Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of February 4, 2004 (this
"AGREEMENT"), is made by and among Delphax Technologies Inc., a Minnesota
corporation, with headquarters located at 00000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxx 00000 (the "COMPANY"), and the investors named on the signature pages
hereto (the "Investors").
RECITALS:
A. In connection with the Securities Purchase Agreement dated as
of the date hereof by and among the Investors and the Company (the "PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Investors
$3,000,000 in aggregate principal of its 7% Convertible Subordinated Notes (the
"CONVERTIBLE NOTES"), which is convertible into shares of the Company's common
stock, par value $.10 per share (the "COMMON STOCK"), and to issue to the
Investors stock purchase warrants (the "WARRANTS") to purchase additional shares
of Common Stock (the shares of Common Stock issued or issuable with respect to
(i) the Convertible Notes (including the PIK Interest Shares, as defined in the
Purchase Agreement) and (ii) the Warrants are hereinafter collectively referred
to as the "COMMON SHARES").
B. In order to induce the Investors to execute and deliver the
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act and applicable state securities laws with
respect to the Common Shares.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Investors hereby agree as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined herein have the
respective meanings given them set forth in the Purchase Agreement. In addition,
as used in this Agreement, the following terms have the following meanings:
1.1 "COMMON SHARES" means the shares of Common Stock issued or
issuable with respect to the Convertible Notes (including the PIK Interest
Shares, as defined in the Purchase Agreement) and the Warrants.
1.2 "INVESTORS" means the investors named on the signature pages
hereto and any of their transferees or assignees who agree to become bound by
the provisions of this Agreement in accordance with Article IX hereof.
1.3 "REGISTRABLE SECURITIES" means the Common Shares (without
regard to any limitations on conversion or exercise) and any shares of capital
stock issued or issuable from
time to time (with any adjustments) in exchange for or otherwise with respect to
the Convertible Notes, Warrants or Common Shares.
1.4 "REGISTRATION PERIOD" means the period between the date of
this Agreement and the earlier of (i) the date on which all of the Registrable
Securities have been sold and no further Registrable Securities may be issued in
the future, or (ii) the date on which all the Registrable Securities (in the
opinion of the Investors' counsel) may be immediately sold without registration
and without restriction (including without limitation as to volume by each
holder thereof) as to the number of Registrable Securities to be sold, pursuant
to Rule 144 or otherwise.
1.5 "REGISTRATION STATEMENT" means a Registration Statement of the
Company filed under the Securities Act.
1.6 The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a Registration Statement or
statements in compliance with the Securities Act and pursuant to Rule 415 and
the declaration or ordering of effectiveness of such Registration Statement by
the SEC.
1.7 "RULE 415" means Rule 415 under the Securities Act, or any
successor Rule providing for offering securities on a continuous basis, and
applicable rules and regulations thereunder.
ARTICLE II
REGISTRATION
2.1 MANDATORY REGISTRATION.
(a) The Company will file with the SEC a Registration Statement on
Form S-3 registering the Registrable Securities and no other securities for
resale within 20 days after the Closing Date of the purchase of the Convertible
Notes under the Purchase Agreement. If Form S-3 is not available at that time,
then the Company will file a Registration Statement on such form as is then
available to effect a registration of the Registrable Securities within such
20-day period, subject to the consent of the Investors, which consent will not
be unreasonably withheld.
(b) To the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), the Registration Statement will
include the Registrable Securities and such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Convertible
Notes and exercise of the Warrants (i) to prevent dilution resulting from stock
splits, stock dividends or similar transactions, or (ii) by reason of changes in
the conversion price of the Convertible Notes or the exercise price of the
Warrants in accordance with the terms thereof. The number of shares of
Registrable Securities initially included in the Registration Statement will be
no less than 125% of the aggregate number of Common Shares that are issuable
upon conversion of the Convertible Notes at the conversion price and exercise of
the Warrants at the exercise price.
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2.2 EFFECTIVENESS OF THE REGISTRATION STATEMENT.
