EXHIBIT 4.12
REGISTRATION RIGHTS AGREEMENT
April 1, 2002
To Each of the Several Purchasers to the Series A Convertible Preferred
Stock Subscription and Purchase Agreement of even date herewith
Dear Sirs:
This will confirm that in consideration of your agreement on the date
hereof to purchase an aggregate of 4,200 shares of Series A Convertible
Preferred Stock, $0.01 par value per share of Edge Technology Group, Inc., a
Delaware corporation (the "Company"), pursuant to the Subscription and
Securities Purchase Agreement of even date herewith (the "Purchase Agreement")
between the Company and you and as an inducement to you to consummate the
transactions contemplated by the Purchase Agreement, the Company covenants and
agrees with each of you as follows:
1. Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
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other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of the
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Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued upon
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conversion of the Preferred Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Preferred Shares" shall mean at any time, the number of shares of
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Series A Convertible Preferred Stock which are then currently outstanding.
"Purchasers" shall mean the several Purchasers named in Schedule I to
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the Purchase Agreement.
"Registration Expenses" shall mean the expenses so described in
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Section 8.
"Restricted Stock" shall mean the Conversion Shares, excluding
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Conversion Shares which (a) have been registered under the Securities Act
pursuant to an effective registration statement filed thereunder and disposed of
in accordance with registration statement
covering them or (b) have become eligible for public re-sale pursuant to Rule
144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
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similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 8.
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2. Required Registration.
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a. At the earlier of (i) any time after the first anniversary of the
Closing Date as such term is defined in the Purchase Agreement, or (ii) at
the time at which a demand to register other restricted stock of the
Company (other than employee stock options on Form S-8) is made by the
holders thereof, then the holders of Restricted Stock constituting at least
40% of the total shares of Restricted Stock then outstanding may request
the Company to register under the Securities Act all or any portion of the
shares of Restricted Stock held by such requesting holder or holders for
sale in the manner specified in such notice. For purposes of this Section 2
and Section 3, 10(a) and 10(d), the term "Restricted Stock" shall be deemed
to include the number of shares of Restricted Stock which would be issuable
to a holder of Preferred Shares upon conversion of all such Preferred
Shares held by such holder at such time, provided, however, that the only
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securities which the Company shall be required to register pursuant hereto
shall be shares of Common Stock. Notwithstanding anything to the contrary
contained herein, the Company shall not be obligated to effect, nor to take
any action to effect, any such registration pursuant to this Section 2
during the period starting with the date forty-five (45) days prior to the
Company's good faith estimate of the date of filing of, and ending on a
date ninety (90) days after the effective date of, a Company-initiated
registration ; provided that the Company is actively employing in good
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faith all reasonable efforts to cause such registration statement to become
effective.
b. Following receipt of any notice under this Section 2, the Company
shall immediately notify all holders of Restricted Stock from whom notice
has not been received and shall use commercially reasonable efforts to
register under the Securities Act, for public sale in accordance with the
method of disposition specified in such notice from requesting holders, the
number of shares of Restricted Stock specified in such notice (and in all
notices received by the Company from other holders within 30 days after the
giving of such notice by the Company). If such method of disposition shall
be an underwritten public offering, the Company will designate the managing
underwriter of such offering. The Company shall be obligated to register
Restricted Stock pursuant to this Section 2 on one occasion only, provided,
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however, that such obligation shall be deemed satisfied only when a
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registration statement covering all shares of Restricted
Registration Rights Agreement - Page 2
Stock specified in notices received and not rescinded as aforesaid, for
sale in accordance with the method of disposition specified by the
requesting holders, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such
shares shall have been sold pursuant thereto.
c. The Company and any other holders of Common Stock which the Company
shall permit to participate shall be entitled to include in any
registration statement referred to in this Section 2, for sale in
accordance with the method of disposition specified by the requesting
holders, shares of Common Stock to be sold by the Company or such other
holders for their own account, except as and to the extent that, in the
opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold.
