EXHIBIT 99.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
October 7, 2002, and shall be effective as of the Closing Date, is made by and
among Xxxxxx Technologies, Inc., a Delaware corporation (the "COMPANY"), Abiliti
Solutions, Inc., a Missouri corporation ("ABILITI"), the investors in the
Investment Agreement (as defined below) (each an "INVESTOR" and collectively,
the "INVESTORS"), Xxxxxxx Bros., L.P., a Delaware limited partnership, ("KBRO"),
and the Permitted Transferees who become party to this Agreement from time to
time pursuant to the terms hereof.
RECITALS
A. In connection with the Asset Purchase Agreement dated
October 7, 2002, by and among the Company, Xxxxxx Solutions, Inc., a Delaware
corporation and indirect, wholly-owned subsidiary of the Company ("ACQUISITION
SUB") and Abiliti (the "PURCHASE AGREEMENT"), the Company has agreed, upon the
terms and subject to the conditions of the Purchase Agreement, to issue to
Abiliti (i) shares of the Company's Series F convertible preferred stock, par
value $.01 per share (the "SERIES F PREFERRED STOCK"), which are convertible
into shares of the Company's common stock, par value $.01 per share (the "COMMON
STOCK"; and together with the shares of Common Stock issuable upon conversion of
the Series F Preferred Stock, the "PURCHASE CONVERSION SHARES"), in accordance
with the terms of the Company's Certificate of Incorporation (the "CERTIFICATE
OF INCORPORATION"), (ii) shares of Common Stock (the "PURCHASE COMMON SHARES"),
and (iii) warrants in the form of Exhibit A to the Purchase Agreement to
purchase additional shares of Common Stock (with the KBRO Warrants (as defined
below), the "ORIGINAL WARRANTS"; and together with the shares of Common Stock
issuable upon exercise of the Warrants, including the KBRO Warrant Shares (as
defined below), the "ORIGINAL WARRANT SHARES").
B. In connection with the Investment Agreement dated October 7,
2002, by and among the Company and the Investors (the "INVESTMENT AGREEMENT"),
the Investors have agreed to purchase from the Company, and the Company has
agreed to issue and sell to the Investors (i) an aggregate of 115,681 shares of
Series F Preferred Stock (the "INVESTMENT SERIES F SHARES"), which are
convertible into shares of Common Stock (the "INVESTMENT CONVERSION SHARES"),
(ii) an aggregate of 10,992,136 shares of Common Stock (the "INVESTMENT COMMON
SHARES"), (iii) original warrants in the form attached as Exhibit B to the
Investment Agreement to purchase an additional 5,666,069 shares of Common Stock
(the "INVESTMENT ORIGINAL WARRANT EXERCISE SHARES") and (iv) additional warrants
in the form attached to the Investment Agreement as Exhibit C (the "ADDITIONAL
WARRANTS") to purchase an additional 500,000 shares of Common Stock (the
"Additional Warrant Exercise Shares").
C. To induce Abiliti to execute and deliver the Purchase
Agreement, and to induce the Investors to enter into the Investment Agreement,
the Company has agreed to provide Abiliti, the Investors and the Permitted
Transferees rights with respect to the registration of Registrable Securities
(as defined below) under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, or any similar successor statute
(collectively, the "SECURITIES ACT"), and applicable state securities laws.
D. In connection with the closing of the Contemplated
Transactions, and as compensation to KBRO, the Company agreed to issue to KBRO a
warrant to purchase an aggregate of 250,000 shares of Common Stock (the "KBRO
WARRANTS" and the shares issuable upon exercise, the "KBRO WARRANT SHARES").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Holders hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "BEST EFFORTS" means the commercially reasonable
efforts that a prudent Person desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as expeditiously as
reasonably possible.
(b) "EFFECTIVENESS PERIOD" means the period beginning on
the date on which a Registration Statement on Form S-3 (as described in Section
2(a)) is declared effective and ending on the earliest of (i) the date as of
which each Demanding Holder (as defined in Section 2(a)) may sell all of its
Registrable Securities during a single three (3) month period pursuant to Rule
144 (or successor thereto) promulgated under the Securities Act ("RULE 144"),
(ii) the date as of which each Demanding Holder may sell all of its Registrable
Securities pursuant to paragraph (k) of Rule 144, or any successor thereto,
(iii) the date on which (A) the Demanding Holders shall have sold or otherwise
disposed of all the Registrable Securities included in the Registration
Statement and (B) none of the Registrable Securities (and related Series F
Preferred Stock, Purchase Original Warrants, Investment Original Warrants, KBRO
Warrants and Additional Warrants) included in the Registration Statement are
held by Persons entitled to the registration rights granted by this Agreement,
or (iv) such date on which the Company is no longer required to file reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) "HOLDER" means Abiliti, the Investors, KBRO and any
other Person who becomes a transferee or assignee of the rights hereunder in
accordance with Section 9 herein and who agrees in writing to become bound by
the provisions of this Agreement in accordance with Section 9 herein. Any Person
(as defined below) shall no longer be a Holder if such Person no longer holds
Registrable Securities, or Purchase Series F Shares, Investment Series F Shares,
Purchase Original Warrants, Investment Original Warrants, Additional Warrants,
or KBRO Warrant Shares.
