Exhibit 4.4
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated _____ __,
2003, is by and between TeraForce Technology Corporation, a Delaware corporation
("Company"), and ________ (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company is offering for sale up to $2,000,000 of 12%
Convertible Subordinated Notes due June 30, 2005 ("Notes"), issued pursuant to
the Note Agreement dated the date hereof ("Note Agreement");
WHEREAS, in consideration of the purchase of the Notes by the Holder,
the Company has agreed to issue to the Holder, a warrant to purchase shares of
Company's common stock, par value $.01 per share ("Common Stock") as set forth
in the Warrant Agreement between the Company and the Holder dated the date
hereof;
WHEREAS, the Holder has subscribed to purchase Notes by entering into a
subscription agreement with the Company and has tendered funds for the payment
of the purchase price of the Notes;
WHEREAS, in connection with the sale and purchase of the Notes and
Warrant by the Holder, the Company has agreed to grant certain Registration
Rights (hereinafter defined) to the shares ("Shares") of Common Stock, which may
be issued upon conversion of the Notes and upon exercise of the Warrant; and
WHEREAS, the parties desire to set forth the Holder's rights and the
Company's obligations to cause the registration of the shares pursuant to the
Securities Act of 1933, as amended (the "Securities Act").
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 is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE ONE
Registration Rights Agreement
SECTION 1.1. Shelf Registration. Within 90 days of the Final Closing
(as defined in the Note Agreement), the Company shall prepare and file with the
Commission a "Shelf" Registration Statement covering all Registrable Securities
(as defined herein) for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (if the Company is not
then eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form in accordance herewith). The
Company shall use its best efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, and shall use its best efforts to keep such Registration
Statement Continuously Effective under the Securities Act until the date when
all Registrable Securities covered by such Registration Statement have been sold
or may be sold without restrictions pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company's transfer agent (the "Effectiveness
Period"), provided, however, that the Company shall not be deemed to have used
its best efforts to keep the Registration Statement effective during the
Effectiveness Period if it voluntarily takes any action that would result in the
Holder not being able to sell the Registrable Securities covered by such
Registration Statement during the Effectiveness Period, unless such action is
pursuant to a Blackout Period (as defined in Section 2) permitted hereunder,
required under applicable law or the Company has filed a post-effective
amendment to the Registration Statement and the Commission has not declared it
effective.
SECTION 1.2 In any offering pursuant to this Section that becomes
effective in which the Holder participates, the Company shall use its best
efforts to keep available to the Holder a prospectus meeting the requirements of
Section 10(a)(3) of the Securities Act and shall file all amendments and
supplements under the Securities Act required for that purpose. In any offering
pursuant to this Section the Company will, as soon as practicable, use its best
efforts to effect such registration and use its best efforts to effect such
qualification and compliance as may be so requested and as would permit or
facilitate the distribution of such Shares, including, without limitation,
registration under the Securities Act, appropriate qualifications under
applicable blue-sky or other state securities laws, appropriate compliance with
any other governmental requirements and listing on a national securities
exchange on which the Common Stock is then listed or inter-dealer quotation
system.
ARTICLE TWO
REGISTRATION PROCEDURE
WITH RESPECT TO EACH REGISTRATION RIGHT, THE FOLLOWING PROVISIONS SHALL APPLY:
SECTION 2.1 Holder's Obligations.
(a) The Holder shall be obligated to furnish to the Company and
the underwriters (if any) such information regarding the Holder, the number of
Registrable Securities owned by it and the proposed manner of distribution of
the Shares and as shall be required in connection with any registration,
qualification or compliance referred to herein and shall otherwise cooperate
with the Company and the underwriters (if any) in connection with such
registration, qualification or compliance.
(b) Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 2.2(b) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 2.2(c); and (ii) it and its officers, directors or affiliates, if any,
will comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.
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SECTION 2.2 Company's Obligations.
