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EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made and entered
into as of June 1, 2001, by and among TeraForce Technology Corporation, a
Delaware corporation (the "Company") and Xxxxx X. Xxxxx, Xx, an individual
residing in Xxxxxx County, Texas ("Xxxxx"), Xxxxxx X. Xxxx, an individual
residing in Xxxxxx County, Texas ("Xxxx") and Xxxxx Xxxxxxx, an individual
residing in Xxxxxx County, Texas ("Sarofim") (Wyatt, Cohn, and Sarofim are
referred to herein collectively as the "Investors"). In order to induce
Investors to enter into that certain Reimbursement Agreement dated as of even
date hereof (the "Reimbursement Agreement") with the Company, whereby Investors
issued a letter of credit securing payment of a bank loan to the Company of
which this Agreement is an exhibit, the Company has agreed to issue to the
Investors the Warrants (as hereafter defined) and to provide the registration
rights set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Board: shall mean the Board of Directors of the Company.
Common Stock: shall mean the common stock, par value $0.01 per share,
of the Company.
Effective Registration Statement: shall mean the currently effective
registration statement covering the Registered Shares on Form S-3 filed with the
Securities and Exchange Commission on April 13, 2001 (Registration No.
333-58970) declared effective on April 27, 2001, including the Prospectus
included in such registration statement, amendments (including post-effective
amendments) and supplements to such registration statement, and all exhibits to
and all material incorporated by reference in such registration statement.
Exchange Act: shall mean the Securities Exchange Act of 1934, as from
time to time amended.
Holder: shall mean Investors, or any permitted assignee of Investors.
For purposes of this Agreement, the Holder of Warrants shall also be deemed to
be the Holder of the Common Stock into which such Warrants may be exercised.
Person: shall mean a natural person, partnership, corporation, business
trust, association, joint venture or other entity or a government or agency or
political subdivision thereof.
Prospectus: shall mean the Prospectus included in any Registration
Statement, as supplemented by any and all Prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated
by reference in such Prospectus.
Registered Shares: shall mean the warrant shares issuable upon exercise
of those certain Amended and Restated Warrants, of even date herewith, issued to
Investors (more specifically to
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Xxxxx, for 500,000 warrant shares, to Xxxx for 150,000 warrant shares and to
Sarofim for 150,000 warrant shares) pursuant to the Reimbursement Agreement.
Registration: shall mean a piggyback registration described in Section
2(a) hereof.
Registration Expenses: shall mean the out-of-pocket expenses of a
Registration, including:
(a) all registration and filing fees (including fees with
respect to filings required to be made with the National Association of
Securities Dealers, Inc.);
(b) fees and expenses of compliance with securities or blue
sky laws (including fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities);
(c) printing, messenger, telephone and delivery expenses;
(d) fees and disbursements of counsel for the Company; and
(e) fees and disbursements of all independent certified public
accountants of the Company incurred specifically in connection with
such Registration.
Registrable Securities: shall mean (a) the shares of Common Stock
issued or issuable (directly or indirectly) upon exercise of Warrants, and (b)
any securities issued or issuable with respect to such Common Stock by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization.
Registration Statement: shall mean any registration statement which
covers Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included in such registration statement, amendments
(including post-effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated by reference in
such registration statement.
Replacement Warrants: shall mean these certain Warrants to purchase
Common Stock of the Company which were originally issued to the Investors and
repriced to $0.75 per share pursuant to the Reimbursement Agreement.
Securities Act: shall mean the Securities Act of 1933, as from time to
time amended.
SEC: shall mean the Securities and Exchange Commission.
Underwritten Public Offering: shall mean a public offering in which
Common Stock of the Company is offered and sold on a firm commitment basis
through one or more underwriters, pursuant to (a) an effective registration
statement under the Securities Act and (b) an underwriting agreement between the
Company and such underwriters.
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Warrants: shall mean those certain Warrants, of even date herewith,
issued to the Investors, pursuant to the Reimbursement Agreement, having an
exercise price of $0.75 per share, but shall not include the Replacement
Warrants.
2. Registrations
(a) Piggyback Registrations
Unless all of the Registrable Securities are covered by
effective registration statements, or if the shares issuable upon exercise of
the Warrants may be re-sold pursuant to Rule 144(k) under the Securities Act,
each time the Company decides to file a Registration Statement under the
Securities Act (other than on Forms S-4 or S-8 or any successor form for the
registration of securities issued or to be issued in connection with a merger or
acquisition or employee benefit plan) covering the offer and sale by it, or
other holders of the Company's securities who may demand registration of such
securities of any of its securities for money, the Company shall give written
notice thereof to all Holders of Registrable Securities. The Company shall
include in such Registration Statement such shares of Registrable Securities for
which it has received written requests to register such shares within 30 days
after such written notice has been given. If the Registration Statement is to
cover an Underwritten Public Offering, such Registrable Securities shall be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters.
