EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT FOR SHARES
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of February 12, 2003 by and among Indus International, Inc., a
Delaware corporation (the "Company"), and those persons (the "Purchasers")
identified on, and a party to, an executed copy of the Subscription Agreement to
which this Agreement is an Exhibit (the "Subscription Agreement").
This Agreement is made pursuant to the Subscription Agreement and the
Purchase Agreement that is included as Exhibit A to the Subscription Agreement
(the "Purchase Agreement"), by and between the Company and the Purchasers,
pursuant to which the Company is issuing and selling up to 6,871,480 shares of
its common stock, $0.001 par value per share (the "Common Stock" or the
"Shares") and up to $20,000,000 in aggregate principal amount of its 8%
convertible notes due 2003 (the "Convertible Notes" or the "Notes") to the
Purchasers. The Shares and Notes are being offered and sold to the Purchasers
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act, and the provisions of Rule 506 of Regulation
D, promulgated under the Securities Act. In order to induce the Purchasers to
enter into the Purchase Agreement, the Company has agreed to provide to the
Purchasers (and their direct and indirect permitted transferees, if any) the
registration rights set forth in this Agreement with respect to the resale of
the Shares, as well as the registration rights set forth in the Registration
Rights Agreement for Conversion Shares (as defined in the Purchase Agreement),
included as Exhibit C to the Subscription Agreement, with respect to the resale
of the shares of Common Stock to which the Notes may convert upon the requisite
Company stockholder approval (the "Conversion Shares"). The execution and
delivery of this Agreement is a condition to the Closing under the Purchase
Agreement. Capitalized terms used but not defined herein shall have the meaning
provided in the Purchase Agreement.
In consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
SECTION 1
REGISTRATION RIGHTS
1.1. FILING OF FORM S-3 RESALE REGISTRATION STATEMENT. As soon as
practical and, within thirty (30) days after the Closing under the Purchase
Agreement, the Company shall file with the Securities and Exchange Commission
(the "SEC" or the "Commission") a registration statement on Form S-3 pursuant to
Rule 415 under the Securities Act, or, in the event that Form S-3 is unavailable
to the Company, a registration statement on such other SEC Form that is
available to the Company (together with any exhibits, amendments or supplements
thereto, and any documents incorporated by reference therein, the "Registration
Statement"), with respect to the resale of the Shares, and any securities of the
Company issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the Shares. The securities described in the
preceding sentence are collectively referred to herein as the "Registrable
Securities"; provided, that the term "Registrable Securities" shall not include
securities transferred to a person other than a permitted transferee.
1.2. EFFECTIVENESS OF REGISTRATION STATEMENT. The Company shall,
subject to Section 6 hereof, use its commercially reasonable efforts to cause
the Registration Statement to become effective as soon as practicable and within
90 days after the filing thereof, and shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective from the date
such Registration Statement becomes effective until the earlier of (i) the date
on which all Registrable Securities have been resold
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under such Registration Statement, and (ii) the date on which all Registrable
Securities may be resold without restriction or limitation (the "Effectiveness
Period").
1.3 DEMAND REGISTRATION AND "PIGGY-BACK" REGISTRATION RIGHTS.
Should the Registration Statement not be declared effective within the period
provided under Section 1.2 of this Agreement, or should its effectiveness lapse
at any point during the Effectiveness Period, if holders of the Registrable
Securities, or their permitted transferees, as appropriate (collectively, the
"Holders") holding more than 30% of the Shares not then resold so call and
demand, the Company shall, at its own expense, use its commercially reasonable
efforts to cause the Registration Statement, or a substitute or replacement
registration statement on Form S-3 or Form S-1 or a successor form, to become
effective. Such demand registration rights may be exercised by the Holders up to
three times.
In addition, the Holders shall have, at the Company's expense,
"piggy-back" registration rights if the Registration Statement is not declared
effective within the period provided under Section 1.2 of this Agreement, or
should its effectiveness lapse at any point during the Effectiveness Period.