3. Incidental Registration. If the Company at any time (other than pursuant
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to Section 2) proposes to register any of its Common Stock under the Securities
Act for sale to the public, whether for its own account or for the account of
other security holders or both (except with respect to registration statements
on Forms X-0, X-0 or another form not available for registering the Restricted
Stock for sale to the public), each such time it will give written notice to all
holders of outstanding Restricted Stock of its intention so to do. Upon the
written request of any such holder, received by the Company within 10 business
days after the giving of any such notice by the Company, to register any of its
Restricted Stock (which request shall state the intended method of disposition
thereof), the Company will use its commercially reasonable efforts to cause the
Restricted Stock as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company, all to the extent requisite to permit the sale or
other disposition by the holder (in accordance with its written request) of such
Restricted Stock so registered. In the event that any registration pursuant to
this Section 3 shall be, in whole or in part, an underwritten public offering of
Common Stock, the number of shares of Restricted Stock to be included in such an
underwriting may be reduced (pro rata among the requesting holders based upon
the number of shares of Restricted Stock owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that such number of shares of Restricted Stock shall
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not be reduced if any shares are to be included in such underwriting for the
account of any executive officer or director of the Company. Notwithstanding the
foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 3 without thereby incurring any liability to the
holders of the Restricted Stock.
4. Registration Procedures. If and whenever the Company is required by the
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provisions of Section 2 or 3 to use commercially reasonable efforts to effect
the registration of any shares of Restricted Stock under the Securities Act, the
Company will, use commercially reasonable efforts to:
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a. prepare and file with the Commission a registration statement with
respect to such securities and use commercially reasonable efforts to cause
such registration statement to become and remain effective for the period
of the distribution contemplated thereby (determined as hereinafter
provided);
b. prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period;
c. furnish to each seller of Restricted Stock and to each underwriter
such number of copies of the registration statement and the prospectus
included therein (including each preliminary prospectus) as such persons
reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
d. use commercially reasonable efforts to register or qualify the
Restricted Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Restricted Stock or, in the case of an underwritten public offering, the
managing underwriter reasonably shall request, provided, however, that the
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Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
e. use commercially reasonable efforts to list the Restricted Stock
covered by such registration statement with any securities exchange on
which the Common Stock of the Company is then listed;
f. immediately notify each seller of Restricted Stock and each
underwriter under 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 of which the Company has
knowledge as a result of which the prospectus contained in such
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 light
of the circumstances then existing;
g. if the offering is underwritten and at the request of any seller of
Restricted Stock, use commercially reasonable efforts to furnish on the
date that Restricted Stock is
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delivered to the underwriters for sale pursuant to such registration: (i)
an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, stating that
such registration statement has become effective under the Securities Act
and that (A) to the knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each
amendment or supplement thereof comply as to form in all material respects
with the requirements of the Securities Act (except that such counsel need
not express any opinion as to financial statements contained therein) and
(C) to such other effects as reasonably may be requested by counsel for the
underwriters and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters, stating
that they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereof, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no more
than five business days prior to the date of such letter) with respect to
such registration as such underwriters reasonably may request; and
h. make available for inspection by each seller of Restricted Stock,
any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant
or agent in connection with such registration statement.
For purposes of Section 4(a) and 4(b) and of Section 2(c), the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchase by it or a period of 90 days, which ever
first occurs, and the period of distribution of Restricted Stock in any other
registration shall be deemed to extend until the later of the sale of all
Restricted Stock covered thereby and 90 days after the effective date thereof.
In connection with each registration hereunder, the sellers of Restricted
Stock will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
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In connection with each registration pursuant to Sections 2 or 3
covering an underwritten public offering, the Company and each seller agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
5. Expenses. All expenses incurred by the Company in complying with
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sections 2 or 3, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of insurance and reasonable fees
and disbursements of one counsel for the sellers of Restricted Stock, but
excluding any Selling Expenses, are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock are called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 2 or 3. All Selling Expenses in connection
with each registration statement under Sections 2 or 3 shall be borne by the
participating sellers in proportion to the number of shares sold by each, or by
such participating sellers other than the Company (except to the extent the
Company shall be a seller) as they may agree.
