REGISTRATION RIGHTS AGREEMENT
Exhibit
4
This
Registration Rights Agreement (the "Agreement")
dated
this 27th
day of
March, 2002, is by and between Teltronics, Inc., a Delaware corporation the
"Company")
and
XXXXXX CORPORATION, a Delaware corporation ("Xxxxxx",
which,
together with any subsequent assignees subject to the provisions hereof, the
"Holder").
W I T N E S S E
T H:
WHEREAS,
on the date hereof the Company has issued the Holder shares of Series C
Preferred Stock (the "Preferred
Shares")
effective the date hereof which are initially convertible into an aggregate
of
1,454,545 shares of the Company's common stock, par value $.001 per share (the
"Common
Stock"),
subject to the terms and conditions set forth in the Company's Certificate
of
Designations creating the Preferred Shares (such shares of Common Stock being
the "Conversion
Shares");
WHEREAS,
none of the Conversion Shares have been registered under the Securities Act
(as
defined below) and, as a inducement to Holder, the Company has agreed to grant
to Holder certain registration rights with respect to the Conversion Shares
as
set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and undertakings contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto agree as follows:
1. Demand
Registration.
(a) Demand
Right.
If the
Company shall receive from Initiating Holders (as defined in Section 10) at
any
time or times a written request that the Company effect any registration with
respect to Registrable Securities (the "Demand
Request"),
in an
offering to be firmly underwritten by underwriter(s) selected by the Initiating
Holders (which underwriter(s) shall be reasonably acceptable to the Company)
the
Company shall:
(i) promptly
give written notice of the proposed registration to all other holders
of Registrable
Securities ("Notice
of Demand Request");
and
(ii) as
soon
as practicable, use its best efforts to file a registration statement covering
the Registrable Securities so requested to be registered and to effect such
registration including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws, and appropriate compliance with the Securities Act of 1933 (the
"Securities
Act")
and as
would permit or facilitate the sale and distribution of all of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other holders of Registrable Securities
joining in such request as are specified in a written request received by the
Company within twenty (20) days after the date of the Notice of Demand
Request.
The
Company shall only be required to effect, pursuant to this Section 1, four
(4)
registrations of Registrable Securities. A requested registration shall not
count for these purposes unless (A) such registration statement has been
declared effective and an offering closed in which at least 90% of the
Registrable Securities requested to be included in such registration by the
Initiating Holders shall have been sold or (B) the registration has been
withdrawn by the Initiating Holders and the Initiating Holders have not paid
the
Registration Expenses pursuant to Section 4 hereof in circumstances in which
they were required to bear such expenses.
The
registration statement filed pursuant to the request of the Initiating Holders
may, subject to the provisions of Sections 1(b) and (7) hereof and the prior
written consent of the Initiating Holders, include other securities of the
Company, with respect to which registration rights have been granted, and may
include securities of the Company being sold for the account of the Company,
provided
that all
the Registrable Securities for which the Initiating Holders have requested
registration shall be covered by such registration statement before any such
other securities are included.
(b) Proviso.
The
Company shall not be obligated to effect, or to take any action to effect,
any
such registration pursuant to this Section 1:
(i) in
any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification, or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities
Act;
(ii) during
the period starting with the date thirty (30) days prior to the Company's good
faith estimate of the date of filing of, and ending on a date seventy-five
(75)
days after the effective date of, a Company-initiated registration, provided
that the Company is actively employing in good faith all reasonable efforts
to
cause such registration statement to become effective; or
(iii) if
the
Initiating Holders propose to dispose of shares of Registrable
Securities which
may
be immediately registered on Form S-3
pursuant to a request made under Section
3
hereof.
(c) Deferral
of Registration.
If (i)
in the good faith judgment of the Board of Directors of the Company, the filing
of a registration statement as soon as practicable after receipt of the request
of the Initiating Holders would be materially detrimental to the Company because
there exist bona
fide financing,
acquisition or other activities of the Company and the Board of Directors of
the
Company concludes, as a result, that it is essential to defer the filing of
such
registration statement at such time, and (ii) the Company shall furnish to
the
Initiating Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be materially detrimental to the Company for such registration statement
to be filed in the near future and that it is essential to defer the filing
of
such registration statement, then the Company shall have the right to
defer
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such
filing (except as provided in Subsection (b)(ii) above) for a period of not
more
than ninety (90) days after receipt of the request of the Initiating Holders,
provided
that the
Company shall not defer its obligation in this manner more than once in any
twelve-month period, and provided
further
that the
Initiating Holders shall be entitled to withdraw the request for registration
and, if such request is withdrawn, such registration shall not count as a
permitted requested registration hereunder and the Company shall pay all
Registration Expenses incurred in connection with such withdrawn registration
request.