(d) "MAJORITY IN INTEREST OF THE REGISTRABLE SECURITIES"
means the Holders of greater than 50% of all Registrable Securities (or, where
reference is made to a Majority in Interest of Registrable Securities proposed
to be included in a Registration Statement, the Holders of greater than 50% of
the Registrable Securities so proposed to be included), deeming for such
purposes (i) all shares of Series F Preferred Stock to have been converted into
either Purchase Conversion Shares or Investment Conversion Shares, as
applicable, at the applicable conversion ratio immediately prior to the
applicable time of determination, (ii) all Purchase Original Warrants to have
been exercised for Purchase Original Warrant Exercise Shares, (iii) all
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Investment Original Warrants to have been exercised for Investment Original
Warrant Exercise Shares, (iv) all Additional Warrants to have been exercised for
Additional Warrant Exercise Shares, and (v) all KBRO Warrants to have been
exercised for KBRO Warrant Shares, each in accordance with the terms thereof
immediately prior to the applicable time of determination.
(e) "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business, a trust, an
individual, a governmental or political subdivision thereof or a governmental
agency.
(f) "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the Securities Act and any
applicable rules and regulations promulgated thereunder (including, in the case
of a Registration Statement on Form S-3, Rule 415), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
(g) "REGISTRABLE SECURITIES" means (i) any and all
Purchase Common Shares, Investment Common Shares, Purchase Original Warrant
Exercise Shares, Investment Original Warrant Exercise Shares, Additional Warrant
Exercise Shares, Purchase Conversion Shares, Investment Conversion Shares and
KBRO Warrant Shares issued to Abiliti pursuant to the Purchase Agreement, issued
to an Investor pursuant to the Investment Agreement or issued to KBRO upon
exercise of the KBRO Warrant, and (ii) any shares of Common Stock issued or
issuable with respect to the Registrable Securities, as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise;
provided, however, that any shares of Common Stock issued as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise with respect to any Registrable Securities shall not be considered
Registrable Securities to the extent such shares of Common Stock are covered by
another, current and effective registration statement permitting the resale
without restriction of such shares. All of the Registrable Securities shall
cease to be Registrable Securities upon termination or expiration of the
Effectiveness Period. Additionally, Registrable Securities shall cease to be
Registrable Securities if and when such securities (A) can be resold under Rule
144(k) under the Securities Act, (B) are sold in a registered public offering,
(C) are sold in any transaction in which the recipient receives shares that are
freely tradable under the Securities Act, (D) are transferred to, or are
otherwise held by, any Person not entitled to the registration rights granted
under this Agreement, or (E) are sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale.
(h) "REGISTRATION PERIOD" means the period beginning on
the later of November 8, 2002 and the Closing Date, and ending on the earliest
of (i) the date on which no Registrable Securities are outstanding or (ii) the
end of the Effectiveness Period.
(i) "REGISTRATION STATEMENT" means a registration
statement or registration statements of the Company filed under the Securities
Act registering Registrable Securities, provided, however, that the term
"Registration Statement" shall not include any registration statement on Form
S-4 or Form S-8 filed or to be filed by the Company.
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(j) "RULE 415" means Rule 415 promulgated under the
Securities Act or any successor rule providing for offering securities on a
continuous or delayed basis.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Purchase Agreement and its exhibits,
schedules and attachments.
2. Registration.
(a) Demand Registration.
(i) Timing of Demand Registrations. At any time
during the Registration Period, the Holders of a Majority in Interest of the
Registrable Securities (individually, a "DEMANDING HOLDER" and collectively, the
"DEMANDING HOLDERS"), may request by notice to the Company (the "DEMAND NOTICE")
that the Company prepare, and, as soon as practicable, using its Best Efforts to
file within 45 days after receipt of the Demand Notice but in no event later
than 90 days after receipt of the Demand Notice (the "FILING DEADLINE"), file
with the SEC a Registration Statement on Form S-3 ("FORM S-3" being deemed to
include, for purposes of this Agreement, any comparable or successor form or
forms) for an offering to be made on a continuous basis pursuant to Rule 415
covering the sale by the Demanding Holders of the Registrable Securities as
provided for in this Section 2(a), provided, however, that in the event that the
Company does not then qualify for registration on Form S-3, or that the SEC,
pursuant to its rules, regulations or otherwise, prohibits the Company from
filing a Registration Statement on Form S-3, then either (i) the Filing Deadline
shall be the day that is 30 days following the Company's eligibility to file a
Registration Statement on Form S-3 or, if the SEC is not open for business on
such day, the next day that the SEC is open for business, or (ii) if a Majority
in Interest of the Registrable Securities proposed to be included in such
registration statement elect to require that the Company effect such
registration in respect of an underwritten offering on a form other than Form
S-3, then the Filing Deadline by which the Company must file a registration
statement on such form as is available for such a registration shall be the day
that is 90 days after written notice of such election is given, subject to the
provisions of Section 2(d) and to the restrictions set forth in Section 4(a)
(including, without limitation, the absence of any requirement that the Company
maintain the effectiveness on a Registration Statement for a continuous or
delayed offering basis on any form other than Form S-3). The Company (a) shall
use its Best Efforts to cause such Registration Statement to be declared
effective by the SEC as soon as practicable after the filing thereof and (b)
shall use its Best Efforts to cause such Registration Statement to be declared
effective by the SEC no later than the date which is 90 days after the filing of
such Registration Statement, or such later date as the Company and the Holders
of a Majority in Interest of the Registrable Securities shall agree in writing
(as so extended, the "EFFECTIVENESS DEADLINE"). Notwithstanding any other
provision herein, the Company shall have no liability hereunder for its failure
to file with the SEC a Registration Statement by the Filing Deadline, or to
cause such Registration Statement to be declared effective by the SEC by the
Effectiveness Deadline, in the event the failure to file a Registration
Statement or to cause the effectiveness of such Registration Statement, on or
before such respective dates arises from the action or inaction of any Holder,
including any Holder's failure to comply with its obligations pursuant to
Section 5 herein (a "HOLDER DELAY"). Notwithstanding any other provision herein,
so long as the Company has used its Best Efforts to cause the Registration
Statement to be declared effective by the SEC by the Effectiveness Deadline, the
Company shall have no liability to any Holder as a result of the failure to
cause such Registration
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Statement to be declared effective by such date. The right to require that the
Company file a Registration Statement to register Registrable Securities under
this Section 2(a)(i) is referred to as a "DEMAND REGISTRATION RIGHT."