(a) The Company will use its best efforts to cause the
Registration Statement contemplated by Section 2.1 to be declared effective by
the SEC as soon as practicable after filing, and in any event no later than the
120th day after the Closing Date (the "REQUIRED EFFECTIVE DATE"). If the SEC
takes the position that registration of the resale of the Registrable Securities
by the Investors is not available under applicable laws, rules and regulation
and that the Company must register the offering of the Registrable Securities as
a primary offering by the Company, the Company will file a Registration
Statement as a primary offering and will use its best efforts to cause the
Registration Statement to be declared effective by the SEC as soon as
practicable after filing, and in any event no later than the Required Effective
Date.
(b) The Company's best efforts will include, but not be limited
to, promptly responding to all comments received from the staff of the SEC. If
the Company receives notification from the SEC that the Registration Statement
will receive no action or review from the SEC, then the Company will cause the
Registration Statement to become effective within five business days after such
SEC notification.
(c) Once the Registration Statement is declared effective by the
SEC, the Company will cause the Registration Statement to remain effective
throughout the Registration Period, except as permitted under Section 3.1.
2.3 PAYMENTS BY THE COMPANY. If (i) at any time after
effectiveness of the Registration Statement, sales cannot be made thereunder
during the Registration Period for any reason (including any suspension of the
use of the Registration Statement under Section 3.6 hereof) for a period of more
than 10 consecutive business days, or 30 days in the aggregate, during any
12-month period or (ii) the Common Stock is not listed or included for quotation
on Nasdaq, Nasdaq SmallCap, the NYSE or AMEX for more than an aggregate of 10
business days in any 12-month period, then the Company will thereafter make a
payment (by wire transfer or check) to each Investor as partial compensation for
such delay. The amount of the payment made to each Investor will be equal to 1%
of the Outstanding Principal Amount (as hereinafter defined) for the first month
that sales cannot be made under the effective Registration Statement or the
Common Stock is not listed or included for quotation on Nasdaq, Nasdaq SmallCap,
the NYSE or AMEX, and 2% of the Outstanding Principal Amount for each month
thereafter, continuing through the date that sales can be made under the
effective Registration Statement or the Common Stock is listed or included for
quotation on Nasdaq, Nasdaq SmallCap, the NYSE or AMEX. The term "OUTSTANDING
PRINCIPAL AMOUNT" for purposes of computing the amount of payment to be made to
an Investor under Section 2.3 and Section 2.4 shall mean the sum of (x) the
principal amount of the then-outstanding Convertible Notes held by such Investor
and (y) in the case of Registrable Securities issued upon conversion of the
Convertible Notes purchased by such Investor and not previously sold by such
Investor, the principal amount of the Convertible Notes from which such
Registrable Securities were converted. These payments will be prorated on a
daily basis for partial months and will be paid to each Investor by wire
transfer or check within five business days following the end of each month.
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2.4 EFFECT OF LATE REGISTRATION. If the Registration Statement
required pursuant to Section 2.1 above has not been declared effective by the
Required Effective Date due solely to the fault of the Company, which includes,
without limitation, the inability of the Company to utilize a particular
registration statement form that would provide for a shorter time to
effectiveness, the failure by the Company to file its reports required under the
Exchange Act and the Company's failure to fulfill its obligations under Section
2.1(a) and Section 2.2(b) (the "EFFECTIVENESS FAILURE"), then the Company shall
pay to each Investor, on each day of such Effectiveness Failure, an amount equal
to the product of (i) such Investor's Outstanding Principal Amount and (ii) the
quotient obtained by dividing 10% by 360 (the "LATE EFFECTIVENESS PAYMENTS").
The Late Effectiveness Payments will be paid to the Investors by wire transfer
or check within five business days after the earlier of (i) the end of each
month following the Required Effective Date or (ii) the effective date of the
Registration Statement. Nothing herein limits any Investor's right to pursue
actual damages for the Company's failure to file a Registration Statement or to
have it declared effective by the SEC on or prior to the Required Effective Date
in accordance with the terms of this Agreement.