(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, the Company agrees to
use its best lawful efforts to:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act,
at all times during which the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended
("Exchange Act");
(ii) File with the Commission in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act (at all times during which the
Company is subject to such reporting requirements); and
(iii) So long as the Holder owns any Notes, Warrant(s) or
Registrable Securities, to furnish to the Holder within ten (10)
business days upon written request by the Holder a written statement by
the Company as to its compliance with the reporting requirements of
Rule 144 and with regard to the Securities Act and the Exchange Act (at
all times during which the Company is subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
the Company.
(b) The Company agrees that it will furnish to the Holder such
number of prospectuses, offering circulars or other documents incident to any
registration, qualification or compliance, as the Holder from time to time may
reasonably request.
(c) The Company shall advise the Holder and, if requested by the
Holder, confirm such advice in writing:
(i) when a registration statement and any amendment
thereto has been filed with the Commission and when the registration
statement or any post-effective amendment thereto has become effective;
and
(ii) the issuance by the Commission of any stop order
suspending effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iii) the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(iv) the happening of any event that requires the making
of any changes in the Registration Statement or the prospectus so that,
as of such date, the registration statement and the prospectus do not
contain an untrue statement of a material fact and do not omit to state
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in the light of the
circumstances under which they were made) not misleading (which advice
shall be accompanied by an instruction to suspend the use of the
prospectus relating to the Registrable Securities until the requisite
changes have been made).
(d) The Company shall bear and pay all expenses and fees incurred
in connection with the Registration Statement pursuant to Section 1 for any
Holder, including registration, qualification and filing fees, exchange listing
fees, printing expenses, escrow fees, fees and disbursements of counsel for the
Company, fees and expenses of counsel for the Agent (as defined in the Note
Agreement) of the
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Holder up to $1,500, blue sky fees and expenses and the expenses of any special
audits incident to or required by any such registration, but excluding (i)
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid by the Holders) and (ii) fees and expenses of counsel for the
Agent of the Holder in excess of $1,500.
(e) In connection with the preparation and filing of a
registration statement under the Securities Act pursuant to this Agreement, the
Company will give the Holder, its counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto.
(f) If there is a significant 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
similar transaction) available to the Company which its board of directors
reasonably determines not to be in the Company's best interest to disclose, then
the Company may suspend the right of the Holder to sell Registrable Securities
under a Registration Statement for one period not to exceed 20 Business Days
during the Effectiveness Period (the "Blackout Period").
ARTICLE THREE
Indemnification
SECTION 3.1 Indemnification by the Company. To the extent permitted by
applicable law, the Company shall indemnify and hold harmless each Holder, each
Person, if any, who controls such Holder within the meaning of the Securities
Act, and each affiliate, officer, director, partner, agent and employee of such
Holder and such controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint or several), including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(a) Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any
preliminary Prospectus or final Prospectus contained therein, or any
amendments or supplements thereto;
(b) The omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(c) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law
or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 3.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished to
the Company by the indemnified party expressly for use in connection with such
registration; provided, further, that the indemnity agreement contained in this
Section 3 shall not apply to any Holder to the extent that any such loss is
based on or arises out of an untrue statement or alleged untrue statement of a
material fact, or an omission or alleged omission to state a material fact,
contained in or omitted from any preliminary prospectus if the final prospectus
shall correct such untrue statement or alleged untrue statement, or such
omission or alleged omission, and a copy of the final prospectus has not been
sent or given to such person at or prior to the confirmation of sale to such
person if such Holder was under an obligation to deliver such final prospectus
and failed to do so.
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SECTION 3.2 Indemnification by the Holder. To the extent permitted by
applicable law, each Holder, severally and not jointly, shall indemnify and hold
harmless the Company, each of its directors, each of its officers who shall have
signed the Registration Statement, and each Person, if any, who controls the
Company within the meaning of the Securities Act, against any and all losses,
claims, damages, liabilities and expenses, including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may otherwise become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
provided, however, that the indemnification required by this Section 3.2 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if settlement is effected without the consent of the
relevant Holder of Securities, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the liability of the Holder under this Section
3.2 shall be limited in an amount equal to the net proceeds from the sale of the
shares sold by such Holder, unless such liability arises out of or is based on
willful conduct or gross negligence by such Holder.