(ii) Number of Demand Registrations. The Company
shall be obligated to prepare, file and cause to become effective pursuant to
this Section 2(a) an aggregate of no more than three Registration Statements,
which shall be on Form S-3 or, in the event Form S-3 is not available, such
other form as is available for such registration, subject to the provisions of
Sections 2(a)(i), 2(d) and 4(a); provided, however, that the Company shall not
be obligated to file more than one Registration Statement pursuant to this
Section 2(a) during any six month period. A Registration Statement will not
count as a Registration Statement unless it is declared effective by the SEC;
provided, however, that in the event a Registration Statement is withdrawn at
the request of the Demanding Holders (other than pursuant to a Cutback
Withdrawal Notice in accordance with the following paragraph (iii) and other
than a withdrawal of a Form S-3 that is refiled as a different form of
Registration Statement), the Demanding Holders will pay all Registration
Expenses with respect to such registration unless they agree to forfeit the
Demand Registration Right that they exercised in connection with such
registration.
(iii) Underwriter's Cutback. The Company and any
other holders of the Company's securities with "piggyback" rights shall have the
right to include securities in a Registration Statement. If, in the good faith
judgment of the managing underwriter, if any, marketing factors require a
limitation of the number of Registrable Securities to be underwritten, the
number of shares of Registrable Securities and other shares to be included in
such Registration Statement shall be reduced in the following order until such
inclusion, in the good faith judgment of the managing underwriter, will not
interfere with the successful marketing of the remaining Registrable Securities
(such reduced aggregate number as so determined by the managing underwriter, the
"MAXIMUM NUMBER OF MARKETABLE SECURITIES"): first, all securities that are not
contractually entitled to be included in such Registration Statement shall be
excluded; second, all securities that are entitled to be included in such
Registration Statement pursuant to contractual commitments made by the Company
that by their terms are junior to the rights granted under this Agreement shall
be excluded; and third, securities that are entitled to be included in such
Registration Statement pursuant to this Agreement and any other shares (the
"OTHER SHARES") included pursuant to registration rights that rank equal to the
rights granted under this Agreement, with such number of excluded securities to
be allocated on a pro rata basis among the holders of such securities in
accordance with the number of Registrable Securities then outstanding and held
by each such Holder. Prompt written notice of such reduction (the "REDUCTION
NOTICE"), specifying the number of Registrable Securities to be included in the
Registration Statement as so reduced (the "REDUCED SHARES"), shall be delivered
to each Demanding Holder. In the event (A) Other Shares are included in the
Registration Statement, and (B) the Reduced Shares are less than 75% of the
lesser of (i) the Maximum Number of Marketable Securities and (ii) the number of
Registrable Securities originally requested to be included in the Registration
Statement, then within ten days of receipt by the Demanding Holders of the
Reduction Notice, the Holders of a Majority in Interest of the Registrable
Securities proposed to be included in such Registration Statement may withdraw
the Demand Notice by delivering written notice of such withdrawal to the Company
(a "CUTBACK WITHDRAWAL NOTICE"). If a Demand Notice is withdrawn pursuant to a
Cutback Withdrawal Notice, the Company shall not be obligated to effect the
registration initiated pursuant to this Section 2(a), such Demand Registration
Right shall again become available to be exercised.
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(iv) Managing Underwriter. The managing
underwriter or other underwriters of any underwritten public offering covered by
a Registration Statement shall be selected by the mutual agreement of Demanding
Holders holding a Majority in Interest of the Registrable Securities proposed to
be included in such Registration Statement, which shall be reasonably acceptable
to the Board of Directors of the Company.
(v) Underwriter's Agreement. Upon receipt of a
valid Demand Notice, the Company shall enter into and perform customary
agreements (including an underwriting agreement in customary form with the
managing underwriter) and take such other actions as are prudent and reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities, including, without limitation, causing its officers to be reasonably
available for and to participate in "road shows," due diligence inquiries and
other information meetings as reasonably requested by the managing underwriter,
if any.