Therefore, if the Company at any time determines to register any of its
securities, for its own account or the account of any of its stockholders, other
than a registration relating solely to employee benefit plans, a registration
related to the offering of debt securities of the Company, or a registration
statement on any form (other than Form X-0, X-0 or S-3, or their successor
forms) that does not include substantially the same information as would be
required in the Registration Statement covering the Registrable Securities, the
Company will:
(a) give to each Holder notice thereof as soon as
practicable prior to the filing of such registration statement; and
(b) include in such registration statement all the
Registered Securities specified in written requests, made within five
business (5) days after receipt of notice from the Company, by any
Holder, subject to the other limitations and exceptions set forth
herein with respect to the Registration Statement.
1.4. SUPPLEMENTS; AMENDMENTS. Subject to Section 6 hereof, the
Company shall supplement or amend the Registration Statement, (i) as required by
Form S-3, including, without limitation, the instructions applicable to Form
S-3, or by the Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or the rules and regulations promulgated under the
Securities Act or the Exchange Act, respectively, and (ii) to include in the
Registration Statement any additional securities that become Registrable
Securities by operation of the definition thereof. The Company shall furnish to
the Holders of the Registrable Securities to which the Registration Statement
relates copies of any such supplement or amendment sufficiently in advance (but
in no event less than five (5) business days in advance) of its use and/or
filing with the Commission to allow the Holders a meaningful opportunity to
comment thereon with respect to the information contained therein regarding the
Holders and any plan for resale of the Registrable Securities. The Holders agree
that they will within five (5) business days prior to the filing of the
Registration Statement supply information regarding themselves and their plan of
resale to the Company and hereby waive any notice of the initial filing of the
Registration Statement, and that such Holders and their successors and assigns
will promptly notify the Company of any changes in such information.
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SECTION 2
EXPENSES
The Company shall pay all expenses, fees and costs incurred in
connection with the preparation, filing, distribution and effectiveness of the
Registration Statement and any supplements or amendments thereto, whether or not
the Registration Statement becomes effective, and whether all, none or some of
the Registrable Securities are sold pursuant to the Registration Statement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, fees and state
securities, or "blue sky," fees and expenses and reasonable fees and expenses of
one counsel for all the Holders, not to exceed $25,000, and the expense of any
special audits incident to or required by, or in connection with the filing and
effectiveness of the Registration Statement (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company). The Holders shall, severally and not jointly, pay all underwriting
fees and discounts, selling commissions, brokerage fees and stock transfer taxes
applicable to the Registrable Securities sold by such Holder and the fees and
expenses of their counsel in excess of $25,000, if any.
SECTION 3
REGISTRATION PROCEDURES
3.1. REGISTRATION. The Company will advise the Holders as to the
status of the preparation, filing and effectiveness of the Registration
Statement and, at the Company's expense, will do the following:
(a) make available to each Holder upon their request a
copy of the Registration Statement (including all exhibits thereto) and
any prospectus forming a part thereof and any amendments and
supplements thereto (including all documents incorporated or deemed
incorporated by reference therein prior to the effectiveness of the
Registration Statement and including each preliminary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act,
which documents, other than documents incorporated or deemed
incorporated by reference, will be subject to the review of the
information contained therein regarding the Holders and any plan for
resale of the Registrable Securities by the Holders and any such
underwriter for a period of at least five (5) business days from the
Holder's receipt of such documents, and the Company shall not file the
Registration Statement or such prospectus or any amendment or
supplement to the Registration Statement or prospectus if any Holder
shall reasonably object within five (5) business day period after the
receipt thereof unless the Company shall have been advised by its
counsel that the Registration Statement or such prospectus or amendment
or supplement thereto is required under the Securities Act or the rules
or regulations adopted thereunder in connection with the distribution
of Registrable Securities by the Holders or the Company. A Holder shall
be deemed to have reasonably objected to such filing only if the
Registration Statement, amendment, prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement
or omission with respect to such Holder or its plan of resale;
(b) make available to each Holder upon their request one
conformed copy of the Registration Statement and of each amendment and
supplement thereto (in each case including all exhibits) and such
number of copies of the prospectus forming a part of the Registration
Statement (including each preliminary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
including, without limitation, documents incorporated or deemed to be
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incorporated by reference prior to the effectiveness of such