2.5 PIGGYBACK REGISTRATIONS.
(a) If, at any time prior to the expiration of the
Registration Period, a Registration Statement is not effective with respect to
all of the Registrable Securities and the Company decides to register any of its
securities for its own account or for the account of others, then the Company
will promptly give the Investors written notice thereof and will use its best
efforts to include in such registration all or any part of the Registrable
Securities requested by such Investors to be included therein (excluding any
Registrable Securities previously included in a Registration Statement). This
requirement does not apply to Company registrations on Form S-4 or S-8 or their
equivalents relating to equity securities to be issued solely in connection with
an acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans. Each Investor must
give its request for registration under this paragraph to the Company in writing
within 15 days after receipt from the Company of notice of such pending
registration. If the registration for which the Company gives notice is a public
offering involving an underwriting, the Company will so advise the Investors as
part of the above-described written notice. In that event, if the managing
underwriter(s) of the public offering impose a limitation (which may be a
complete exclusion) on the number of shares of Common Stock that may be included
in the Registration Statement because, in such underwriter(s)' judgment, such
limitation would be necessary to effect an orderly public distribution or reduce
the number of securities which could be sold by the Company, then the Company
will be obligated to include only such limited portion, if any, of the
Registrable Securities with respect to which such Investors have requested
inclusion hereunder. Any exclusion of Registrable Securities will be made pro
rata among all holders of the Company's securities seeking to include shares of
Common Stock in proportion to the number of shares of Common Stock sought to be
included by those holders. However, the Company will not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities the
holders of which are not entitled by right to inclusion of securities in such
Registration Statement or are not entitled pro rata inclusion with the
Registrable Securities. If any Investor or other person does not agree to the
terms of such underwriting or otherwise fails to comply with the terms of this
Agreement, such Investor or other person shall be excluded therefrom upon
written
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notice from the Company or underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
(b) No right to registration of Registrable Securities
under this Section 2.5 limits in any way the registration required under Section
2.1 above. The obligations of the Company under this Section 2.5 expire upon the
earliest of (i) the effectiveness of the Registration Statement filed pursuant
to Section 2.1 above with respect to the Registrable Securities or the
respective portion thereof, (ii) after the Company has afforded the opportunity
for the Investors to exercise registration rights under this Section 2.5 for two
registrations (provided, however, that any Investor that has had any Registrable
Securities excluded from any Registration Statement in accordance with this
Section 2.5 may include in any additional Registration Statement filed by the
Company the Registrable Securities so excluded), or (iii) expiration of the
Registration Period.
(c) The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.5 prior to the
effectiveness of such registration whether or not any Investor has elected to
include securities in such registration. The expenses of such withdrawn
registration shall be borne by the Company.
2.6 ELIGIBILITY TO USE FORM S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for registration
of the resale by the Investors of the Registrable Securities. The Company will
file all reports required to be filed by the Company with the SEC in a timely
manner so as to preserve its eligibility for the use of Form S-3.
ARTICLE III
ADDITIONAL OBLIGATIONS OF THE COMPANY
3.1 CONTINUED EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
will keep the Registration Statement covering the Registrable Securities
effective under Rule 415 at all times during the Registration Period. In the
event that the number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover all of the Registrable
Securities issued or issuable upon conversion of (or otherwise pursuant to) the
Convertible Notes and upon exercise of (or otherwise pursuant to) the Warrants,
the Company will (if permitted) amend the Registration Statement or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities. The Company will file
such amendment or new Registration Statement as soon as practicable, but in no
event later than 20 business days after the necessity therefor arises (based
upon the market price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely). The Company will use its best efforts to
cause such amendment or new Registration Statement to become effective as soon
as is practicable after the filing thereof, but in no event later than 90 days
after the date on which the Company reasonably first determines (or reasonably
should have determined) the need therefor.
3.2 ACCURACY OF REGISTRATION STATEMENT. Any Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) filed by the Company covering Registrable Securities will not contain
any untrue statement of a material fact or omit to
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state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading. The Company will promptly prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to permit sales pursuant to the
Registration Statement at all times during the Registration Period, and, during
such period, will comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities of the Company covered by the
Registration Statement until the termination of the Registration Period, or if
earlier, until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement.
