REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as
of January 23, 2002 is made by and between XXXXXX TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), and BLUWAT AG, a corporation organized under the
laws of Switzerland (the "Lender").
R E C I T A L S
A. The Company and the Lender have entered into that
certain Loan Agreement, with an effective date of January 10, 2002 (the "Loan
Agreement") for the loan by the Lender to the Company of $500,000, evidenced by
the Promissory Note with an effective date of January 10, 2002 (the "Note").
B. In addition to the Note, the Company issued a Stock
Purchase Warrant with an effective date of January 10, 2002 to Lender
("Warrant") for the right to acquire an aggregate of 347,222 of the shares of
the Company's Common Stock.
C. In connection with the Loan Agreement and the
Warrant, the Company has agreed to grant certain registration rights to the
Lender.
THE PARTIES AGREE AS FOLLOWS:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Common Stock" shall mean the common stock, $0.001
par value per share, of the Company.
(c) "Form" shall mean any Form issued by the Commission
for the Registration of Securities.
(d) "Holder" shall mean any holder of outstanding
Registrable Securities which have not been sold to the public.
(e) "Register," "Registered" and "Registration" shall
refer to a registration effected by preparing and filing a registration
statement ("Registration Statement") in compliance with the Securities Act and
the declaration or ordering of the effectiveness of such Registration Statement.
(f) "Registrable Securities" shall mean (i) Common Stock
not previously sold to the public, or been subject to an effective Registration
which is issued,
or issuable, upon exercise of the Warrant issued to the Lender, and (ii) any
securities of the Company granted registration rights pursuant to Section 7
hereof.
(g) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 2 of this Agreement,
including, without limitation, all federal and state registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration but shall not include Selling
Expenses or fees and disbursements of counsel for the Holders.
(h) "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
(i) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities pursuant to this Agreement.
(j) "Underwriter's Representative" shall mean the
representative of the underwriter or underwriters selected by the Company for
the underwriting of its Common Stock.
2. Piggyback Registration.
2.1. Notice of Piggyback Registration and Inclusion of Registrable
Securities.
Subject to the terms of this Agreement, in the event the
Company decides to Register any of its Common Stock (either for its own account
or the account of a security holder or holders), on a form that would be
suitable for a registration involving Registrable Securities (but not in
connection with a registration affected solely to implement an employee stock
option or other employee benefit plan or a transaction to which Rule 145 or any
other similar rule of the Commission under the Securities Act is applicable),
the Company will: (i) promptly give each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable Blue Sky or other state
securities laws), and (ii) include in such Registration (and any related
qualification under Blue Sky laws or other compliance) and in any underwriting
involved therein, all the Registrable Securities specified in a written request
delivered to the Company by any Holder within twenty days after such written
notice is sent by the Company.
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2.2. Underwriting in Piggyback Registration.
2.2.1. Notice of Underwriting in Piggyback Registration.
If the Registration of which the Company gives notice is for a
Registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
2.1. In such event the right of any Holder to Registration shall be conditioned
upon the Holder's acceptance of the terms and restrictions imposed by the lead
underwriter such underwriting and the inclusion of such Holder's Registrable
Securities in such underwriting to the extent provided in this Section 2. All
Holders proposing to distribute their securities through such underwriting,
together with the Company and the other holders distributing their securities
through such underwriting, shall enter into an underwriting agreement with the
Underwriter's Representative for such offering. The Holders shall have no right
to participate in the selection of the underwriters for an offering pursuant to
this Section 2.
2.2.2. Marketing Limitation in Piggyback Registration.
In the event the Underwriter's Representative advises the
Holders seeking registration of Registrable Securities pursuant to Section 2 in
writing that market factors (including, without limitation, the aggregate number
of shares of Common Stock requested to be Registered, the general condition of
the market and the status of the persons proposing to sell securities pursuant
to the Registration) require a limitation of the number of shares to be
underwritten, the Underwriter's Representative (subject to the allocation
priority set forth in Section 2.2.3) may exclude some or all Registrable
Securities from such registration and underwriting.