Registration Statement, as each of the Holders or any such underwriter,
from time to time may reasonably request;
(c) to the extent practicable, promptly upon the filing
of any document that is to be incorporated by reference into the
Registration Statement or prospectus forming a part thereof subsequent
to the effectiveness thereof, and in any event no later than five (5)
business days after such document is filed with the Commission, make
available copies of such document to the Holders upon their request,
and make representatives of the Company available for discussion of
such document and other customary due diligence matters; and provide
promptly to the Holders upon request any document filed by the Company
with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act;
(d) make available at reasonable times for inspection by
the Holders, and any attorney, accountant, financial adviser or other
representative (collectively, "Representatives") retained by the
Holders, subject to the recipient's prior written agreement to keep
such information confidential and not use or disclose it, all financial
and other records, pertinent corporate documents and properties of the
Company and cause the officers, directors and employees of the Company
to supply all information reasonably requested by the Holders or their
respective Representatives in connection with the preparation, filing
and effectiveness of the Registration Statement;
(e) use its commercially reasonable efforts (i) to
register or qualify all Registrable Securities covered by the
Registration Statement under state securities, or "blue sky," laws of
such States of the United States of America where required and where an
exemption is not available and as the Holders of Registrable Securities
covered by the Registration Statement shall reasonably request, (ii) to
keep such registration or qualification in effect for so long as the
Registration Statement is required to be effective hereunder, and (iii)
to take any other action which may be reasonably necessary or advisable
to enable the Holders to consummate the disposition of the securities
to be sold by the Holders in such jurisdictions, consistent with the
plan of distribution described in the prospectus included in the
Registration Statement, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where it is not so qualified, or 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 or applicable rules or regulations
thereunder;
(f) use its commercially reasonable efforts to cause all
Registrable Securities covered by the Registration Statement to be
registered or qualified with or approved by all other applicable
Governmental Authorities as may be necessary, in the opinion of counsel
to the Company and counsel to the Holders of Registrable Securities, to
enable the Holders thereof the consummate the disposition of such
Registrable Securities;
(g) subject to Section 6 hereof, promptly notify each
Holder of Registrable Securities covered by the Registration Statement
(i) upon discovery that, or upon the occurrence of any event as a
result of which, the prospectus forming a part of the Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, (ii) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
proceedings for that purpose, (iii) of any request by the Commission
for (A) amendments to the Registration
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Statement or any document incorporated or deemed to be incorporated by
reference in the Registration Statement, or (B) supplements to the
prospectus forming a part of the Registration Statement, or (C)
additional information, or (iv) of the receipt by the Company of any
notification with respect to the suspension of the registration,
qualification or exemption from registration or qualification of any of
the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and at the request of
any such Holder promptly prepare and file an amendment to the
Registration Statement or a supplement to the prospectus as the Company
may deem necessary so that, as thereafter delivered to the purchasers
of such securities, 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, in
the light of the circumstances under which they were made, not
misleading; and make available to each Holder upon their request a
reasonable number of copies of such supplement to, or amendment of,
such registration statement and prospectus, and, in the event of a stop
order, use its commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of any the Registration
Statement, or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction;
(h) if reasonably requested by any Holder or if required
by law or SEC or other applicable rule or regulation, promptly
incorporate in the Registration Statement such appropriate information
as the Holder may reasonably request to have included therein by filing
a Form 8-K, or filing a supplement to the prospectus, to reflect any
change in the information regarding the Holder, and make all required
filings with the Commission in respect of any offer or sale of
Registrable Securities or any amendment or supplement to the
Registration Statement or related prospectus;
(i) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months, but not more than
18 months, beginning with the first full calendar month after the
effective date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder; and
(j) use its commercially reasonable efforts to cause all
Registrable Securities included in the Registration Statement to be
listed on Nasdaq and each securities exchange on which securities of
the same class are then listed, or, if not then listed on any
securities exchange or Nasdaq, to be eligible for trading in any
over-the-counter market or trading system in which securities of the
same class are then traded.