6. Indemnification and Contribution.
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a. In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Sections 2 or 3, the Company will indemnify
and hold harmless each seller of such Restricted Stock thereunder, each
underwriter of such Restricted Stock thereunder and each other person, if
any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such seller, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of any material fact
contained in any registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Sections 2 or 3, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each such seller, each such underwriter and each such controlling person
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Company will not be liable in any such
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case if and to the extent that any such loss, claim, damage or liability
arises out of or is based upon an
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untrue statement or omission so made in conformity with information
furnished by any seller, any underwriter or any controlling person
specifically for use in such registration statement or prospectus. It is
agreed that the indemnity agreement contained in this Section 7(a) 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 or delayed).
b. In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Sections 2 or 3, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and
hold harmless the Company, each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who
signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning
of the Securities Act, against all losses, claims, damages or liabilities,
joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement of any material fact contained in the registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant to Sections 2 or 3, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of
or are based upon the 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 each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, provided, however, that
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such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished
to the Company by such seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability
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of each seller hereunder shall not in any event to exceed the proceeds
received by such seller from the sale of Restricted Stock covered by such
registration statement. It is agreed that the indemnity agreement contained
in this Section 6(b) 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 seller hereunder (which consent shall not
be unreasonably withhold or delayed).
c. Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim
in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any liability which
it may have to such indemnified party other than under this
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Section 6 and shall only relieve it from any liability which it may have to
such indemnified party under this Section 6 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume
and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected, provided, however, that, if the
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defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party
or if the interest of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified
party shall have the right to select a separate counsel and to assume such
legal defenses and otherwise to participate in the defense of such action,
with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
d. In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any
holder of Restricted Stock exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 6 but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding
the fact that this Section 6 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of
any such selling holder or any such controlling person in circumstances for
which indemnification is provided under this Section 6; then, and in each
such case, the Company and such holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that such holder is
responsible for the portion represented by the percentage that the public
offering price of its Restricted Stock offered by the registration
statement bears to the public offering price of all securities offered by
such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) no such
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holder will be required to contribute any amount in excess of the public
offering price of all such Restricted Stock offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
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7. Changes in Common Stock. If, and as often as, there is any change in the
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Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
8. Rule 144 Reporting. With a view to making available the benefits of
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certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, at all times
after 90 days after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
b. use commercially reasonable efforts to file with the Commission in
a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
c. furnish to each holder of Restricted Stock forthwith upon request a
written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed by the Company as such holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Restricted Stock without
registration.
9. Representations and Warranties of the Company.
---------------------------------------------- The Company represents
and warrants to you as follows:
a. The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or there
agency of government, the Charter or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or
any of its properties or assets is bound, conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or result in the creation
or imposition of any lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Company.
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b. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
10. Miscellaneous.
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a. All covenants and agreements contained 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 (including
without limitation transferees of any Preferred Shares or Restricted
Stock), whether so expressed or not, provided, however, that registration
rights conferred herein on the holders of Preferred Shares or Restricted
Stock shall only inure to the benefit of a transferee of Preferred Shares
or Restricted Stock if (i) there is transferred to such transferee at least
100 shares in the aggregate of Preferred Shares or 100,000 shares in the
aggregate of Restricted Stock or (ii) such transferee is a partner,
shareholder or affiliate of a party hereto.
b. All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person, mailed by certified
or registered mail, return receipt requested, or sent by telecopier or
telex, addressed as follows:
if to the Company or any other party hereto, at the address of such
party set forth in the Purchase Agreement;
if to any subsequent holder of Preferred Shares or Restricted Stock,
to it at such address as may have been furnished to the Company in writing
by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares or
Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in
the case of the Company) in accordance with the provisions of this paragraph.
c. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
d. This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the
holders of at least two-thirds (2/3) of the voting power of the outstanding
shares of Restricted Stock.
e. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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f. The obligations of the Company to register shares of Restricted
Stock under Sections 2 or 3 shall terminate on the tenth anniversary
hereof.
g. If the Company grants to any third party any registration rights
more favorable in any material respect than any of those contained herein,
then the registration rights under this Agreement shall automatically be
amended without the requirement of further action by the Purchasers to be
equivalent to such more favorable rights.
h. If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability
shall attach only to such provision and shall not in any manner affect or
render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
COMPANY:
EDGE TECHNOLOGY GROUP, INC.
By: --------------------------------------------------
Name: --------------------------------------------------
Title: --------------------------------------------------
Address: --------------------------------------------------
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Facsimile:--------------------------------------------------
Telephone:--------------------------------------------------
PURCHASERS:
By: --------------------------------------------------
Name: --------------------------------------------------
Title: --------------------------------------------------
Address: --------------------------------------------------
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Fax: --------------------------------------------------
Tel.: --------------------------------------------------
Edge Technology Group, Inc. - Page 12