3.3 FURNISHING DOCUMENTATION. The Company will furnish to each
Investor whose Registrable Securities are included in a Registration Statement,
and to its legal counsel, (a) promptly after each document is prepared and
publicly distributed, filed with the SEC or received by the Company, one copy of
any Registration Statement filed pursuant to this Agreement and any amendments
thereto, each preliminary prospectus and final prospectus and each amendment or
supplement thereto; and, in the case of a Registration Statement filed under
Section 2.1 above, each letter written by or on behalf of the Company to the SEC
and each item of correspondence from, or order issued by, the SEC or the staff
of the SEC, in each case relating to such Registration Statement (other than any
portion of any item thereof which contains information for which the Company has
sought confidential treatment); and (b) a number of copies of a prospectus,
including a preliminary prospectus (if any), and all amendments and supplements
thereto, and such other documents as the Investor may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by the
Investor. The Company will promptly notify by facsimile each Investor whose
Registrable Securities are included in any Registration Statement of the
effectiveness of the Registration Statement and any post-effective amendment.
3.4 ADDITIONAL OBLIGATIONS. The Company will use its best efforts
to (a) register and qualify the Registrable Securities covered by a Registration
Statement under such other securities or blue sky laws of such jurisdictions as
each Investor who holds (or has the right to hold) Registrable Securities being
offered reasonably requests, (b) prepare and file in those jurisdictions any
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain their
effectiveness during the Registration Period, (c) take any other actions
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (d) take any other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions. Notwithstanding the foregoing, the Company is not required, in
connection such obligations, to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3.4,
(ii) subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause material expense or burden to the Company, or (v) make
any change in its charter or bylaws, which in each case the Board of Directors
of the Company determines to be contrary to the best interests of the Company
and its stockholders.
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3.5 UNDERWRITTEN OFFERINGS. If the Investors who hold a majority
in interest of the Registrable Securities being offered in an offering pursuant
to a Registration Statement or any amendment or supplement thereto under this
Agreement select underwriters reasonably acceptable to the Company for such
offering, the Company will enter into and perform its obligations under an
underwriting agreement in usual and customary form including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering, but the Company will not be obligated to
pay any fees or expenses of such underwriters related to the offering.
3.6 SUSPENSION OF REGISTRATION.
(a) The Company will notify (by telephone and also by
facsimile and reputable overnight courier) each Investor who holds Registrable
Securities being sold pursuant to a Registration Statement of the happening of
any event of which the Company has knowledge as a result of which the prospectus
included in the Registration Statement as then in effect includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will make
such notification as promptly as practicable after the Company becomes aware of
the event (but in no event will the Company disclose to any Investor any of the
facts or circumstances regarding the event), will promptly (but in no event more
than ten business days) prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and will deliver a
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request. The Company will use its best efforts to keep
the length of any such suspension to as short a period as is practicable given
the then existing circumstances and may so defer or suspend the use of the
Registration Statement no more than two times in any 18-month period, and
provided, further, that, after deferring or suspending the use of the
Registration Statement, the Company may not again defer or suspend the use of
the Registration Statement until a period of thirty days has elapsed after
resumption of the use of the Registration Statement. Notwithstanding anything to
the contrary contained herein or in the Purchase Agreement, if the use of the
Registration Statement is suspended by the Company, the Company will promptly
give notice of the suspension to all Investors whose securities are covered by
the Registration Statement, and will promptly notify each such Investor as soon
as the use of the Registration Statement may be resumed. Notwithstanding
anything to the contrary contained herein or in the Purchase Agreement, the
Company will cause the Transfer Agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which such Investor has entered into a contract for sale prior to
receipt of notice of such suspension and for which such Investor has not yet
settled unless, in the opinion of Company's legal counsel, such delivery without
legends would be in violation of applicable securities laws and/or otherwise
subject the Company to liability.
(b) Subject to the Company's rights under Section 3.1,
the Company will use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of a Registration Statement and, if such an
order is issued, will use its best efforts to obtain the withdrawal of such
order at the earliest possible time and will promptly notify each Investor that
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holds Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof.
3.7 REVIEW BY THE INVESTORS. The Company will permit each
Investor's legal counsel to review the Registration Statement and all amendments
and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and will not file any document in a form to which such counsel
reasonably objects unless such counsel fails to notify the Company of his or her
objection within 3 business days after receipt of the proposed Registration
Statement, and unless otherwise required by law in the opinion of the Company's
counsel. The sections of any such Registration Statement including information
with respect to the Investors, the Investors' beneficial ownership of securities
of the Company or the Investors' intended method of disposition of Registrable
Securities must conform to the information provided to the Company by each of
the Investors.