3.2. UNDERWRITING. If Holders of at least 50% of the Registrable
Securities ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
notify the Company. The Holders whose shares are to be included in such
registration and the Company shall (together with all other stockholders
proposing to distribute their securities through such underwriting) enter into
underwriting and related agreements in customary form with the representative of
the underwriter or underwriters selected for such underwriting by the Initiating
Holders and reasonably acceptable to the Company. In any case, such
representative shall be a nationally recognized underwriter in good standing.
Such underwriting agreement will contain such representations and warranties by
the Company and such other terms and provisions as are customary for
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution, the provision of opinions of
counsel and accountants' letters and the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the Holders. The
Company shall cooperate fully
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with the Holders and the underwriters in connection with any underwritten
offering. Notwithstanding any other provision of this Section 3.2, if the
representative of the underwriters advises the Holders in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
securities of the Company held by other stockholders shall be excluded from such
registration to the extent so required by such limitation. If, after the
exclusion of such shares, still further reductions are required, the number of
shares included in the registration by each Holder shall be reduced on a pro
rata basis (based on the number of shares held by such Holder), by such minimum
number of shares as is necessary to comply with such request; provided, that
there shall be no reduction in the number of shares included in the registration
by any Holders until all shares of other stockholders have been excluded from
such registration. No Registrable Securities or any other securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. If any other stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders. The securities so
withdrawn shall also be withdrawn from registration. If the underwriter has not
limited the number of Registrable Securities or other securities to be
underwritten, the Company and officers and directors of the Company may include
its or their securities for its or their own account in such registration, or
for the account of others, if the representative so agrees and if the number of
Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
SECTION 4
INDEMNIFICATION
4.1. INDEMNIFICATION BY THE COMPANY. The Company will indemnify:
(a) each of the Holders, as applicable,
(b) each of the Holder's officers, directors, members and
partners, and
(c) each individual, partnership, joint stock company,
corporation, trust, unincorporated organization,
government agency or political subdivision (each of
the foregoing, a "Person") controlling each of the
Holders within the meaning of SEC Rule 405 under the
Securities Act, Section 15 of the Securities Act or
Section 20 of the Exchange Act,
with respect to the Registration Statement, against all expenses, claims,
losses, damages and liabilities (or actions, investigations or proceedings in
respect thereof) (collectively, a "Claim") arising out of or based on any actual
or alleged untrue statement of a material fact, or any omission of a material
fact required to be stated therein or necessary in order to make the statements
included therein not misleading, contained in the Registration Statement, any
prospectus or other offering document (including any related registration
statement, notification or the like) incident to the registration, qualification
or compliance, or any violation by the Company of the Securities Act or the
Exchange Act or any other laws 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, qualification or compliance, and will
reimburse each of the Holders, each of its officers, directors, members and
partners, and each Person controlling each of the Holders, for any legal and any
other expenses reasonably incurred in connection with investigating and
defending any such Claim; provided, however, that the Company will not be liable
in any such case to the extent that any such Claim (i) arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company by the Holders or their Representatives and stated to be
specifically for use therein, or (ii) is finally judicially determined to have
resulted primarily from the
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gross negligence or willful misconduct of any person or entity set forth in
subsections (a) through (c) above.
4.2. INDEMNIFICATION BY THE HOLDERS. Each of the Holders will, if
Registrable Securities held by it are included in the securities as to which
such Registration Statement is being effected, severally and not jointly,
indemnify the Company, each of its directors and officers, and each Person who
"controls" the Company within the meaning of SEC Rule 405 under the Securities
Act, Section 15 of the Securities Act or Section 20 of the Exchange Act, and
each other Holder, against all Claims arising out of or based on any actual or
alleged untrue statement of a material fact, or any omission or a material fact
required to be stated therein or necessary in order to make the statement
included or incorporated therein not misleading, contained in the Registration
Statement, prospectus, or other offering document made by or on behalf of such
Holder, and will reimburse the Company and each other Holder, its respective
directors, officers, partners, members or control Persons for any legal or any
other expenses reasonably incurred in connection with investigating and
defending any such Claim, 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 the Registration Statement, prospectus, offering memorandum
or other document in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Holder and stated to be
specifically for use therein; provided, however, that the several obligations of
each of the Holders hereunder shall be limited to an amount equal to the net
proceeds received by such Holder from the sale of the Registrable Securities
pursuant to the Registration Statement.