(d) Underwriting.
The
right of any other holders of Registrable Securities joining in a request for
registration as provided in Section 1(a)(ii) above to registration pursuant
to
this Section 1 shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable Securities in the
underwriting on the same terms as those of the Initiating Holders (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such holder with respect to such participation and inclusion).
(e) Procedures.
In any
registration pursuant to Section 1, if the Company shall request inclusion
of
securities to be sold for its own account, or if other persons entitled to
incidental registrations shall request inclusion in such registration pursuant
to Subsection (c) above, the Initiating Holders shall, on behalf of all holders
of Registrable Securities, offer to include such securities in the underwriting
and may condition such offer on the acceptance by the Company or such other
persons of the further applicable provisions of this Section 1. The Company
shall (together with all Holders and such other persons proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the representative(s) of the underwriter(s) selected
for
such underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section, if the representative
of
the underwriter(s) advises the Initiating Holders of the need for an
Underwriter's Cutback (as defined in Section 10), the number of shares to be
included in the underwriting or registration shall be allocated as set forth
in
Section 8 hereof. If a person who has requested inclusion in such registration
as provided in this Subsection (e) does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written notice from
the
Company, the underwriter or the Initiating Holders, and the securities owned
by
such person(s) shall be withdrawn from registration (the "Withdrawn
Securities").
If
there are any Withdrawn Securities and if there was an Underwriter's Cutback,
then the Company shall offer to all holders who have retained rights to include
securities in the registration the right to include additional securities in
the
registration in an aggregate amount equal to the number of Withdrawn Securities
that would have been included in the registration after giving effect to the
Underwriter's Cutback had such securities not been withdrawn, with such shares
to be allocated among such Holders requesting additional inclusion in accordance
with Section 8.
2. Piggyback
Registration.
(a) Notice
and Procedures.
If the
Company proposes to register any of its Common Stock either for its own account
or the account of a security holder or holders exercising their respective
demand registration rights (other than pursuant to Sections 1 or 3 hereof),
the
Company will:
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(i) promptly
give written notice thereof to the Holder or, if different, to each holder
of
Registrable Securities; and
(ii) use
its
best efforts to include in such registration (and any related qualification
under blue sky laws or other compliance), except as set forth in Section 2(b)
below, and in any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any holder of Registrable
Securities and received by the Company within fifteen (15) days after the
written notice from the Company described in clause (i) above, which written
request may specify the inclusion of all or a part of such holder's Registrable
Securities.
The
provisions of this Section 2 shall not apply to any registration relating solely
to employee benefit plans (as defined under Rule 405 of the Securities Act),
or
a registration relating solely to a Rule 145 transaction, or a registration
on
any registration form that does not permit secondary sales.
(b) Underwriting.
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
of
Registrable Securities as a part of the written notice given pursuant to Section
2(a)(i). In such event, the right of any holders to registration pursuant to
this Section shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable Securities in the
underwriting to the extent provided herein. All holders of Registrable
Securities proposing to distribute their securities through such underwriting
shall (together with the Company and the other holders of securities of the
Company with registration rights to participate therein distributing their
securities through such underwriting) enter into an underwriting agreement
in
customary form with the representative of the underwriter(s) selected by the
Company.
Notwithstanding
any other provision of this Section 2, if the representative of the underwriters
advises the Company of the need for an Underwriter's Cutback, the representative
may (subject to the limitations set forth below) limit the number of Registrable
Securities to be included in the registration and underwriting; provided,
however,
that
Registrable Securities shall be included in any over-allotment option granted
to
the underwriters before inclusion of any shares from the Company. The Company
shall advise all holders of securities requesting registration of the
Underwriter's Cutback, and the number of shares of securities that are entitled
to be included in the registration and underwriting shall be allocated first
to
the Company for securities being sold for its own account and thereafter as
set
forth in Section 9. If any person does not agree to the terms of any such
underwriting, it shall be excluded therefrom by written notice from the Company
or the underwriter and any securities so excluded or withdrawn from such
underwriting shall be withdrawn from such registration ("Withdrawn
Securities").