3.8 INFORMATION. The Company will make generally available to its
security holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in a form complying
with the provisions of Rule 158 under the Securities Act) covering a 12-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Registration Statement.
3.9 COMFORT LETTER; LEGAL OPINION. If the Investors request an
underwritten offering in accordance with Section 3.5 above, then, at the request
of the underwriters for the offering, on the date that Registrable Securities
are delivered to the underwriters for sale in connection with the Registration
Statement, the Company will furnish to the Investors and the underwriters (i) a
letter, dated such date, from the Company's independent certified public
accountants, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters; and (ii) an opinion, dated such date, from
counsel representing the Company for purposes of the Registration Statement, in
form and substance as is customarily given in an underwritten public offering,
addressed to the underwriters and Investors.
3.10 DUE DILIGENCE; CONFIDENTIALITY.
(a) The Company will make available for inspection by any
Investor whose Registrable Securities are being sold pursuant to a Registration
Statement, any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney or accountant retained by any such
Investor or underwriter (collectively, the "INSPECTORS"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as each Inspector reasonably deems
necessary to enable the Inspector to exercise its due diligence responsibility
in connection with or related to the contemplated offering. The Company will
cause its officers, directors and employees to supply all information that any
Inspector may reasonably request for purposes of performing such due diligence.
(b) Each Inspector will hold in confidence, and will not
make any disclosure (except to an Investor) of, any Records or other information
that the Company determines in
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good faith to be confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, (iii) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement (to the knowledge of the
relevant Inspector), (iv) the Records or other information was developed
independently by an Inspector without breach of this Agreement, (v) the
information was known to the Inspector before receipt of such information from
the Company, or (vi) the information was disclosed to the Inspector by a third
party not under an obligation of confidentiality. The Company is not required to
disclose any confidential information in the Records to any Inspector unless and
until such Inspector has entered into a confidentiality agreement (in form and
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3.10. Each Investor will, upon
learning that disclosure of Records containing confidential information is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
the Company's expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, the Records deemed confidential. Nothing
herein will be deemed to limit the Investor's ability to sell Registrable
Securities in a manner that is otherwise consistent with applicable laws and
regulations.
(c) The Company will hold in confidence, and will not
make any disclosure of, information concerning an Investor provided to the
Company under this Agreement unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, or any exchange
listing or similar rules and regulations, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction, (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement or any
other agreement or (v) such Investor consents to the form and content of any
such disclosure. If the Company learns that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, the Company will give prompt
notice to such Investor prior to making such disclosure and allow such Investor,
at its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
3.11 LISTING. The Company will (i) cause all of the Registrable
Securities covered by each Registration Statement to be listed on each national
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) to the
extent the securities of the same class or series are not then listed on a
national securities exchange, secure the designation and quotation of all of the
Registrable Securities covered by each Registration Statement on Nasdaq and,
without limiting the generality of the foregoing, arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. as such with respect to such Registrable Securities.
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3.12 TRANSFER AGENT; REGISTRAR. The Company will provide a transfer
agent and registrar, which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration Statement.
3.13 SHARE CERTIFICATES. The Company will cooperate with the
Investors who hold Registrable Securities being sold and with the managing
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to a Registration Statement and will enable
such certificates to be in such denominations or amounts as the case may be, and
registered in such names as the Investors or the managing underwriter(s), if
any, may reasonably request, all in accordance with Article V of the Purchase
Agreement.
3.14 PLAN OF DISTRIBUTION. Subject to Section 3.17 hereof, at the
request of an Investor holding an interest of the Registrable Securities
registered pursuant to a Registration Statement, the Company will promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement, and the prospectus
used in connection with the Registration Statement, as may be necessary in order
to change the plan of distribution set forth in such Registration Statement.
3.15 SECURITIES LAWS COMPLIANCE. The Company will comply with all
applicable laws related to any Registration Statement relating to the sale of
Registrable Securities and to offering and sale of securities and with all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act, the Exchange Act
and the rules and regulations promulgated by the SEC).
3.16 FURTHER ASSURANCES. The Company will take all other reasonable
actions as any Investor or the underwriters, if any, may reasonably request to
expedite and facilitate disposition by such Investor of the Registrable
Securities pursuant to the Registration Statement.