(b) Allocation of Registrable Securities. The initial
number of Registrable Securities included in any Registration Statement and each
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Holders based on the number of Registrable
Securities held by each Holder at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that a Holder sells or otherwise transfers
any of such Holder's Registrable Securities to another party who becomes a
Holder, each transferee Holder shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such Registration
Statement for such transferor Holder. Any shares of Common Stock included in a
Registration Statement and that remain allocated to any Person that ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Holders, pro rata based on the number of Registrable
Securities then held by such Holders that are covered by such Registration
Statement.
(c) Legal Counsel. Subject to Section 6 hereof, the
holders of a Majority in Interest of the Registrable Securities shall have the
right to select one legal counsel ("LEGAL COUNSEL") to review and, if
applicable, comment on, the Registration Statement and any amendments thereto
pursuant to this Section 2, provided such Holders provide a written certificate
to the Company of such selection. The Company shall reasonably cooperate with
Legal Counsel in connection with its review of the Registration Statement.
(d) Ineligibility for Form S-3. Notwithstanding anything
to the contrary herein, in the event that Form S-3 is not available to the
Company for any registration of Registrable Securities hereunder, and if a
Majority in Interest of the Registrable Securities so elect, pursuant to Section
2(a)(i), the Company shall file one or more Registration Statements to register
the sale of the Registrable Securities on another appropriate form, including a
Form S-1; provided, however, that the Company shall not be required to file such
Registration Statement pursuant to Rule 415 or any successor rule providing for
offering securities on a continuous or delayed basis.
(e) Incidental or "Piggyback" Registration. If the
Company proposes to file a Registration Statement under the Securities Act with
respect to an offering of Common Stock by the Company for its own account (other
than a Registration Statement on Form S-4 or S-8 or any
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successor thereto) or for the account of any stockholder of the Company, then
the Company shall give written notice of such proposed filing to each of the
Holders of Investment Series F Shares, Investment Conversion Shares, Investment
Common Shares, Investment Original Warrants, Investment Original Warrant
Exercise Shares, Additional Warrants and Additional Warrant Exercise Shares (the
"INVESTMENT HOLDERS") at least twenty (20) days before the anticipated filing
date, and such notice shall describe the proposed registration and distribution
and offer such Investment Holders the opportunity to register the number of
Investment Registrable Securities (as defined below) as each such Investment
Holder may request, subject in each case to the terms of any existing
registration rights agreement(s) (an "INCIDENTAL REGISTRATION"). The Company
shall use its Best Efforts (as defined herein) (within twenty (20) days of the
notice provided for in the preceding sentence) to cause the managing underwriter
or underwriters in the case of a proposed firm commitment underwritten offering
(the "Underwriter") to permit each of the Investment Holders who have requested
in writing to participate in the Incidental Registration to include its or his
Investment Conversion Shares, Investment Common Shares, Investment Original
Warrant Exercise Shares and Additional Warrant Exercise Shares that are
Registrable Securities (the "INVESTMENT REGISTRABLE SECURITIES") in such
offering on the same terms and conditions as the securities of the Company or
the account of such other stockholder, as the case may be, included therein. In
connection with any Incidental Registration under this Section 2(e) involving an
underwritten offering, the Company shall not be required to include any
Registrable Securities in such underwritten offering unless the Investment
Holders thereof accept the terms of the underwritten offering as agreed upon
between the Company, such other stockholders, if any, and the Underwriter, and
then only in such quantity as the Underwriter believes will not jeopardize the
success of the offering by the Company. If the Underwriter determines that the
registration of all or part of the Investment Registrable Securities that the
Investment Holders have requested to be included would materially adversely
affect the success of such offering, then the Company shall be required to
include in such Incidental Registration, to the extent of the amount that the
Underwriter believes may be sold without causing such adverse effect: first, all
of the securities to be offered for the account of the Company; second,
securities requested to be included in such offering pursuant to registration
rights granted by the Company whose rights are, by their terms, superior to
those granted to the Investment Holders hereunder; third, to the Registrable
Securities to be offered for the account of the Investment Holders pursuant to
this Section 2(e) and any securities requested to be included in such offering
pursuant to registration rights granted by the Company whose rights are, by
their terms, pari passu to those granted to Investment Holders hereunder, which
includes, without limitation, the rights granted in the registration rights
agreement dated March 30, 2001, between the Company and the investors therein,
pro rata based on the number of Registrable Securities owned by each such
Investment Holder and securities owned by each such other holder or registration
rights; and fourth, any other securities requested to be included in such
offering. Notwithstanding anything herein to the contrary, no holder of
Investment Registrable Securities may participate in any underwritten
registration hereunder unless such holder (i) agrees to enter into an
underwriting agreement in customary form with the Underwriter or Underwriters
and (ii) accurately completes and executes in a timely manner all
questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements, lock-up agreements and other documents reasonably
required under the terms of such underwriting agreements.