If
there
are Withdrawn Securities and if there was an Underwriter's Cutback, the Company
shall then offer to all persons who have retained the right to include
securities in the registration the right to include additional securities in
the
registration in an aggregate amount equal to the number of shares of Withdrawn
Securities that would have been included in the
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registration
after giving effect to the Underwriter's Cutback had such securities not been
withdrawn, with such shares to be allocated among such holders requesting
additional inclusion in accordance with Section 9.
(c) Lock
Up Agreements.
If
requested in writing by the Company and an underwriter of Common Stock for
the
Company, the holders of Registrable Securities shall agree not to sell or
otherwise transfer or dispose of any Common Stock of the Company held by such
holder (other than those included in the registration statement) for a period
not to exceed one hundred twenty (120) days following the effective date of
a
registration statement of the Company filed under the Securities Act,
provided
that all
officers and directors of the Company, all holders of Registrable Securities,
and all other holders of rights to registration of any other security of the
Company enter into similar agreements identical in terms to that of the holders
of Registrable Securities. The terms of this Section 2(c) shall not apply to
sales made pursuant to Rule 144 promulgated under the Securities
Act.
3. Registration
On Form S-3.
(a) After
the
Company has qualified for the use of Form S-3, in addition to the rights
contained in the foregoing provisions of this Agreement, the holders of
Registrable Securities shall have the right to request registrations on Form
S-3
or any comparable or successor form. Each such request shall be in writing
and
shall state the anticipated number of shares of Registrable Securities to be
disposed of and the anticipated gross proceeds of such shares, and the intended
methods of disposition of such shares by such holder or holders, including
whether such resales are to be made on a delayed or continuous basis pursuant
to
Rule 415. The Company shall not be obligated to effect any registration pursuant
to this Section 3 if (i) the holder of Registrable Securities, together with
the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other shares
of
Common Stock (if any) on Form S-3 at an aggregate price to the public of less
than $500,000, or (ii) in the event that the Company shall furnish the
certification described in Subsection 1(b)(ii) or Subsection 1(c) (but subject
to the limitations set forth therein), or (iii) the Company will be required
to
obtain an audit (other than for its normal year-end audit) for such registration
to become effective. The Company shall only be required to effect two (2)
registrations of Registrable Securities pursuant to this Section 3 in each
calendar year, provided,
however,
that if
the offering is to be effected on a continuous or delayed basis pursuant to
Rule
415 (or any successor rule), and the registration statement is kept effective
for a period in excess of 180-days, then the Company shall not be required
to
effect another registration in that calendar year.
(b) If
a
request complying with the requirements of Section 3(a) hereof is delivered
to
the Company, the provisions of Sections 1(a)(i) and (ii) and Section 1(b) hereof
shall apply to such registration. If the registration is for an underwritten
offering, the provisions of Sections 1(d) and 1(e) hereof shall also apply
to
such registration.
4. Expenses
Of Registration.
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All
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Sections 1, 2, and 3 hereof, shall
be
borne by the Company; provided,
however, that a holder of Registrable Securities shall bear the Registration
Expenses for any registration proceeding begun pursuant to Section 1 and
subsequently withdrawn by that holder registering shares therein, unless such
withdrawal is based upon (a) material adverse information relating to the
Company that is different from the information known or available (upon request
from the Company or otherwise) to the Initiating Holders at the time of their
request for registration under Section 1, or (b) material adverse changes in
the
financial markets which result in a significant decline in the public market
price for the Company's Common Stock of at least twenty percent (20%) from
the
date such registration proceeding is begun to the date of such withdrawal.
All
Selling Expenses relating to securities registered pursuant to Sections 1,
2,
and 3 hereof, shall be borne by the holders of such securities pro rata on
the
basis of the number of shares of securities so registered on their
behalf.
5. Registration
Procedures.