3.17 NO ADDITIONAL SELLING SHAREHOLDERS. The Company will not, and
will not agree to, allow the holders of any securities of the Company to include
any of their securities in any Registration Statement under Section 2.1 hereof,
or any amendment or supplement thereto under Section 3.2 hereof, without the
consent of all of the holders of the Registrable Securities.
ARTICLE IV
OBLIGATIONS OF THE INVESTORS
4.1 INVESTOR INFORMATION. As a condition to the obligations of the
Company to complete any registration pursuant to this Agreement with respect to
the Registrable Securities of each Investor, such Investor will furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as is reasonably required by the Company to effect the registration of the
Registrable Securities. At least 10 business days prior to the first anticipated
filing date of a Registration Statement for any registration under this
Agreement, the Company will notify each Investor of the information the Company
requires from that Investor if the Investor elects to have any of its
Registrable Securities included in the Registration Statement. If, within three
business
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days prior to the filing date, the Company has not received the requested
information from an Investor, then the Company may file the Registration
Statement without including Registrable Securities of that Investor. Any and all
information provided by the Investor pursuant to this Section 4.1 shall be true,
accurate, correct and complete in all material respects.
4.2 FURTHER ASSURANCES. Each Investor will cooperate with the
Company, as reasonably requested by the Company, in connection with the
preparation and filing of any Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from the Registration
Statement.
4.3 SUSPENSION OF SALES. Upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.6, each
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until (i) it receives copies of a supplemented or amended prospectus
contemplated by Section 3.6 or (ii) the Company advises the Investor that a
suspension of sales under Section 3.6 has terminated. If so directed by the
Company, each Investor will deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Investor's possession (other than a limited number of file
copies) of the prospectus covering such Registrable Securities that is current
at the time of receipt of such notice.
4.4 UNDERWRITTEN OFFERINGS.
(a) If Investors holding a majority in interest of the
Registrable Securities being registered (with the approval of a majority in
interest of the Investors) to engage the services of an underwriter, each
Investor will enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering, and will take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of its Registrable Securities from
such Registration Statement.
(b) Without limiting any Investor's rights under Section
2.1 hereof, no Investor may participate in any underwritten distribution
hereunder unless such Investor (a) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (c) agrees to pay its pro rata share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or managers of such underwriting, and legal expenses of
the underwriter, applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company under the terms of this Agreement.
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ARTICLE V
EXPENSES OF REGISTRATION
The Company will bear all reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Articles II and III of this Agreement, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company, and
the reasonable fees and disbursements of each Investor's legal counsel to review
the Registration Statement and all amendments and supplements thereto pursuant
to Section 3.7 hereof.
ARTICLE VI
INDEMNIFICATION
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify and
hold harmless each Investor that holds such Registrable Securities, any
underwriter (as defined in the Securities Act) for the Investors, any directors,
officers or advisors of such Investor or such underwriter and any person who
controls such Investor or such underwriter within the meaning of the Securities
Act or the Exchange Act (each, an "INDEMNIFIED PERSON") against any losses,
claims, damages, expenses or liabilities (joint or several) (collectively, and
together with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened in respect
thereof, "CLAIMS") to which any of them become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such Claims arise out of or are based
upon any of the following statements, omissions or violations in a Registration
Statement filed pursuant to this Agreement, any post-effective amendment thereof
or any prospectus included therein: (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or 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, (b) any untrue statement or alleged untrue
statement of a material fact contained in the prospectus (as it may be amended
or supplemented) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(c) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any other law, including without limitation any state securities
law or any rule or regulation thereunder (the matters in the foregoing clauses
(a) through (c) being, collectively, "VIOLATIONS"). Subject to the restrictions
set forth in Section 6.3 with respect to the number of legal counsel, the
Company will reimburse the Investors and each such underwriter or controlling
person and each such other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.1 (i) does not apply to
Claims arising out of or based upon a Violation that occurs in reliance upon and
in conformity with information furnished in writing to the Company by an
Indemnified Person expressly for use in connection
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with the preparation of the Registration Statement or any such amendment thereof
or supplement thereto, if such prospectus was timely made available by the
Company pursuant to Section 3.3 hereof; and (ii) does not apply to amounts paid
in settlement of any Claim if such settlement is made without the prior written
consent of the Company, which consent will not be unreasonably withheld. This
indemnity obligation will remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Persons and will survive
the transfer of the Registrable Securities by the Investors under Article IX of
this Agreement.