If in the good faith judgment of the managing underwriter in any
Underwritten Public Offering, the inclusion of all of the shares of Registrable
Securities and any other Common Stock requested to be registered would interfere
with the successful marketing of a smaller number of such shares, then the
number of shares of Registrable Securities and other Common Stock to be included
in the offering shall be made in accordance with the following priorities: (1)
first, the shares to be sold for the account of the Company, (2) second, the
number of shares to be registered for the Holder reduced on a pro-rata basis
based on the number of shares to be sold by the Holder as compared to the number
of shares to be sold by all other selling stockholders.
All shares so excluded from the underwritten public offering shall be
withheld from the market by the Holders thereof for a period (not to exceed 30
days prior to the effective date and 90 days thereafter) that the managing
underwriter reasonably determines is necessary in order to effect the
Underwritten Public Offering.
The Company may decline to file a Registration Statement after giving
notice to any Holder pursuant to this Section 2(a), or withdraw a Registration
Statement after filing and after such notice, but prior to the effectiveness
thereof, provided, that the Company shall promptly notify each Holder in writing
of any such action and provided, further, that the Company shall bear all
expenses which would otherwise have been charged to the Holder in connection
with such withdrawn Registration Statement.
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3. Registration Procedures
If and whenever the Company is required to register Registrable
Securities, the Company will use its commercially reasonable best efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended plan of distribution thereof, and pursuant thereto
the Company will as expeditiously as possible:
(a) prepare and file with the SEC as soon as practicable a
Registration Statement with respect to such Registrable Securities and
use its commercially reasonable best efforts to cause such Registration
Statement to become effective and remain effective until the
Registrable Securities covered by such Registration Statement have been
sold;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement, and such
supplements to the Prospectus, as may be requested by any Holder of
Registrable Securities or any underwriter of Registrable Securities or
as may be required by the rules, regulations or instructions applicable
to the registration form used by the Company or by the Securities Act
or rules and regulations thereunder to keep the Registration Statement
effective until all Registrable Securities covered by such Registration
Statement are sold in accordance with the intended plan of distribution
set forth in such Registration Statement or supplement to the
Prospectus, unless such Registrable Securities may otherwise be re-sold
pursuant to Rule 144(k) under the Securities Act;
(c) deliver to each selling Holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of each
Prospectus (and each preliminary Prospectus) as such Persons may
reasonably request (the Company hereby consenting to the use of each
such Prospectus (or preliminary Prospectus) by each of the selling
Holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus (or preliminary Prospectus); and
(d) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling Holders of
Registrable Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as such selling Holders or underwriters
may designate in writing and do anything else necessary or advisable to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided that the
Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process in any such
jurisdiction where it is not then so subject.
4. Registration Expenses
The Registration Expenses of all Registrations shall be borne by the
Company, except that (i) the fees and disbursements of any counsel to the
selling security holders shall be paid by such holders if such security holders
are unwilling to be represented by counsel to the Company and (ii)
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the selling security holders shall pay all incremental federal and state filing
fees incurred as a result of the inclusion of the Registrable Securities in a
Registration pursuant to Section 2(a).
5. Requirements for Participation in Underwritten Public Offerings
No person may participate in any Underwritten Public Offering pursuant
to a Registration initiated by the Company hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements;
provided, that the term of such underwriting arrangement in connection with the
sale of Registrable Securities shall be no less favorable than the terms
afforded to any other holder of securities participating in the Underwritten
Public Offering.
6. Suspension of Sales
Upon receipt of written notice from the Company that a Registration
Statement or Prospectus contains an untrue statement or alleged untrue statement
of material fact or an omission or alleged omission to state a material fact
necessary to make the statements made therein not misleading, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until such Holder has received copies of a supplemented or amended
Prospectus, or until such Holder is advised in writing by the Company that the
use of the Prospectus may be resumed, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
7. Indemnification
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each of the Holders who holds
such Registrable Securities and the Registered Shares, the directors, officers,
partners, employees, agents of, and each person, if any, who controls any Holder
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "Claims") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to which any of them may become
subject to the extent such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) are attributable to: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement or
the Effective Registration Statement or any post-effective amendment thereto or
in any filing made in connection with the qualification of the offering under
the securities or other "blue sky" laws of any jurisdiction in which Registrable
Securities or Registered Shares are offered ("Blue Sky Filing"), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not
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misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary Prospectus (but only to the extent
that the Company specifically authorizes in writing the use of such preliminary
Prospectus by the Holder) or the final Prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the SEC)
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 (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities or the Registered Shares pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Notwithstanding anything to the contrary
contained herein, the indemnification provisions contained in this Section 7(a):
(i) shall not apply to a Claim by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished to the Company by such Indemnified Person or underwriter
for such Indemnified Person for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; (ii)
with respect to any Prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the Registrable
Securities or the Registered Shares that are the subject thereof (or to the
benefit of any person controlling such person) if the Indemnified Person was
promptly advised in writing not to use the incorrect Prospectus prior to the use
giving rise to a Violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Holder to deliver or to cause to be delivered the Prospectus
made available by the Company or any Violation by the Holder of the Plan of
Distribution set forth in the Prospectus; (iv) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld; and (v) with respect to any preliminary Prospectus shall not inure to
the benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary Prospectus was corrected on a timely
basis in the Prospectus, as then amended or supplemented. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person.