In
the
case of each registration effected by the Company pursuant to this Agreement,
the Company will use its best efforts to effect the registration and sale of
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare
and file with the SEC a registration statement with respect to the securities
to
be registered on such form as the Company deems appropriate and is permitted
or
qualified to use, and shall use all reasonable efforts to cause such
registration statement to become and remain effective for a period of ninety
(90) days or until the holders have completed the distribution described in
the
registration statement relating thereto, whichever first occurs or, in the
case
of any registration of Registrable Securities on Form S-3 which are intended
to
be offered on a continuous or delayed basis, for such period as shall be
necessary to keep the registration statement effective until all such
Registrable Securities are sold;
(b) prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement;
(c) furnish
to the holders of Registrable Securities to be included in a registration
statement, at a reasonable time prior to the filing thereof with the SEC, a
copy
of the registration statement (and each amendment or supplement thereto) in
the
form the Company proposes to file the same; and furnish such number of
prospectuses and other documents incident thereto, including any amendment
of or
supplement to the prospectus, as such holder of Registrable Securities from
time
to time may reasonably request in order to facilitate the disposition of such
Registrable Securities owned by such Seller;
(d) notify
each seller of Registrable Securities covered by such registration statement,
at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such
6
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 not misleading in the light of the circumstances,
and prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as
thereafter delivered to the purchasers of such shares, such prospectus shall
not
include an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(e) cause
all
such Registrable Securities registered pursuant hereunder to be listed on each
securities exchange on which similar securities issued by the Company are then
listed; and provide a transfer agent and registrar and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date
of
such registration;
(f) otherwise
use its best efforts to comply with all applicable rules and regulations of
the
SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months, but not more than eighteen (18) months, beginning with the first day
of
the Company's first full fiscal quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of
Section 11(a) of the Securities Act; and
(g) in
connection with any underwritten offering pursuant to a registration statement
filed pursuant to Section 1 or 3 hereof, enter into an underwriting agreement
containing customary underwriting provisions so as to effect the offer and
sale
of the Registrable Securities.
6. Indemnification.
(a) The
Company will indemnify each holder of Registrable Securities, each of its
officers, directors and partners, and each person controlling such holder within
the meaning of Section 15 of the Securities Act, with respect to which
registration has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls within the meaning of Section 15 of the
Securities Act any such underwriter, against all expenses, claims, losses,
damages, and liabilities (or actions, proceedings, or settlements in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus (including any related
registration statement, notification, or the like) incident to any registration
under this Agreement, or 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 the
Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, and will reimburse each such holder, each of its
officers, directors, partners, and each person controlling such holder, each
such underwriter, and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage, liability,
or action, provided 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 on any untrue statement or omission based upon written information
furnished to the Company by such holder
7
or
underwriter and stated to be specifically for use therein. It is agreed that
the
indemnity agreement contained in this Section shall not apply to amounts paid
in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).
(b) In
connection with the registration or sale of shares of Registrable Securities
pursuant to this Agreement, each holder whose Registrable Securities are
included in such registration being effected under this Agreement, will
indemnify the Company, each of its directors, officers, partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within
the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on
any
untrue statement (or alleged untrue statement) of a material fact contained
in
any such registration statement or prospectus, 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, and will reimburse
the
Company and such directors, officers, partners, underwriters, or control person
for any legal or 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 or prospectus, in reliance upon and in conformity with
written information furnished to the Company by such holder of the Registrable
Securities, and stated to be specifically for use therein; provided,
however,
that
the obligations of such holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities if such
settlement is effected without the consent of such holder, which consent shall
not be unreasonably withheld; and provided
that in
no event shall any indemnity under this Section exceed the net amount of
proceeds from the offering received by such holder.
(c) Each
party entitled to indemnification under this Section (the "Indemnified
Party")
shall
give notice to the party or parties required to provide indemnification (the
"Indemnifying
Party")
promptly after such Indemnified Party has actual knowledge of any claim as
to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section, to the extent such failure is not prejudicial. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
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(d) If
the
indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any
loss,
liability, claim, damage, or expense referred to therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one
hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense
as
well as any other relevant equitable considerations. The relative fault of
the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or
prevent such statement or omission.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
7. Information
By Holder.
Each
holder of Registrable Securities shall furnish to the Company in writing such
information regarding such holder and the distribution proposed by such holder
as the Company or underwriters may reasonably request in writing and as shall
be
reasonably required in connection with any registration, qualification, or
compliance referred to in this Agreement.
8. Allocation
Of Registration Opportunities.