6.2 In connection with any Registration Statement in which an
Investor is participating, each such Investor will indemnify and hold harmless,
to the same extent and in the same manner set forth in Section 6.1 above, the
Company, each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, and any other shareholder selling
securities pursuant to the Registration Statement and any of its directors and
officers and any person who controls such shareholder within the meaning of the
Securities Act or the Exchange Act (each an "INDEMNIFIED PERSON") against any
Claim to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is 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 to the Company by such Investor expressly for use in connection with
such Registration Statement. Subject to the restrictions set forth in Section
6.3, such Investor will promptly reimburse the Company and each such other
Indemnified Person, any legal or other expenses (promptly as such expenses are
incurred and due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim. However, the indemnity agreement
contained in this Section 6.2 does not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Investor, which consent will not be unreasonably withheld, and no Investor
will be liable under this Agreement (including this Section 6.2 and Article VII)
for the amount of any Claim that exceeds the net proceeds actually received by
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. This indemnity will remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party and
will survive the transfer of the Registrable Securities by the Investors under
Article IX of this Agreement.
6.3 Promptly after receipt by an Indemnified Person under this
Article VI of notice of the commencement of any action (including any
governmental action), such Indemnified Person will, if a Claim in respect
thereof is to be made against any indemnifying party under this Article VI,
deliver to the indemnifying party a written notice of the commencement thereof.
The indemnifying party may participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly given
notice, assume control of the defense thereof with counsel mutually satisfactory
to the indemnifying parties and the Indemnified Person. In that case, the
indemnifying party will diligently pursue such defense. If, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between the
Indemnified Person and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action including the Indemnified Person, and such Indemnified Person reasonably
13
determines that there may be legal defenses available to such Indemnified Person
that are different from or in addition to those available to the indemnifying
party, then the Indemnified Person is entitled to assume such defense and may
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party (subject to the restrictions on settlement under Section 6.1
or Section 6.2, as applicable). The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action does not relieve an indemnifying party of any liability to an Indemnified
Person under this Article VI, except to the extent that the indemnifying party
is prejudiced in its ability to defend such action. The indemnification required
by this Article VI will be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable. Each Indemnified Person shall
furnish such information regarding itself or the claim in question as an
Indemnifying Person may reasonably request in writing and shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
ARTICLE VII
CONTRIBUTION
To the extent that any indemnification provided for herein is
prohibited or limited by law, the indemnifying party will make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article VI to the fullest extent permitted by law. However, (a) no
contribution will be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Article
VI, (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation, and (c) contribution
(together with any indemnification or other obligations under this Agreement) by
any seller of Registrable Securities will be limited in amount to the net amount
of proceeds received by such seller from the sale of such Registrable
Securities.
ARTICLE VIII
EXCHANGE ACT REPORTING
In order to make available to the Investors the benefits of Rule 144 or
any similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration,
the Company will:
(a) File with the SEC in a timely manner, and make and
keep available, all reports and other documents required of the Company under
the Securities Act and the Exchange Act so long as the Company remains subject
to such requirements (it being understood that nothing herein limits the
Company's obligations under Section 4.3 of the Purchase Agreement) and the
filing and availability of such reports and other documents is required for the
applicable provisions of Rule 144; and
14
(b) Furnish to each Investor who so requests, so long as
such Investor holds Convertible Notes, Warrants or Registrable Securities,
promptly upon the Investor's request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents filed by the Company
with the SEC and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, will be
automatically assigned by the Investors to transferees or assignees of all or
any portion of the Convertible Notes, Warrants or Registrable Securities, but
only if (a) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being transferred or assigned, (c)
after such transfer or assignment, the further disposition of such securities by
the transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein, (e) such transfer is made in accordance with the applicable
requirements of the Purchase Agreement or the Warrant, as the case may be, and
(f) the transferee is an "accredited investor" as that term is defined in Rule
501 of Regulation D. Any transferee or assignee of an Investor under this
Article IX shall be deemed an "Investor" for all purposes of this Agreement, and
shall be entitled to all rights of, and subject to all obligations (including
indemnification obligations) of, an Investor hereunder.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
This Agreement may be amended and the obligations hereunder may be
waived (either generally or in a particular instance, and either retroactively
or prospectively) only with the written consent of the Company and each Investor
(but not including any Investor who is not affected by such amendment or
waiver). Any amendment or waiver effected in accordance with this Article X is
binding upon each Investor (and each future holder of all such Registrable
Securities) and the Company. Notwithstanding the foregoing, no amendment or
waiver will retroactively affect any Investor without its consent, or will
prospectively adversely affect any Investor who no longer owns any Convertible
Notes, Warrants or Registrable Securities without its consent. Neither Article
VI nor Article VII hereof may be amended or waived in a manner adverse to an
Investor without its consent.