4.3. PROCEDURES. Each party entitled to indemnification under this
Agreement (each, an "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any Claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such Claim; provided that counsel for the Indemnifying Party, who shall conduct
the defense of such Claim, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of one such counsel for all Indemnified Parties
shall be at the expense of the Indemnifying Party), 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 Agreement unless
the Indemnifying Party is materially prejudiced thereby. No Indemnifying Party,
in the investigation or defense of any such Claim shall, except with the consent
of each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement or
compromise which does not include an unconditional release of the Indemnifying
Party from all liability in respect to such Claim. Each Indemnified Party shall
furnish such information regarding itself or the Claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the investigation and defense of such Claim.
4.4. CONTRIBUTION. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any Claim, 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
which resulted in such Claim, as well as any other relevant equitable
considerations; provided, however, that the Company will not be liable in any
such case to the extent that any such Claim (i) arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by the Holders or their Representatives and stated to be specifically
for use therein, or (ii) is finally judicially
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determined to have resulted primarily from the gross negligence or willful
misconduct of any person or entity set forth in Section 4.1(a) through 4.1(c)
above. 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 (or alleged
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, and provided that each Holder shall not be required to
contribute, in the aggregate, more than the net proceeds received by such Holder
from the sale of its Registrable Securities pursuant to the Registration
Statement and further provided that the obligations of the Holders under this
Section 4.4 shall be several and not joint.
SECTION 5
PROVISION OF INFORMATION BY THE HOLDERS
Each of the Holders whose Registrable Securities are included in the
Registration Statement shall furnish to the Company such information regarding
such Holder as the Company may reasonably request in writing and as shall be
reasonably required or advisable in connection with any registration,
qualification or compliance referred to in this Agreement, and shall promptly
notify the Company if such information becomes incorrect or misleading, or
requires amendment or updating. Each of the Holders, severally and not jointly,
agrees that the plan of distribution included in any prospectus relating to the
Registrable Securities shall be substantially as set forth on Schedule B-1
hereto and that such Holder will not resell any Registrable Securities pursuant
to the Registration Statement in any manner other than as provided therein or
herein. The other information regarding the Holders required for the initial
filing of the Registration Statement has been provided by each Holder on the
Subscription Agreement. Each Holder, severally and not jointly, represents,
warrants and covenants to the Company that the information regarding such Holder
that appears in the Subscription Agreement and/or Schedule B-2 is accurate and
complete in all material respects consistent with Commission Regulation S-K,
Items 507 and 508. The Purchaser will confirm promptly by delivery of a signed
copy of Schedule B-2, the sale of any Shares pursuant to Rule 144 or the
Registration Statement.
SECTION 6
HOLDBACK; POSTPONEMENT
Notwithstanding the other provisions of this Agreement, if (a) there is
material non-public information regarding the Company which the Company's Board
of Directors reasonably and in good faith determines not to be in the Company's
best interest to disclose and which the Company is not otherwise required to
disclose, or (b) there is a extraordinary business opportunity (including but
not limited to the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or other
similar extraordinary transaction not in the ordinary course of business)
available to the Company which the Company's Board of Directors reasonably and
in good faith determines not to be in the Company's best interest to disclose,
then the Company may postpone or suspend filing or effectiveness of a
registration statement for a period not to exceed 90 days, provided that the
Company may not postpone or suspend filing or effectiveness of a registration
statement for more than 180 days in the aggregate during any 365-day period and
there shall be an aggregate of not more than two (2) suspensions during any
365-day period; provided, however that no postponement or suspension shall be
permitted for consecutive 90 day periods arising out of the same set of facts,
circumstances or transactions.
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SECTION 7
RULE 144 REPORTING, ETC.