In
any
circumstance in which all of the Registrable Securities and other shares Common
Stock of the Company with registration rights (the "Other
Shares")
requested to be included in a registration on behalf of the holders of
Registrable Securities or other selling stockholders cannot be so included
as a
result of limitations of the aggregate number of shares of Registrable
Securities and Other Shares that may be so included, the number of shares of
Registrable Securities and Other Shares that may be so included shall be
allocated among the holders of Registrable Securities and other selling
stockholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares that would be held by
such
holders and other selling stockholders. If any holder of Registrable Securities
or other selling stockholder does not request inclusion of the maximum number
of
shares of Registrable Securities and Other Shares allocated to him pursuant
to
this procedure, the remaining portion of his allocation shall be reallocated
among those requesting holders of Registrable Securities and other selling
stockholders whose allocations did not satisfy their requests pro rata on the
basis of the number of shares of Registrable Securities and Other Shares which
would be held by such holders and other selling stockholders, and this procedure
shall be repeated until all of the shares of Registrable Securities and Other
Shares which may be included in the registration on behalf of the holders of
Registrable Securities and other selling stockholders have been so allocated.
The
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Company
shall not limit the number of Registrable Securities to be included in a
registration pursuant to this Agreement in order to include shares held by
stockholders with no registration rights or to include in that registration
shares of stock issued to employees, officers, directors, or consultants
pursuant to the Company's stock option plan, or in order to include in such
registration securities registered for the Company's own account.
9. Survival
Of Rights; Termination Of Registration Rights.
The
provisions of this Agreement shall survive the conversion of the Preferred
Shares. The right of any holder of Registrable Securities to request
registration or inclusion in any registration pursuant to this Agreement shall
terminate on such date as all shares of Registrable Securities held or entitled
to be held upon conversion by such holder shall be freely tradable under Rule
144(k).
10. Definitions.
Unless
the context otherwise requires, the terms hereinafter set forth when used herein
shall have the following meanings:
"Holder"
shall
mean any Person who holds Registrable Securities and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have
been
transferred in compliance herewith.
"Initiating
Holders"
shall
mean holders of the Registrable Securities who in the aggregate hold not less
than twenty five percent (25%) of the aggregate of the original Registrable
Securities, and who exercise rights to request registration under Section
1.
"Person"
shall
mean an individual, corporation, partnership, limited liability company, joint
venture, sole proprietorship, trust or other entity, business association or
organization.
"Register,"
"registered"
and
"registration"
shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness
of
such registration statement and such other action as might be required with
respect to registration, qualification or compliance under applicable state
securities laws.
"Registration
Expenses"
shall
mean all expenses incurred in effecting any registration pursuant to this
Agreement, including, without limitation, all registration, qualification,
and
filing fees, printing expenses, escrow fees, fees and disbursements of
custodians, fees and disbursements of counsel for the Company and its
independent certified public accountants, blue sky fees and expenses, and
reasonable fees and disbursements of one counsel for the holders or selling
stockholders, which counsel shall be chosen by the holders of a majority of
the
Registrable Securities included in such registration, but shall not include
Selling Expenses.
"Registrable
Securities"
shall
mean (i) Conversion Shares issued upon conversion of the Preferred Shares,
and
(ii) any Common Stock issued as a dividend or other distribution
with
10
respect
to, or in exchange for, or in replacement of, the shares referred to in clause
(i); provided,
however,
that
Registrable Securities shall not include any securities which have been
distributed to the public pursuant to an offering registered under the
Securities Act, or sold to the public through a broker, dealer or market maker
in compliance with Rule 144.
"Rule
144"
shall
mean Rule 144 as promulgated by the SEC under the Securities Act, as such Rule
may be amended from time to time, or any similar successor rule that may be
promulgated by the SEC.
"Rule
145"
shall
mean Rule 145 as promulgated by the SEC under the Securities Act, as such Rule
may be amended from time to time, or any similar successor rule that may be
promulgated by the SEC.
"SEC"
shall
mean the Securities and Exchange Commission.
"Security"
shall
have the same meaning as in Section 2(1) of the Securities Act of 1933, as
amended.
"Selling
Expenses"
shall
mean all underwriting discounts, selling commissions and stock transfer taxes
applicable to the sale of Registrable Securities and fees and disbursements
of
counsel for any stockholder (other than the fees and disbursements of one
counsel for the holders of Registrable Securities, as selling stockholders,
included in Registration Expenses).
"Underwriter's
Cutback"
shall
mean a reduction in the number of shares to be included in any underwritten
offering as the result of receipt of written notice from the representative(s)
of the underwriters to the effect that the number of shares requested to be
included in such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to either the Company
(in a primary registration) or the majority of the holders initially requesting
such registration (in a secondary registration).
11. Other
Registration Rights.