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ARTICLE XI
MISCELLANEOUS
11.1 CONFLICTING INSTRUCTIONS. A person or entity is deemed to be a
holder of Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company will act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
11.2 NOTICES. Any notices required or permitted to be given under
the terms of this Agreement will be given and deemed received as set forth in
the Purchase Agreement.
11.3 WAIVER. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, does not operate as a waiver thereof.
11.4 GOVERNING LAW. This Agreement will be governed by and
interpreted in accordance with the laws of the State of Minnesota without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of Minnesota with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby or thereby.
11.5 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
11.6 ENTIRE AGREEMENT. This Agreement, the Purchase Agreement and
the Warrants (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
11.7 SUCCESSORS AND ASSIGNS. Subject to the requirements of Article
IX hereof, this Agreement inures to the benefit of and is binding upon the
successors and assigns of each of the parties hereto. Notwithstanding anything
to the contrary herein, including, without limitation, Article IX, the rights of
an Investor hereunder are assignable to and exercisable by a bona fide pledgee
of the Registrable Securities in connection with an Investor's margin or
brokerage accounts.
11.8 USE OF PRONOUNS. All pronouns refer to the masculine, feminine
or neuter, singular or plural, as the context may require.
16
11.9 HEADINGS. The headings of this Agreement are for convenience
of reference only, are not part of this Agreement and do not affect its
interpretation.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission, and facsimile
signatures are binding on the parties hereto.
11.11 FURTHER ASSURANCES. Each party will do and perform, or cause
to be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
11.12 CONSENTS. All consents and other determinations to be made by
the Investors pursuant to this Agreement will be made by the Investors holding a
majority in interest of the Registrable Securities, determined as if all
Convertible Notes and all Warrants then outstanding had been converted into or
exercised for Registrable Securities.
11.13 NO STRICT CONSTRUCTION. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
11.14 NO THIRD-PARTY BENEFICIARIES. Other than as specifically
provided herein, this Agreement is intended to inure to the benefit of the
parties hereto only, and no other party shall have any rights, express or
implied, by reason of this Agreement.
11.15 SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed
day for the taking of any action required or permitted hereby shall be a
Saturday, Sunday, a nationally recognized holiday, or a state holiday in the
State of Minnesota, then such action may be taken on the next succeeding
business day.
11.16 INDEPENDENT NATURE OF INVESTORS' OBLIGATIONS AND RIGHTS. The
obligations of each Investor under any of the Purchase Agreement, Convertible
Note, Warrant or this Agreement (collectively, the "Transaction Documents") are
several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. Nothing contained herein
or in any Transaction Document, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Investor shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company has elected to provide
17
all Investors with the same terms and Transaction Documents for the convenience
of the Company and not because it was required or requested to do so by the
Investors.
[signature pages follow]
18
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
DELPHAX TECHNOLOGIES INC.
By: /S/ XXXXXX X. XXXXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President, Chief
Financial Officer and
Secretary
[Signatures continued on next page]
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INVESTOR:
XXXX CAPITAL PARTNERS FUND, LLC
By Xxxx Capital Partners, LLC
Its Managing Member
By Xxxx Capital Management, LLC
Its Managing Member
By: /S/ XXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Managing Member
ADDRESS:
Xxxx Capital Partners Fund, LLC
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
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