2.2.3. Allocation of Shares in Piggyback Registration.
In the event that the Underwriter's Representative limits the
number of shares to be included in a Registration pursuant to Section 2.2.2, the
number of shares to be included in such Registration shall be allocated (subject
to Section 2.2.2) in the following manner: The shares (other than Registrable
Securities) held by officers or directors of the Company shall be excluded from
such Registration and underwriting to the extent required by such limitation. If
a limitation of the number of shares is still required after such exclusion, the
number of shares that may be included in the Registration and underwriting by
selling shareholders shall be allocated among all other Holders thereof and
other holders of securities other than Registrable Securities requesting and
legally entitled to include shares in such Registration, in proportion, as
nearly as practicable, to the respective amounts of securities (including
Registrable Securities) which such Holders and such other holders have otherwise
requested be included in such Registration. No Registrable Securities or other
securities excluded from the underwriting by reason of this Section 2.2.3 shall
be included in the Registration Statement.
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2.2.4. Withdrawal in Piggyback Registration.
If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter delivered at least seven (7) days prior to the
effective date of the Registration Statement. Any Registrable Securities or
other securities excluded or withdrawn from such underwriting shall be withdrawn
from such Registration.
2.3. Blue Sky in Piggyback Registration.
In the event of any Registration of Registrable Securities
pursuant to Section 2, the Company will exercise its best efforts to Register
and qualify the securities covered by the Registration Statement under such
other securities or Blue Sky laws of such jurisdictions as shall be reasonably
appropriate for the distribution of such securities; provided, however, that (i)
the Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions and (ii)
notwithstanding anything in this Agreement to the contrary, in the event any
jurisdiction in which the securities shall be qualified imposes a non-waivable
requirement that expenses incurred in connection with the qualification of the
securities be borne by selling shareholders, such expenses shall be payable pro
rata by selling shareholders.
3. Expenses of Registration.
All Registration Expenses incurred in connection with up to
two (2) Registrations pursuant to Section 2 shall be borne by the Company. All
Selling Expenses shall be borne by the Holders of the securities registered pro
rata on the basis of the number of shares registered.
4. Registration Procedures.
The Company will keep each Holder whose Registrable Securities
are included in any Registration pursuant to this Agreement advised as to the
initiation and completion of such Registration. At its expense the Company will:
(a) use its best efforts to keep such Registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in the Registration Statement relating thereto, whichever
first occurs and (b) furnish such number of prospectuses (including preliminary
prospectuses) and other documents as a Holder from time to time may reasonably
request.
5. Indemnification.
5.1. Company's Indemnification of Holders.
To the extent permitted by law, the Company will indemnify
each Holder, each of its officers, directors and constituent partners, legal
counsel for the Holders, and
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each person controlling such Holder, with respect to which Registration,
qualification or compliance of Registrable Securities has been effected pursuant
to this Agreement, and each underwriter, if any, and each person who controls
any underwriter against all claims, losses, damages or liabilities (or actions
in respect thereof) to the extent such claims, losses, damages or liabilities
arise out of or are based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or other document
(including any related Registration Statement) incident to any such
Registration, qualification or compliance, or are based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such Registration, qualification or compliance;
and the Company will reimburse each such Holder, each such underwriter and each
person who controls any such Holder or underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action; provided, however, that the
indemnity contained in this Section 5.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if settlement is
effected without the consent of the Company (which consent shall not
unreasonably be withheld); and provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based upon any untrue statement or
omission based upon written information furnished to the Company by such Holder,
underwriter, or controlling person and stated to be for use in connection with
the offering of securities of the Company.