SECTION 3.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party under this Section 3 of notice of the commencement of any
action, suit, proceeding, investigation or threat thereof made in writing for
which such indemnified party may make a claim under this Section 3, such
indemnified party shall deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and disbursements and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 3 but shall not relieve the indemnifying party of any liability that it
may have to any indemnified party otherwise than pursuant to this Section 3. Any
fees and expenses incurred by the indemnified party (including any fees and
expenses incurred in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the indemnified party, as incurred,
within thirty (30) days of written notice thereof to the indemnifying party
(regardless of whether it is ultimately determined that an indemnified party is
not entitled to indemnification hereunder). Any such indemnified party shall
have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses or (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding or (iii) the named parties to any such action, claim
or 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 there may be one or more legal defenses available to it
which are different from or in addition to those available to the indemnifying
party and that the assertion of such defenses would create a conflict of
interest such that counsel employed by the indemnifying party could not
faithfully represent the indemnified 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 of such action, claim or
proceeding on behalf of such indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
claim or proceeding or separate but substantially similar or related actions,
claims or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all such indemnified parties,
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unless in the reasonable judgment of such indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such action, claim or proceeding, in which
event the indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels). No indemnifying party shall be liable to
an indemnified party for any settlement of any action, proceeding or claim
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld.
SECTION 3.4 If the indemnification required by this Section 3 from the
indemnifying party is unavailable or insufficient to hold harmless an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to in this Section 3:
(a) The 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, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties, on the one hand and the
indemnified party on the other from the sale of the Registrable Securities, or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only the relative benefits referred to in clause (i) above
but also the relative fault of the indemnifying party on the one hand and
indemnified parties on the other in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 3.1 and Section 3.2,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 3.4(a). 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.
(c) Notwithstanding the provisions of this Section 3.4, a Holder
shall not be required to contribute any amount or make any other payments under
this Agreement that in the aggregate exceed the net proceeds received by the
Holder from the sales of the Registrable Securities of the Company.
SECTION 3.5 The obligations of the Company and the selling Holders of
Registrable Securities under this Section 3 shall survive the completion of any
offering of Registrable Securities pursuant to a Registration Statement under
this Agreement, and otherwise.
SECTION 3.6 Indemnification Payments. The indemnification required by
this Article shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
ARTICLE FOUR
Miscellaneous
SECTION 4.1 Amendment, Modification and Waivers; Further Assurances.
(a) This Agreement may be amended with the consent of the parties
hereto and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company shall have
obtained the written consent of the Holder.
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(b) No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(c) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
SECTION 4.2 Term of the Agreement. This Agreement shall terminate with
respect to the Holder on the earlier to occur of (i) all of the Registrable
Securities having been registered as provided in Article One or (ii) all of the
Registrable Securities are eligible to be resold pursuant to Rule 144(k) of the
Securities Act.
SECTION 4.3 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto are transferable and will bind and inure
to the benefit of the respective successors and assigns of the parties hereto,
but only if so expressed in writing.
SECTION 4.4 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
SECTION 4.5 Delays or Omissions. No failure to exercise or delay in the
exercise of any right, power or remedy accruing to the Holder on 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 such breach or
default.
SECTION 4.6 Remedies Cumulative. All remedies under this Agreement, or
by law or otherwise afforded to any party hereto shall be cumulative and not
alterative.
SECTION 4.7 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. Unless clearly denoted otherwise, any reference to Articles or
Sections contained herein shall be to the Articles or Sections of this
Agreement.
