment option granted to the underwriters
before inclusion of any shares from the Company. The Company shall advise all
holders of securities requesting registration of the Underwriter's Cutback, and
the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter as set forth in Section
9. If any person does not agree to the terms of any such underwriting, it shall
be excluded therefrom by written notice from the Company or the underwriter and
any securities so excluded or withdrawn from such underwriting shall be
withdrawn from such registration ("Withdrawn Securities").
If there are Withdrawn Securities and if there was an Underwriter's
Cutback, the Company shall then offer to all persons who have retained the right
to include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares of Withdrawn Securities that would have been included in the
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registration after giving effect to the Underwriter's Cutback had such
securities not been withdrawn, with such shares to be allocated among such
holders requesting additional inclusion in accordance with Section 9.
(c) Lock Up Agreements. If requested in writing by the Company and an
underwriter of Common Stock for the Company, the holders of Registrable
Securities shall agree not to sell or otherwise transfer or dispose of any
Common Stock of the Company held by such holder (other than those included in
the registration statement) for a period not to exceed one hundred twenty (120)
days following the effective date of a registration statement of the Company
filed under the Securities Act, provided that all officers and directors of the
Company, all holders of Registrable Securities, and all other holders of rights
to registration of any other security of the Company enter into similar
agreements identical in terms to that of the holders of Registrable Securities.
The terms of this Section 2(c) shall not apply to sales made pursuant to Rule
144 promulgated under the Securities Act.
3. REGISTRATION ON FORM S-3.
(a) After the Company has qualified for the use of Form S-3, in
addition to the rights contained in the foregoing provisions of this Agreement,
the holders of Registrable Securities shall have the right to request
registrations on Form S-3 or any comparable or successor form. Each such request
shall be in writing and shall state the anticipated number of shares of
Registrable Securities to be disposed of and the anticipated gross proceeds of
such shares, and the intended methods of disposition of such shares by such
holder or holders, including whether such resales are to be made on a delayed or
continuous basis pursuant to Rule 415. The Company shall not be obligated to
effect any registration pursuant to this Section 3 if (i) the holder of
Registrable Securities, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other shares of Common Stock (if any) on Form S-3 at an
aggregate price to the public of less than $500,000, or (ii) in the event that
the Company shall furnish the certification described in Subsection 1(b)(ii) or
Subsection 1(c) (but subject to the limitations set forth therein), or (iii) the
Company will be required to obtain an audit (other than for its normal year-end
audit) for such registration to become effective. The Company shall only be
required to effect two (2) registrations of Registrable Securities pursuant to
this Section 3 in each calendar year, provided, however, that if the offering is
to be effected on a continuous or delayed basis pursuant to Rule 415 (or any
successor rule), and the registration statement is kept effective for a period
in excess of 180-days, then the Company shall not be required to effect another
registration in that calendar year.
(b) If a request complying with the requirements of Section 3(a) hereof
is delivered to the Company, the provisions of Sections 1(a)(i) and (ii) and
Section 1(b) hereof shall apply to such registration. If the registration is for
an underwritten offering, the provisions of Sections 1(d) and 1(e) hereof shall
also apply to such registration.
4. EXPENSES OF REGISTRATION.
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All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Sections 1, 2, and 3 hereof, shall be
borne by the Company; provided, however, that a holder of Registrable Securities
shall bear the Registration Expenses for any registration proceeding begun
pursuant to Section 1 and subsequently withdrawn by that holder registering
shares therein, unless such withdrawal is based upon (a) material adverse
information relating to the Company that is different from the information known
or available (upon request from the Company or otherwise) to the Initiating
Holders at the time of their request for registration under Section 1, or (b)
material adverse changes in the financial markets which result in a significant
decline in the public market price for the Company's Common Stock of at least
twenty percent (20%) from the date such registration proceeding is begun to the
date of such withdrawal. All Selling Expenses relating to securities registered
pursuant to Sections 1, 2, and 3 hereof, shall be borne by the holders of such
securities pro rata on the basis of the number of shares of securities so
registered on their behalf.