(f) Liquidated Damages. If, other than as a result of
Holder Delay, the first Registration Statement required to be filed pursuant to
Section 2(a) of this Agreement is not filed with the SEC on or prior to 90 days
after the Company's receipt of the Demand Notice (any such
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event, a "REGISTRATION DEFAULT"), then the Company shall pay each Investor
liquidated damages in an amount equal to one percent (1.0%) of the aggregate
purchase price paid by such Investor for the Investment Common Shares,
Investment Series F Shares, Investment Original Warrants and Additional Warrants
that are convertible or exercisable for the Registrable Securities not included
in the Registration Statement per calendar month, including a pro rata portion
thereof for any partial calendar month, that such Registration Default continues
("LIQUIDATED DAMAGES"). Upon cure of a Registration Default (by the filing of
the Registration Statement, as applicable) such Liquidated Damages shall cease
to accrue. All accrued Liquidated Damages shall be paid in cash to the Investors
entitled thereto, in proportion to the aggregate number of Registrable
Securities beneficially owned by each such Investor, on the last business day of
March, June, September or December, as applicable, following the Filing
Deadline. The provisions of this Section 2(f) may be waived by the Investors
representing a majority of the Investment Common Shares, Investment Conversion
Shares (or Investment Series F Shares, voting on an as converted basis),
Investment Original Warrant Exercise Shares and Additional Warrant Exercise
Shares that are included in the Demand Notice.
3. Limitations on Registration Rights. Any other provision of
this Agreement notwithstanding, if the Company furnishes to the Holders a
certificate signed by a duly authorized officer of the Company stating that in
the good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company for such Registration Statement to be filed
on or before the date filing would be required or to update or correct the
Registration Statement or prospectus pursuant to Section 4 hereof prior to its
effectiveness, then the Company shall be entitled to postpone filing the
Registration Statement or updating or correcting the Registration Statement or
prospectus, as applicable, or otherwise be obligated to effect any registration
pursuant to this Agreement for up to 90 days; provided, however, that the
Company shall only be allowed to postpone filing the Registration Statement or
updating or correcting the Registration Statement or prospectus prior to its
effectiveness, as applicable, pursuant to this Section 3, one time during any 12
month period unless such postponement is consented to by the Holders of a
Majority in Interest of the Registrable Securities to be included in such
Registration Statement.
4. Company Obligations. At such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2, the Company
will use its Best Efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
(a) When preparing and filing with the SEC a Registration
Statement with respect to the Registrable Securities as described in Section 2
and until the effectiveness thereof, the Company shall use its Best Efforts to
cause such Registration Statement relating to the Registrable Securities to
become effective as soon as possible after such filing and, provided the
Registration Statement is filed on Form S-3, to keep such Registration Statement
effective pursuant to Rule 415 at all times from and after the effective date of
the Registration Statement until the expiration of the Effectiveness Period. In
the event the Registration Statement is on a form other than Form S-3, the
Company shall have no obligation to maintain the effectiveness of such
Registration Statement under Rule 415 (or any successor thereto). The term "BEST
EFFORTS" as used in the first sentence of this Section 4(a) shall mean, among
other things, that the Company shall submit to the SEC, within three business
days after the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the
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staff has no further comments on the Registration Statement, as the case may be,
a request for acceleration of effectiveness of such Registration Statement to a
time and date not later than 48 hours or two business days (whichever is later)
after the submission of such request.
(b) Subject to Section 4(l), the Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement on Form S-3 and the prospectus used in
connection with such Registration Statement on Form S-3, which prospectus is to
be filed pursuant to Rule 424 promulgated under the Securities Act, as may be
necessary to keep such Registration Statement on Form S-3 effective at all times
during the Effectiveness Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement on
Form S-3 until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration Statement on Form S-3.
(c) The Company shall (i) permit Legal Counsel, as
selected and certified pursuant to Section 2(c), to review and comment upon a
Registration Statement and all amendments and supplements thereto at least five
days prior to their filing with the SEC and (ii) not file any document in a form
to which Legal Counsel reasonably objects and has advised the Company in writing
of its objection and the basis for such objection, provided that notwithstanding
anything to the contrary in this Agreement, the Company shall suffer no adverse
consequence from any delay in the filing of a Registration Statement if such
delay is caused by any delay in review of or comment on such Registration
Statement by Legal Counsel. The Company shall furnish to Legal Counsel, without
charge, (A) copies of any correspondence with the SEC or the staff of the SEC to
the Company or its representatives relating to the effectiveness of the
Registration Statement, (B) promptly after the same is prepared and filed with
the SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, and all exhibits, and (C) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto.
(d) The Company shall furnish to each Holder whose
Registrable Securities are included in any Registration Statement, without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, and all exhibits, (ii) upon the
effectiveness of any Registration Statement, five copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Holder may reasonably request),
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Holder may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such Holder.