SECTION 4.8 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been
sufficiently given (a) if sent by facsimile transmission, upon telephonic
confirmation of receipt, (b) if sent by registered or certified mail, upon the
sooner of the expiration of five (5) days after deposit in the post office
facilities properly addressed with postage prepaid or acknowledgment of receipt,
(c) if personally delivered, when delivered to the party to whom notice is sent,
or (d) if delivered by a recognized overnight courier, upon receipt evidencing
proof of delivery, addressed to the appropriate party or parties, at the address
of such party set forth below, (or at such other address as such party may
designate by written notice furnished to all other parties in accordance
herewith):
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If to the Company, to:
TeraForce Technology Corporation
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: President
If to Holder, to:
_________________________________________
_________________________________________
Attn:____________________________________
SECTION 4.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. EACH OF THE PARTIES HEREBY
SUBMITS TO PERSONAL JURISDICTION AND WAIVES ANY OBJECTION AS TO VENUE IN THE
COUNTY OF DALLAS, STATE OF TEXAS. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT.
SECTION 4.10 Final Agreement. This Agreement, together with those
documents expressly referred to herein, constitutes the final agreement of the
parties concerning the matters referred to herein, and supersedes all prior
agreements and understandings.
SECTION 4.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument.
ARTICLE FIVE
DEFINED TERMS
As used in this Agreement:
5.1 Definitions.
(a) "Blackout Period" shall have the meaning set forth in Section
2.2(e).
(b) "Business Day" shall mean any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking institutions in
the state of New York generally are authorized or required by law or other
government actions to close.
(c) "Commission" shall mean the Securities and Exchange
Commission.
(d) "Common Stock" shall mean (i) the common stock of the Company,
par value $.01 per share, and (ii) shares of capital stock of the Company issued
by the Company in respect of or in exchange for shares of such common stock in
connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such common stock.
(e) "Continuously Effective," with respect to a specified
registration statement, shall mean that it shall not cease to be effective and
available for Transfers of Registrable Securities thereunder for longer than
either (i) any ten (10) consecutive business days, or (ii) an aggregate of
fifteen (15) business days during the Effective Period.
(f) "Effectiveness Period" shall have the meaning set forth in
Section 1.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
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(h) "Holders" shall mean the Person named on the first page of
this Agreement and the transferees of the Registrable Securities of such Person,
at such times as such Persons shall own Registrable Securities. For purposes of
this Agreement, a Person will be deemed to be a holder and an owner of
Registrable Securities whenever such Person has the right to acquire such
Registrable Securities (by conversion, purchase or otherwise), whether or not
such acquisition has actually been effected and whether or not such right is
currently exercisable.
(i) "Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
(j) "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplement by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
(k) "Register," "registered," and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering by the Commission of effectiveness of such registration statement or
document.
(l) "Registrable Securities" shall mean the Shares; provided,
however, that Registrable Securities shall not include any Registrable
Securities which have theretofore been registered and sold pursuant to the
Securities Act or which have been sold to the public pursuant to Rule 144 or any
similar rule promulgated by the Commission pursuant to the Securities Act, and,
provided further, the Company shall have no obligation under Section 1 or
Section 2 to register any Registrable Securities if the Company delivers to the
Holders requesting such registration an opinion of counsel to the effect that
the proposed sale or disposition of all of the Registrable Securities for which
registration was requested does not require registration under the Securities
Act for a sale or disposition in a single public sale, and offers to remove any
and all legends restricting transfer from the certificates evidencing such
Registrable Securities.
(m) "Registration Statement" means the registration statement and
any additional registration statements contemplated by Section 1 including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
(n) "Securities Act" shall have the meaning set forth in the
Recitals.
(o) "Shares" shall mean the shares of Common Stock underlying the
Notes and the Warrant.
(p) "Transfer" shall mean and include the act of selling, giving,
transferring, creating a trust (voting or otherwise) and transferring title
thereto, assigning or otherwise disposing of (other than pledging, hypothecating
or otherwise transferring as security) (and correlative words shall have
correlative meanings); provided however, that any transfer or other disposition
upon foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a "Transfer."
(q) "Violation" shall have the meaning set forth in Article 3.
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The parties hereto have executed this Agreement as of the date first
set forth above.
COMPANY:
TERAFORCE TECHNOLOGY CORPORATION
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
HOLDER:
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
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