(b) To the fullest extent permitted by law, in connection with the
Registration Statement or the Effective Registration Statement in which a Holder
is participating, each such Holder agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
7(d), 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 (collectively an "Indemnified
Party"), against any Claim or Indemnified Damages to which any of them may
become subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, to the extent, (i) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Holder for
use in connection with such Registration Statement or the Effective Registration
Statement, (ii) that such Violation arises out of a misstatement or omission in
a preliminary Prospectus or a Prospectus which the Company advised the Holder in
writing to not use, and the Holder subsequently used it, (iii) the Holder failed
to deliver or cause to be delivered the Prospectus made available by the
Company, or (iv) for any
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Violation by the Holder of the provisions in the plan of distribution set forth
in the Prospectus. In such event the Holder will reimburse any legal or other
expenses reasonably incurred by the Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
provisions contained in this Section 7(b) and the provisions with respect to
contribution contained in Section 7(d) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Holder, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party, as the case may be, under this Section 7 of notice of the commencement of
any action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party, as the case may
be, shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 7, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof and to select counsel therefore. If the indemnifying party
selects counsel pursuant to the preceding sentence, the Indemnified Person or
the Indemnified Party, as the case may be, shall have the right to approve such
counsel which approval shall not be unreasonably withheld. In the event that the
Indemnified Person or the Indemnified Party, as the case may be, does not
approve of the selection of counsel by the indemnifying party and the
withholding of such approval is reasonable, then the indemnifying party shall be
responsible for the reasonable costs and expenses of one counsel selected by the
Indemnified Person and the Indemnified Party, as the case may be, to represent
their interests, provided that the indemnifying party shall not be responsible
for the costs and expenses of more than one counsel total selected by the
Indemnified Party or Indemnified Person. The Indemnified Party or Indemnified
Person, as the case may be, shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person, as the case
may be, which relates to such action or claim. The indemnifying party shall keep
the Indemnified Party or Indemnified Person, as the case may be, fully notified
at all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, as the case may be, consent to entry of
any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person, as the case may be, of a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person, as the
case may be, with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or
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Indemnified Party, as the case may be, under this Section 7(c), except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 7(c) to the fullest extent permitted by law; provided, however,
that no seller of Registrable Securities or Registered Shares guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities or Registered Shares who was not guilty of fraudulent
misrepresentation.
8. Other Obligations and Agreements
(a) So long as the Company has a class of securities registered
pursuant to Section 12 of the Exchange Act and so long as the Holder own any of
the shares issuable upon exercise of the Warrants and such shares are
"restricted securities" (as defined in Rule 144), with a view of making
available to the Holder the benefits of Rule 144 under the Securities Act and
any other rule or regulation of the SEC that may at any time permit the Holder
to sell the shares to the public without registration, the Company agrees to use
its commercially reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and
the Exchange Act; and
(iii) make available to the Holder, so long as the Holder own any
Registrable Securities or Registered Shares a copy of the most
recent annual or quarterly report of the Company and such
other SEC reports and documents filed by the Company and such
other information (but not opinion of counsel) as may be
reasonably requested by the Holder seeking to avail itself of
any rule or regulation of the SEC with permits the selling of
any such securities without registration.
(b) If required under the rules of the Nasdaq Stock Market, Inc., the
Company shall file before the Closing any required applications and
notifications in connection with the issuance of the Warrants. The Company shall
use its commercially reasonable best efforts either to secure and maintain
designation and quotation of all the Registrable Securities covered by the
Registration Statement and all Registered Securities covered by the Effective
Registration Statement on the Nasdaq Market or, if, despite the Company's
commercially reasonable best efforts to satisfy the preceding clause, the
Company is unsuccessful in satisfying the preceding clause, then the Company
shall use its commercially reasonable best efforts to secure the inclusion for
quotation on the OTC Bulletin Board for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such shares.
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9. Miscellaneous
(a) Notices
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery: (i) if
to a Holder of Registrable Securities, at the most current address set forth in
the Company's stock transfer books; and (ii) if to the Company, at its address
set forth in the Reimbursement Agreement. All such notices and communications
shall be deemed to have been duly given: at the time delivered by hand
(including by telecopy), if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed, upon confirmation if
sent by telecopier; when receipt acknowledged, if to an air courier guaranteeing
overnight delivery. The Company shall promptly provide a list of the most
current addresses of the Holders of Registrable Securities given to it in
accordance with the provisions hereof to any such Holder for the purpose of
enabling such Holder to communicate with other Holders in connection with this
Agreement.
(b) Successors and Assigns
This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Company. This Agreement may not be
assigned by the Holders, except with the prior written consent of the Company
(which shall not unreasonably be withheld in the case of the sale or transfer of
substantially all of the Registrable Securities to not more than one party).
(c) Counterparts
This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(d) Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
(e) Severability
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TERAFORCE TECHNOLOGY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
INVESTORS
/s/ Xxxxx X. Xxxxx, Xx.
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Xxxxx X. Xxxxx, Xx.
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
/s/ Xxxxx Xxxxxxx
----------------------------------------------
Xxxxx Xxxxxxx
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