5.2. Holder's Indemnification of Company.
To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such Registration, qualification or compliance is being effected pursuant
to this Agreement, indemnify the Company, each of its directors and officers,
each legal counsel and independent accountant of the Company, each underwriter,
if any, of the Company's securities covered by the Registration Statement, each
person who controls the Company or such underwriter within the meaning of the
Securities Act, and each other such Holder, each of its officers, directors and
constituent partners and each person controlling such other Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any such Registration Statement, prospectus or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by such Holder of any rule or regulation
promulgated under the Securities Act applicable to such Holder and relating to
action or inaction required of such Holder in connection with any such
Registration, qualification or compliance; and will reimburse the Company, such
Holders, such directors, officers, partners, persons, law and accounting firms,
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underwriters or control persons for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, prospectus or other document
in reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use in connection with
the offering of securities of the Company; provided, however, that each Holder's
liability under this Section 5.2 shall not exceed such Holder's proceeds from
the offering of securities made in connection with such Registration.
5.3. Indemnification Procedure.
Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 5, notify the indemnifying party in writing of the
commencement thereof and generally summarize such action. The indemnifying party
shall have the right to participate in and to assume the defense of such claim;
provided, however, that the indemnifying party shall be entitled to select
counsel for the defense of such claim with the approval of any parties entitled
to indemnification, which approval shall not be unreasonably withheld; provided
further, however, that if either party reasonably determines that there may be a
conflict between the position of the Company and the Investors in conducting the
defense of such action, suit or proceeding by reason of recognized claims for
indemnity under this Section 5, then counsel for such party shall be entitled to
conduct the defense to the extent reasonably determined by such counsel to be
necessary to protect the interest of such party. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 5, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 5.
6. Market Stand-off.
Each Holder hereby agrees that, if so requested by the Company
and the Underwriter's Representative (if any), such Holder shall not sell or
otherwise transfer any Registrable Securities or other securities of the Company
during the one hundred eighty (180) day period following the effective date of a
Registration Statement of the Company filed under the Securities Act in
connection with a subsequent underwritten public offering in which such Holder
is a selling shareholder.
7. Limitations on Registration Rights Granted to Other Securities.
Additional holders may be added as parties to this Agreement
with regard to any or all securities of the Company held by them. Any such
additional parties shall
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execute a counterpart of this Agreement, and upon execution by such additional
parties and by the Company, shall be considered a Holder for all purposes of
this Agreement.
8. Transfer of Rights.
The right to cause the Company to register securities granted
by the Company to the Holders under this Agreement may be assigned by any Holder
to a transferee or assignee of any Registrable Securities of a Holder not sold
to the public.
9. Miscellaneous.
9.1. Entire Agreement; Successors and Assigns.
This Agreement constitutes the entire contract between the
Company and the Holders relative to the subject matters hereof. Any previous
agreement between the Company and the Holders insofar as any such agreement
concerns Registration rights is superseded by this Agreement. Subject to the
exceptions specifically set forth in this Agreement, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the parties.
9.2. Governing Law.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina applicable to
contracts made and to be performed in such State without giving effect to the
conflicts of laws rules of such state.
9.3. Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.4. Headings.
The headings of the Sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
9.5. Notices.
Any notice required or permitted hereunder shall be given in
writing and shall be conclusively deemed effectively given upon personal
delivery, or three days after deposit in the United States mail, by registered
or certified mail, postage prepaid, addressed (i) if to the Company, at 0000
Xxxxxx Xxxx Xxxxxxxxx, Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000, (ii) if to the
Lender at Xxxxxxxxxxxxx 0, XX - 0000 Xxx, XXXXXXXXXXX, or at such other address
as the Company or the Lender may designate by ten (10) days' advance written
notice to the Company and the Lender, respectively.
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9.6. Amendment of Agreement.
Any provision of this Agreement may be amended only by a
written instrument signed by the parties hereto.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXXX TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Chairman & CEO
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BLUWAT AG
By: /s/ Xxxxxxxx Xxxxxxx
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Name: Xxxxxxxx Xxxxxxx
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Title: Director
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