(e) Subject to Section 4(l), the Company shall use its
Best Efforts to (i) register and qualify the Registrable Securities covered by a
Registration Statement under such securities or "blue sky" laws of such
jurisdictions in the United States as Legal Counsel or any Demanding Holder
reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Effectiveness Period (in the case of a
Registration Statement on Form S-3), (iii) take such other actions as may
-9-
be necessary to maintain such registrations and qualifications in effect at all
times during the Effectiveness Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 4(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Holder who holds
Registrable Securities included in the Registration Statement of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(f) As promptly as practicable after becoming aware of
such event or development, the Company shall notify each Holder whose
Registrable Securities are included in the Registration Statement in writing of
the happening of any event as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that such notice shall not
contain any material, non-public information), and, in the case of a
Registration Statement on Form S-3, promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver five copies of such supplement or amendment to each Holder whose
Registrable Securities are included in the Registration Statement (or such other
number of copies as such Holder may reasonably request). The Company shall also
promptly notify each Holder whose Registrable Securities are included in the
Registration Statement in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to Legal Counsel by overnight mail as
promptly as possible), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(g) The Company shall use its Best Efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Holder who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(h) At the reasonable request of any Holder whose
Registrable Securities are included in the Registration Statement and at the
Company's expense, the Company shall use its Best Efforts to furnish to such
Holder, on the date of the effectiveness of the Registration Statement and
thereafter from time to time upon any change or addition (including by way of
incorporation by reference) to the financial statements or financial information
included in the Registration Statement (i) a letter, dated such date, from the
Company's independent certified public accountants in form and substance as is
customarily given by independent certified public
-10-
accountants to underwriters in an underwritten public offering, addressed to
such Holder and the Company and any underwriter and (ii) an opinion, dated as of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to such Holder and any underwriter.
(i) During the Effectiveness Period, the Company shall
use its Best Efforts to cause all the Registrable Securities covered by a
Registration Statement to be listed on the securities exchange, The Nasdaq Stock
Market, the OTC Bulletin Board, or other inter-dealer quotation system, if any,
on which the Common Stock is then listed or quoted for trading. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 4(i).
(j) The Company shall reasonably cooperate with the
Holders who hold Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of certificates
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Holders may reasonably request and registered in such
names as the Holders may request.
(k) Within two business days after a Registration
Statement that includes the Registrable Securities is declared effective by the
SEC, the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Holders whose Registrable Securities are included in such Registration
Statement) written confirmation that such Registration Statement has been
declared effective by the SEC.
(l) Notwithstanding anything to the contrary herein, at
any time after the applicable Registration Statement has been declared effective
by the SEC, the Company may delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company, in the best
interest of the Company (a "GRACE PERIOD"); provided, that the Company shall
promptly (i) notify the Holders whose Registrable Securities are included in the
Registration Statement in writing of the existence of material non-public
information giving rise to a Grace Period (provided that in each notice the
Company will not disclose the content of such material non-public information to
the Holders) and the date on which the Grace Period will begin, and (ii) notify
the Holders in writing of the date on which the Grace Period ends; and, provided
further, that no Grace Period shall exceed 45 consecutive days and during any
consecutive 365 day period, such Grace Periods shall not exceed an aggregate of
120 days (an "ALLOWABLE GRACE PERIOD"). For purposes of determining the length
of a Grace Period above, the Grace Period shall begin on and include the date
the Holders receive the notice referred to in clause (i) and shall end on and
include the later of the date the Holders receive the notice referred to in
clause (ii) and the date referred to in such notice. The provisions of Section
4(f) hereof shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 4(f) with respect to the information giving rise
thereto. The Holders agree to hold confidential the existence of the Company's
request for a Grace Period and to execute such agreements as reasonably
requested by the Company to keep such information confidential.
-11-
(m) If requested by a Holder whose Registrable Securities
are included in the Registration Statement, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as a Holder reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such other
offering provided that such information is required to be included in the
Registration Statement by the Securities Act; (ii) as soon as practicable make
all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) as soon as practicable,
supplement or make amendments to any Registration Statement if reasonably
requested by a Holder of such Registrable Securities.
(n) The Company shall use its Best Efforts to cause the
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
(o) The Company shall make generally available to its
security holders as soon as practical, but not later than 90 days after the
close of the period covered thereby, an earnings statement as contemplated by
Section 11(a) of the Securities Act (in form and in a manner complying with the
provisions of Rule 158 promulgated under the Securities Act). The Company shall
otherwise use its Best Efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.
(p) The Company shall make available for inspection by
(i) any Holder, (ii) Legal Counsel, (iii) one firm of accountants or other
agents retained by consent of the Holders of a Majority in Interest of the
Registrable Securities and upon delivery to the Company of a certificate
executed by such Holders giving notice of such selection and (iv) any
underwriter (collectively, the "INSPECTORS"), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably requested by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make
any disclosure (except to a Holder) or use any Record or other information that
the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (A) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the Securities Act at a
time when there is no Grace Period, (B) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a court or government
body of competent jurisdiction, or (C) the information in such Records has been
made generally available to the public other than by disclosure in violation of
this or any other agreement of which the Inspector has knowledge. Each Holder
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.
-12-
5. Obligations of the Holders.
(a) At least seven days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Holder in
writing of the information the Company requires from each such Holder if such
Holder elects to have any of such Holder's Registrable Securities included in
such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.
(b) Each Holder by such Holder's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Holder has notified the Company in
writing of such Holder's election to exclude all of such Holder's Registrable
Securities from such Registration Statement.
(c) Each Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(g), the first sentence of Section 4(f), or Section 4(l), such Holder will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(d) or the first sentence of Section 4(f) or receipt of
notice that no supplement or amendment is required, or in the case of Section
4(l) that the Grace Period has expired and if so directed by the Company, such
Holder shall deliver to the Company or destroy (and deliver to the Company a
written certificate of destruction) all copies in such Holder's possession, of
the prospectus covering such Registrable Securities at the time of receipt of
such notice.