5. REGISTRATION PROCEDURES.
In the case of each registration effected by the Company pursuant to
this Agreement, the Company will use its best efforts to effect the registration
and sale of Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the SEC a registration statement with respect
to the securities to be registered on such form as the Company deems appropriate
and is permitted or qualified to use, and shall use all reasonable efforts to
cause such registration statement to become and remain effective for a period of
ninety (90) days or until the holders have completed the distribution described
in the registration statement relating thereto, whichever first occurs or, in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, for such period as
shall be necessary to keep the registration statement effective until all such
Registrable Securities are sold;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to the holders of Registrable Securities to be included in
a registration statement, at a reasonable time prior to the filing thereof with
the SEC, a copy of the registration statement (and each amendment or supplement
thereto) in the form the Company proposes to file the same; and furnish such
number of prospectuses and other documents incident thereto, including any
amendment of or supplement to the prospectus, as such holder of Registrable
Securities from time to time may reasonably request in order to facilitate the
disposition of such Registrable Securities owned by such Seller;
(d) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such
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registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances, and prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(e) cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Company are then listed; and provide a transfer agent and registrar and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration;
(f) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen (18) months, beginning with the first
day of the Company's first full fiscal quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(g) in connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 1 or 3 hereof, enter into an
underwriting agreement containing customary underwriting provisions so as to
effect the offer and sale of the Registrable Securities.
6. INDEMNIFICATION.
(a) The Company will indemnify each holder of Registrable Securities,
each of its officers, directors and partners, and each person controlling such
holder within the meaning of Section 15 of the Securities Act, with respect to
which registration has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls within the meaning of Section
15 of the Securities Act any such underwriter, against all expenses, claims,
losses, damages, and liabilities (or actions, proceedings, or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus (including any
related registration statement, notification, or the like) incident to any
registration under this Agreement, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, and will reimburse each such holder, each
of its officers, directors, partners, and each person controlling such holder,
each such underwriter, and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage, liability,
or action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such holder
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or underwriter and stated to be specifically for use therein. It is agreed that
the indemnity agreement contained in this Section shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).
(b) In connection with the registration or sale of shares of
Registrable Securities pursuant to this Agreement, each holder whose Registrable
Securities are included in such registration being effected under this
Agreement, will indemnify the Company, each of its directors, officers,
partners, and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement or prospectus, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and such directors, officers, partners, underwriters,
or control person for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or prospectus, in reliance upon
and in conformity with written information furnished to the Company by such
holder of the Registrable Securities, and stated to be specifically for use
therein; provided, however, that the obligations of such holder hereunder shall
not apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities if such settlement is effected without the consent of such holder,
which consent shall not be unreasonably withheld; and provided that in no event
shall any indemnity under this Section exceed the net amount of proceeds from
the offering received by such holder.
(c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party or parties required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section,
to the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
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(d) If the indemnification provided for in this Section is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
7. INFORMATION BY HOLDER.
Each holder of Registrable Securities shall furnish to the Company in
writing such information regarding such holder and the distribution proposed by
such holder as the Company or underwriters may reasonably request in writing and
as shall be reasonably required in connection with any registration,
qualification, or compliance referred to in this Agreement.
8. ALLOCATION OF REGISTRATION OPPORTUNITIES.
In any circumstance in which all of the Registrable Securities and
other shares Common Stock of the Company with registration rights (the "Other
Shares") requested to be included in a registration on behalf of the holders of
Registrable Securities or other selling stockholders cannot be so included as a
result of limitations of the aggregate number of shares of Registrable
Securities and Other Shares that may be so included, the number of shares of
Registrable Securities and Other Shares that may be so included shall be
allocated among the holders of Registrable Securities and other selling
stockholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares that would be held by such
holders and other selling stockholders. If any holder of Registrable Securities
or other selling stockholder does not request inclusion of the maximum number of
shares of Registrable Securities and Other Shares allocated to him pursuant to
this procedure, the remaining portion of his allocation shall be reallocated
among those requesting holders of Registrable Securities and other selling
stockholders whose allocations did not satisfy their requests pro rata on the
basis of the number of shares of Registrable Securities and Other Shares which
would be held by such holders and other selling stockholders, and this procedure
shall be repeated until all of the shares of Registrable Securities and Other
Shares which may be included in the registration on behalf of the holders of
Registrable Securities and other selling stockholders have been so allocated.
The
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Company shall not limit the number of Registrable Securities to be included
in a registration pursuant to this Agreement in order to include shares held by
stockholders with no registration rights or to include in that registration
shares of stock issued to employees, officers, directors, or consultants
pursuant to the Company's stock option plan, or in order to include in such
registration securities registered for the Company's own account.
9. SURVIVAL OF RIGHTS; TERMINATION OF REGISTRATION RIGHTS.
The provisions of this Agreement shall survive the conversion of the
Preferred Shares. The right of any holder of Registrable Securities to request
registration or inclusion in any registration pursuant to this Agreement shall
terminate on such date as all shares of Registrable Securities held or entitled
to be held upon conversion by such holder shall be freely tradable under Rule
144(k).
10. DEFINITIONS.
Unless the context otherwise requires, the terms hereinafter set forth
when used herein shall have the following meanings:
"Holder" shall mean any Person who holds Registrable Securities and any
holder of Registrable Securities to whom the registration rights conferred by
this Agreement have been transferred in compliance herewith.