7.1. SEC REPORTING COMPLIANCE.
(a) With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time
permit the sale of the Registrable Securities to the public without
registration, through the second anniversary of this Agreement, the
Company will:
(i) make and keep "current public information"
regarding the Company available, as defined in Commission Rule
144(c) under the Securities Act, and cooperate with the
Holders and take such further reasonable action as the Holders
may reasonable request in writing (including, without
limitation, making such reasonable representations as the
Holders may reasonably request);
(ii) use its commercially reasonable efforts to
file with the Commission in a timely manner all SEC Reports
and other filings and documents required of the Company under
the Securities Act and the Exchange Act; and
(iii) so long as a Holder owns any Registrable
Securities, furnish the Holder forthwith upon request a
written statement by the Company as to its compliance with the
reporting requirements under the Securities Act and the
Exchange Act, including compliance with SEC Rule 144(c), a
copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company
and other information in the possession of, or reasonably
obtainable by, the Company as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission
allowing a Holder to sell any such securities without
registration.
Notwithstanding the foregoing, nothing in this Section 7.1(a) shall be deemed to
require the Company to register any of its securities (other than the Common
Stock) under any section of the Exchange Act.
(b) The Company shall file the reports required to be
filed by it under the Exchange Act and shall comply with all other
requirements set forth in the instruction to Form S-3 in order to allow
the Company to be eligible to file registration statements on Form S-3.
SECTION 8
MISCELLANEOUS
8.1. ASSIGNMENT. The registration rights set forth herein may be
assigned, in whole or in part, to any transferee of Registrable Securities
permitted in accordance with the Purchase Agreement, which transferee, upon
registration on the Company's or its transfer agent's books and records as a
holder of record of Registrable Securities, shall be considered thereafter to be
a Holder (provided that any transferee who is not an affiliate of a Purchaser
shall be a Holder only with respect to such Registrable Securities so acquired
and any stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, such Registrable
Securities) and shall be bound by all obligations and limitations of this
Agreement and the Purchase Agreement.
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8.2. SECTION HEADINGS. The titles and headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
8.3. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the conflict of law rules thereof to the extent that the application
of the law of another jurisdiction would be required thereby.
8.4. NOTICES.
(a) All communications under this Agreement shall be in
writing and shall be delivered by facsimile, by hand, by reliable
overnight delivery service such as UPS or FedEx or by registered or
certified mail, postage prepaid:
(i) if to the Company, to the address listed in
the Purchase Agreement, or at such other address as it may
have furnished in writing to the Purchasers;
(ii) if to the Purchasers, at the addresses
listed on Subscription Agreement, or at such other addresses
as may have been furnished the Company in writing.
(b) Any notice so addressed shall be deemed to be given
(i) if delivered by hand, on the date of such delivery, (ii) if sent by
reliable overnight delivery service such as UPS or FedEx, on the first
business day following the date of delivery to such service for
overnight delivery, (iii) if delivered by facsimile, on the date of
such facsimile, or (iv) if mailed by registered or certified mail, on
the third business day after the date of such mailing. In the event
that any notice is sent by facsimile transmission to the Company, such
transmission shall be followed immediately by overnight delivery to the
Company of such notice.
8.5. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties. No other person is intended to or
shall have any rights or remedies hereunder, whether as a third part beneficiary
or otherwise.
8.6. COUNTERPARTS. Persons may become parties to this Agreement be
entering into the Subscription Agreement, which may be executed in one or more
identical counterparts, each of which shall be deemed an original and all of
which shall be one and the same agreement. Any signature that is delivered by
facsimile signature page shall be valid and binding, with the same force and
effect as if an original, manually signed counterpart.
8.7. REMEDIES. Each Holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
8.8. SEVERABILITY. In the event that any provision contained herein
is unenforceable, the remaining provisions shall continue in full force and
effect.
8.9. DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Holders, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy, nor shall it be construed to be a waiver of any provision hereof,
B-10
or of any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character by a Holder of any
breach or default under this Agreement, or any waiver by a Holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in the writing, and that all
remedies, either under this Agreement, or by law or otherwise afforded to a
Holder, shall be cumulative and not alternative.