(d) To the extent requested by the managing underwriter
in the case of an underwritten public offering, and if all of the Company's
executive officers, directors and holders in excess of five percent (5%) of its
outstanding capital stock execute agreements identical to those referred to in
this Section 5(d), each Holder agrees not to effect any public sale or
distribution of any Registrable Securities or of any securities convertible into
or exchangeable or exercisable for such Registrable Securities, including a sale
pursuant to Rule 144 promulgated under the Securities Act, during the 90 day
period or such shorter period, if any, mutually agreed upon by such Holder and
the managing underwriter beginning on the effective date of such Registration
Statement (except as part of such registration).
(e) If a Holder has entered into a contract for sale of
its Registrable Securities prior to the Holder's receipt of a notice from the
Company of the happening of any event of the kind described in Section 4(g), the
first sentence of Section 4(f), or Section 4(l) and for which the Holder has not
yet settled, the Company agrees to (i) cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of the Holder in accordance
with the terms of the purchase agreement in connection with any sale, or (ii) be
fully liable for any damages resulting from any breach of such contract for sale
by the Holder resulting from such Holder's compliance with this Section 5(e).
-13-
6. Expenses of Registration. Except as otherwise set forth
herein, all reasonable expenses (including up to $25,000 of Legal Counsel fees
and expenses), other than underwriting discounts, Legal Counsel fees and
expenses in excess of $25,000, and brokerage commissions incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 4,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees shall be paid by the Company.
7. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement and without limitation as to
time, indemnify and hold harmless each Holder, such Holder's officers,
directors, agents (including any underwriters retained by such Holder in
connection with the offer and sale of Registrable Securities), each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and attorneys' fees) and expenses (collectively, "LOSSES"), that
arise out of or are based upon (x) any untrue statement of a material fact or
alleged untrue statement of material fact contained in the Registration
Statement, any prospectus, or any form of prospectus or amendment or supplement
thereto, (y) any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(z) any violation or alleged violation by the Holder (or its underwriter) of the
prospectus delivery requirements of the Securities Act. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 7(a): (w) shall not apply to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by or on behalf of
such Holder expressly for use in any Registration Statement, prospectus or any
amendment or supplement thereto, which information was reasonably relied on by
the Company for use therein or to the extent that such information relates to
such Holder or such Holder's or managing underwriter's proposed method of
distribution of Registrable Securities and was reviewed and approved by such
Holder or underwriter for use in the Registration Statement, such prospectus or
such form of prospectus or in any amendment or supplement thereto; (x) with
respect to any preliminary prospectus, shall not inure to the benefit of any
such Holder, managing underwriter or any related Indemnified Party (as defined
in subsection (c) below) from whom the Person asserting any such Losses
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any Person controlling such Person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 4(d) hereof; (y) shall
not be available to the extent such Losses are based on a failure of a Holder to
deliver or to cause to be delivered the prospectus made available by the
Company; and (z) shall not apply to amounts paid in settlement of any losses,
claims, damages, liabilities, costs if such settlement is effected without the
prior written consent of the Company, which consent shall not be unreasonably
withheld.
-14-
(b) Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses to the extent they arise out of or are based upon (x) any
untrue statement of a material fact or alleged untrue statement of material fact
contained in the Registration Statement, any prospectus, or any form of
prospectus or amendment or supplement thereto, or (y) any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (z) any violation or alleged violation
by the Holder (or its underwriter) of the prospectus delivery requirements of
the Securities Act, including, without limitation, Losses arising out of the
failure to deliver, or to cause to be delivered, or alleged failure to deliver
or cause to be delivered any amendments or supplements to the prospectus or
supplement, if such amendment or supplement was timely made available to such
Holder; provided, however, that the Holder shall be liable under this Section
7(b) to the extent, but only to the extent, that such untrue statement is
contained in, or such omitted information is required to be contained in, any
information furnished in writing by such Holder to the Company specifically for
use in connection with the Registration Statement or such prospectus or any
amendment or supplement thereto, or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and approved by such Holder expressly for use in the
Registration Statement, such prospectus or such form of prospectus or any
amendment or supplement thereto; provided, further that the Holder shall be
liable under this Section 7(b) for only that amount of a claim or Losses as does
not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings.
(i) If any proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (each an
"INDEMNIFIED PARTY" and collectively, the "INDEMNIFIED PARTIES"), such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(each the "INDEMNIFYING PARTY" and collectively, the "INDEMNIFYING PARTIES") in
writing promptly after receipt by the Indemnified Party of notice of such
proceeding, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and adversely prejudiced the Indemnifying Party or the
defense of such proceeding or is shown to be the proximate cause of additional
Losses.
(ii) An Indemnified Party shall have the right to
employ separate counsel in any such proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Indemnified Parties unless: (1) the Indemnifying Party
has agreed to pay such fees and expenses; or (2) the Indemnifying Party shall
have failed promptly to assume the defense of such proceeding and to
-15-
employ counsel reasonably satisfactory to such Indemnified Party in any such
proceeding; or (3) the named parties to any such proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable expenses of such counsel shall be at the expense of the
Indemnifying Party). Notwithstanding the foregoing, in no event shall an
Indemnifying Party be required to pay the expenses of more than one separate
counsel. The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such proceeding.