"Initiating Holders" shall mean holders of the Registrable Securities
who in the aggregate hold not less than twenty five percent (25%) of the
aggregate of the original Registrable Securities, and who exercise rights to
request registration under Section 1.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, sole proprietorship, trust or other entity,
business association or organization.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement and such other action as might be required with respect
to registration, qualification or compliance under applicable state securities
laws.
"Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of custodians, fees and disbursements of counsel for the
Company and its independent certified public accountants, blue sky fees and
expenses, and reasonable fees and disbursements of one counsel for the holders
or selling stockholders, which counsel shall be chosen by the holders of a
majority of the Registrable Securities included in such registration, but shall
not include Selling Expenses.
"Registrable Securities" shall mean (i) Conversion Shares issued upon
conversion of the Preferred Shares, and (ii) any Common Stock issued as a
dividend or other distribution with
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respect to, or in exchange for, or in replacement of, the shares referred to in
clause (i); provided, however, that Registrable Securities shall not include any
securities which have been distributed to the public pursuant to an offering
registered under the Securities Act, or sold to the public through a broker,
dealer or market maker in compliance with Rule 144.
"Rule 144" shall mean Rule 144 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
"Rule 145" shall mean Rule 145 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities and fees and disbursements of counsel for any stockholder (other than
the fees and disbursements of one counsel for the holders of Registrable
Securities, as selling stockholders, included in Registration Expenses).
"Underwriter's Cutback" shall mean a reduction in the number of shares
to be included in any underwritten offering as the result of receipt of written
notice from the representative(s) of the underwriters to the effect that the
number of shares requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to either the Company (in a primary registration) or the
majority of the holders initially requesting such registration (in a secondary
registration).
11. OTHER REGISTRATION RIGHTS.
Except as provided in this Agreement, the Company shall not hereafter
grant to any person the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of a majority of the Registrable Securities, provided that the Company
may grant rights to other persons to participate in piggyback registrations as
provided in Section 2 hereof so long as such rights are subordinate to the
rights of the holders of Registrable Securities with respect to such piggyback
registrations.
12. NOTICE.
All notices, demands or other communications to be given or delivered
under this Agreement shall be in writing, signed by the party giving such
notice, demand or communication and shall be deemed to have been given (i) when
delivered personally to the recipient, (ii) one (1) day after being sent to the
recipient by a nationally recognized overnight courier service (charges
11
prepaid) or sent by facsimile transmission, or (iii) three (3) business days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each party at the address set forth below, or at
such other address as may have been previously supplied by written notice to the
sending party:
Holder: Xxxxxx Corporation
0000 XXXX Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
with a copy to: Xxxxx X. Xxxxxx, Esq.
Vice President-Counsel,
Corporate & Commercial Operations
and Assistant Secretary
0000 XXXX Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
The Company: Teltronics, Inc.
0000 Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, President
with a copy to: Xxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
13. MISCELLANEOUS.
(a) Remedies. Any person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may at its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(b) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, the Holder (as long as the Holder holds any
Registrable Securities) and holders of at least a majority of any other
outstanding Registrable Securities and any such amendment or waiver shall
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be binding on all Holders, provided that in no event shall the obligation of any
Holder hereunder be materially increased except with the written consent of such
Holder.
(c) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(d) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be in effect only to
the extent that such prohibition or invalidity, without invalidating the
remainder of this Agreement.
(e) Counterparts. This Agreement may be executed simultaneously in
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Agreement.
(f) Descriptive Headings. The section numbers and descriptive headings
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
(g) Governing Law. The Delaware General Corporation Law shall govern
all issues and questions concerning the relative rights of the Company and its
stockholders and all other issues and questions concerning the construction,
validity, interpretation and enforcement of this Agreement without giving effect
to any choice of law or conflict of law rules or provisions that would cause the
application of the laws of any jurisdiction other than the state of Delaware.
(h) Jurisdiction and Venue. The Company and Holder hereby consent to
the jurisdiction of the courts of Brevard County in the State of Florida and the
United States District Court for the Middle District of Florida, as well as to
the jurisdiction of all courts from which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out of
any of its obligations arising under this Agreement or with respect to the
transactions contemplated hereby, and expressly waives any and all objections it
may have as to venue in any of such courts.
(i) Notice of Transfer. The Holder and any other holder of Registrable
Securities agrees to notify the Company of any transfers of Registrable
Securities; provided, however, that any failure to give such notice shall not
adversely effect the rights to which any holder or transferee of Registrable
Securities would otherwise be entitled hereunder.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK.]
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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by their duly authorized officers as of the date
first above written.
COMPANY:
TELTRONICS, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
President
HOLDER:
XXXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------------------------
Its: Assistant Treasurer
---------------------------------------
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