8.10. ATTORNEY'S FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
8.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Purchase
Agreement, the Subscription Agreement and the other Agreements constitute the
entire understanding and agreement of the parties with respect to the subject
matter hereof and supersede all prior understandings, written or otherwise,
among such parties. This Agreement may be amended only in a writing signed by
the Company and the Holders of at least a majority of the then outstanding
Registrable Securities.
8.12. TERMINATION UPON FAILURE TO CLOSE THE ACQUISITION. In the
event that the Company fails to close the Acquisition on or prior to the
Expiration Date, then this Agreement shall automatically and immediately
terminate and be of no further force or effect.
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B-11
SCHEDULE B-1
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility (including,
without limitation, the Nasdaq National Market and the over the counter market)
on which the shares are traded or in private transactions, subject to applicable
law. These sales may be public or private at prices prevailing in such market,
fixed prices or prices negotiated at the time of sale. The shares may be sold by
the Selling Stockholders directly to one or more purchasers, through agents
designated from time to time or to or through broker-dealers designated from
time to time. In the event the shares are publicly offered through
broker-dealers or agents, the selling stockholders may enter into agreements
with respect thereto. The Selling Stockholders may, subject to applicable law,
also use any one or more of the following methods when selling shares:
-- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
-- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
-- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
-- an exchange distribution in accordance with the rules of the
applicable exchange;
-- privately negotiated transactions;
-- short sales broker-dealers may agree with the Selling
Stockholders to sell a specified number of such shares at a
stipulated price per share;
-- a combination of any such methods of sale; or
-- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The Selling Stockholder may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3), or other applicable provision of the Securities Act of
1933, amending the list of Selling Stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.
The Selling Stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus. The Selling Stockholders and the broker-dealers or agents that
participate
in the distribution of the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
discounts and any commissions received by such broker-dealers or agents and any
profit on the sale of the shares purchased by them and any discounts or
commissions might be deemed to be underwriting discounts or commissions under
the Securities Act. Any such broker-dealers and agents may engage in
transactions with, and perform services for, the Company. At the time a
particular offer of shares is made by the selling stockholders, to the extent
required, a prospectus will be distributed which will set forth the aggregate
number of shares being offered, and the terms of the offering, including the
public offering price thereof, the name or names of any broker-dealers or
agents, any discounts, commissions and other items constituting compensation
from, and the resulting net proceeds to, the Selling Stockholders.
In order to comply with the securities laws of certain states, sales of
shares offered hereby to the public in such states may be made only through
broker-dealers who are registered or licensed in such states. Sales of shares
offered hereby must also be made by the Selling Stockholders in compliance with
other applicable state securities laws and regulations. The Company is required
to pay all fees and expenses incident to the registration of the shares,
including fees and expenses of one counsel for all Selling Stockholders in an
amount not to exceed $25,000; provided, that the Selling Stockholders are
required, severally and not jointly, to pay all underwriting fees and discounts,
selling commissions, brokerage fees and stock transfer taxes applicable to
shares sold by such Selling Stockholders hereby. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
SCHEDULE B-2
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE(1)
The undersigned, an officer of, or other person duly authorized by the
Purchaser named below hereby certifies to the Company, as defined in the
Registration Right Agreement, dated as of February 12, 2003 (the "Agreement")
that he/she (said institution) is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ______________________ ,
200_ in accordance with:
(i) Registration Statement number _____________________________ ,
in the manner indicated under "Plan of Distribution" in the
current prospectus and has delivered a current prospectus, or
(ii) Pursuant to the applicable requirements of Rule 144 of the
Securities Act of 1933, as amended, in which case, a copy of
Form 144 as filed with the Securities and Exchange Commission,
together with the representation letter of the undersigned and
the broker's representation letter are enclosed.
Print or Type:
Name of Purchaser (Individual or Institution):
----------------------
Name of Individual Representing Purchaser (if an Institution):
------------------------------------
Title:
-----------------------------------
Confirmed by the undersigned thereunto duly authorized:
------------------------------------
Purchaser Name
By:
-----------------------------------
Name:
Title:
---------------
(1) All capitalized terms used but not defined herein shall have the meanings
provided in the Agreement.