(d) Contribution. If a claim for indemnification under
Section 7(a) or Section 7(b) is unavailable to an Indemnified Party because of a
failure or refusal of a governmental authority to enforce such indemnification
in accordance with its terms (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 7(c), any reasonable attorneys' or other fees or expenses incurred by
such party in connection with any proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section 7 was available to such party in accordance with its terms. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by the Holder from the sale of the Registrable
Securities subject to the proceeding exceeds the amount of any damages that the
Holder 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.
-16-
(e) Fees and Expenses - Indemnification. All fees and
expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
proceeding in a manner not inconsistent with this Section 7) shall be paid to
the Indemnified Party, as incurred, within ten (10) business days after written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder); provided, however, this Section 7(e) shall not apply
if there is a bona fide dispute between the Indemnifying Party and the
Indemnified Party as to the Indemnified Party's right to indemnification in the
instance in question.
(f) Cumulative. The indemnity and contribution agreements
contained in this Section 7 are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties.
8. Reports Under the Securities Act and the Exchange Act. With a
view to making available to the Holders the benefits of Rule 144 or any other
similar rule or regulation of the SEC that may at any time permit the Holders to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) furnish to each Holder so long as such Holder owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of the Exchange Act
or, if applicable, that there is publicly available the information concerning
the Company described in Rule 144(C)(2), (ii) unless available on the XXXXX
system, a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Holders to sell such
securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights. The rights of the Holders
hereunder, including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be assignable by each Holder to any
Permitted Transferee (as defined below) of such Holder with respect to all or
any portion of the Registrable Securities if: (i) the Holder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the Company is
furnished with written notice of (a) the name and address of such transferee or
assignee and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment,
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement and the
other agreements contemplated thereby. Further, the Holder shall execute
-17-
and deliver to the Company a certificate representing to the Company that such
transferee or assignee is a Permitted Transferee of the Holder and stating the
number of Registrable Securities affected by such transfer or assignment. A
"PERMITTED TRANSFEREE" of a Holder shall mean (a) any successor by merger to
Abiliti (so long as such merger is with and into a newly formed entity, the
membership interests of which after giving effect to such merger are held solely
by creditors of Abiliti), (b) each creditor of Abiliti (or stakeholder of such
successor) to whom shares of Common Stock and Series F Preferred Stock or
Original Warrants are distributed in respect of amounts owed to such creditor by
Abiliti (or, as the case may be, in respect of their interests in the successor
referred to in the preceding clause (a)) (the "ABILITI DISTRIBUTEES") and (c)
any transferee or assignee who, after giving effect to such transfer or
assignment by an Abiliti Distributee, holds at least 40% of the Registrable
Securities held by such Abiliti Distributee (i) after giving effect to all
distribution(s) by Abiliti (or such successor) to such Abiliti Distributee, plus
(ii) pursuant to the Investment Agreement.
10. Amendment of Registration Rights. Provisions of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Holders who then hold a Majority in Interest
of the Registrable Securities. Any amendment or waiver affected in accordance
with this Section 10 shall be binding upon each Holder and the Company.
11. Miscellaneous.
(a) A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) All notices, consents, waivers or other
communications under this Agreement must be in writing and will be deemed to
have been duly given when: (i) delivered by hand (with written confirmation of
receipt); (ii) sent by telecopier (with written confirmation of receipt);
provided that a copy is mailed by registered mail, return receipt requested or
nationally recognized overnight delivery service; or (iii) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
(A) if to the Company:
Xxxxxx Technologies, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, President and CEO
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-18-
With a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000; and
(B) if to a Holder, to it at the address and facsimile number set
forth below adjacent to such Holder's name on EXHIBIT A hereto, with copies to
such Holder's representatives as set forth on EXHIBIT A.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service shall be
reputable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) The corporate laws of the State of Delaware shall
govern all issues concerning the relative rights of the Company and the Holders.
All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Delaware. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. Each party hereby irrevocably waives any
right it might have, and agrees not to request, a jury trial for the
adjudication of any dispute hereunder of in connection herewith or arising out
of this Agreement or any transaction contemplated hereby.
(e) This Agreement, the Purchase Agreement, the
Investment Agreement, the Escrow Agreement, the Abiliti Voting Agreements and
the Warrants are the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(f) Subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
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(g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
(i) Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(j) All consents and other determinations to be made by
the Holders pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Holders holding a Majority in Interest of the Registrable
Securities.
(k) The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party.
(l) If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the Holders shall be enforceable to the fullest
extent permitted by law.
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
XXXXXX TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Chairman, President and Chief
Executive Officer
ABILITI SOLUTIONS, INC.
By: /s/ Xxxxxx X. Quick
-------------------------------------
Name: Xxxxxx X. Quick
Title: President and Chief Executive
Officer
XXXXXXX CAPITAL II, L.P.
By Xxxxxxx Brothers, LLC,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx,
Managing Member
STRATEGIC ENTREPRENEUR FUND II, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx,
General Partner
XXXXXXX BROTHERS, L.P.
By: /s/ Xxxxxxx Bros., L.P.
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