Except
as
provided in this Agreement, the Company shall not hereafter grant to any person
the right to request the Company to register any equity securities of the
Company, or any securities convertible or exchangeable into or exercisable
for
such securities, without the prior written consent of the holders of a majority
of the Registrable Securities, provided that the Company may grant rights to
other persons to participate in piggyback registrations as provided in Section
2
hereof so long as such rights are subordinate to the rights of the holders
of
Registrable Securities with respect to such piggyback
registrations.
12. Notice.
All
notices, demands or other communications to be given or delivered under this
Agreement shall be in writing, signed by the party giving such notice, demand
or
communication and shall be deemed to have been given (i) when delivered
personally to the recipient, (ii) one (1) day after being sent to the recipient
by a nationally recognized overnight courier service (charges
11
prepaid)
or sent by facsimile transmission, or (iii) three (3) business days after being
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
shall be sent to each party at the address set forth below, or at such other
address as may have been previously supplied by written notice to the sending
party:
|
Holder:
|
Xxxxxx
Corporation
0000
XXXX Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxx 00000
Attention:
Corporate Secretary
|
|
with
a copy to:
|
Xxxxx
X. Xxxxxx, Esq.
Vice
President-Counsel,
Corporate
& Commercial Operations
and
Assistant Secretary
0000
XXXX Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxx 00000
Fax:
(000) 000-0000
|
|
The
Company:
|
Teltronics,
Inc.
0000
Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx,
Xxxxxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxx X. Xxxxxxx, President
|
|
with
a copy to:
|
Xxxxx
& Xxxxx
0000
Xxxxxxxx Xxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxx X. Xxxxx, Esq.
|
13. Miscellaneous.
(a) Remedies.
Any
person having rights under any provision of this Agreement will be entitled
to
enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that money damages
may
not be an adequate remedy for any breach of the provisions of this Agreement
and
that any party may at its sole discretion apply to any court of law or equity
of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
(b) Amendments
and Waivers.
Except
as otherwise provided herein, the provisions of this Agreement may be amended
or
waived only upon the prior written consent of the Company, the Holder (as long
as the Holder holds any Registrable Securities) and holders of at least a
majority of any other outstanding Registrable Securities and any such amendment
or waiver shall
12
be
binding on all Holders, provided
that in
no event shall the obligation of any Holder hereunder be materially increased
except with the written consent of such Holder.
(c) Successors
and Assigns.
All
covenants and agreements in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. In addition, whether
or not any express assignment has been made, provisions of this Agreement which
are for the benefit of purchasers or holders of Registrable Securities are
also
for the benefit of, and enforceable by, any subsequent holder of Registrable
Securities.
(d) Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
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 shall be in effect only to the extent that such prohibition
or
invalidity, without invalidating the remainder of this Agreement.
(e) Counterparts.
This
Agreement may be executed simultaneously in counterparts, any one of which
need
not contain the signatures of more than one party, but all such counterparts
taken together will constitute one and the same Agreement.
(f) Descriptive
Headings
The
section numbers and descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
(g) Governing
Law.
The
Delaware General Corporation Law shall govern all issues and questions
concerning the relative rights of the Company and its stockholders and all
other
issues and questions concerning the construction, validity, interpretation
and
enforcement of this Agreement without giving effect to any choice of law or
conflict of law rules or provisions that would cause the application of the
laws
of any jurisdiction other than the state of Delaware.
(h) Jurisdiction
and Venue.
The
Company and Holder hereby consent to the jurisdiction of the courts of Brevard
County in the State of Florida and the United States District Court for the
Middle District of Florida, as well as to the jurisdiction of all courts from
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations arising under
this Agreement or with respect to the transactions contemplated hereby, and
expressly waives any and all objections it may have as to venue in any of such
courts.
(i) Notice
of Transfer.
The
Holder and any other holder of Registrable Securities agrees to notify the
Company of any transfers of Registrable Securities; provided,
however,
that
any failure to give such notice shall not adversely effect the rights to which
any holder or transferee of Registrable Securities would otherwise be entitled
hereunder.
[Remainder
of page left intentionally blank.]
13
[SIGNATURE
PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed by their duly authorized officers as of the date first
above written.
|
COMPANY:
TELTRONICS,
INC.
|
|
|
By: /s/
Ewen R.
Xxxxxxx
|
|
|
Xxxx
X. Xxxxxxx
President
|
|
|
HOLDER:
XXXXXX
CORPORATION
|
|
|
By: /s/
Xxxxxxx X.
Xxxxxxx
|
|
|
Name:
Xxxxxxx X. Xxxxxxx
Its:
Assistant Treasurer
|
14
