REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
June 10, 1998 is made and entered into between XXXXXX ELECTRONICS CORPORATION, a
New York corporation ("AEC"), and Societe Generale (the "Purchaser").
WHEREAS, AEC and the Purchaser have entered into that certain
Securities Purchase Agreement, dated as of the date hereof (the "Subscription
Agreement"), pursuant to which AEC has issued to the Purchaser U.S. $10,753,000
aggregate principal amount of its 6% Convertible Notes Due June 10, 2000 (the
"Notes"), which Notes, together with, in certain circumstances, accrued interest
thereon, are convertible into such number of shares of Common Stock, $.50 par
value per share, of AEC as are specified in the Notes (the "Convertible
Shares");
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Purchaser's agreement to enter into the Subscription Agreement, the Company
has agreed to provide the Purchaser with certain registration rights with
respect to the Conversion Shares (as defined below);
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Subscription
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms defined in the Subscription
Agreement shall have the same meanings herein as are ascribed to them therein.
In addition, the following terms shall have the meanings ascribed to them below:
"Purchaser" shall mean the Purchaser referenced in the preamble, and,
unless the context otherwise requires, shall include the Purchaser for so long
as it owns any Registrable Securities and any assignee or transferee of the
Notes or Registrable Securities to whom the registration rights conferred by
this Agreement have been transferred in compliance with this Agreement.
"Registrable Securities" means all of the Convertible Shares and any
other securities issued or issuable upon conversion of the Notes as provided
therein (together, the "Conversion Shares") until (i) a registration statement
under the Securities Act covering the offering of such Conversion Shares has
been declared
effective by the Commission and such Conversion Shares have been disposed of
pursuant to such effective registration statement, (ii) such Conversion Shares
are sold under circumstances in which all of the applicable conditions of Rule
144 (or any similar provision then in force) under the Securities Act ("Rule
144") are met, (iii) such Conversion Shares have been otherwise transferred and
AEC has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, which counsel shall be acceptable to the Purchasers
in their sole discretion, such Conversion Shares may be sold without any time,
volume or manner limitation pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act.
"Registration Statement" means the initial Registration Statement
filed by AEC pursuant to Section 2.1(a) and any additional Registration
Statement or Registration Statements filed by AEC pursuant to Section 2.2.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including
without limitation the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws appropriate compliance with applicable regulations issued under
the Securities Act and, if necessary, the filing of an additional Registration
Statement or Registration Statements registering the resale of additional
Conversion Shares) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holders. Such best efforts by the Company
shall include the following:
(a) AEC will as expeditiously as possible (and in no event more
than thirty (30) days from the date hereof (the "Filing Deadline") prepare and
file with the Commission a registration statement (the "Registration Statement")
on Form S-3 (if use of such form is then available to AEC pursuant to the rules
of the Commission and, if not, on such other form promulgated by the Commission
for which AEC then qualifies and which counsel for AEC shall deem appropriate
and which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance with the provisions of this Agreement and
in accordance with the intended method of such Registrable Securities), and use
its commercially reasonable efforts to cause such filed Registration Statement
to become effective
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within one hundred and twenty (120) days from the date hereof (the
"Effectiveness Deadline"). AEC will as expeditiously as possible prepare and
file with the Commission such amendments and supplements to a Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective, for a period of not less than: (i)
in the case of a non-underwritten offering of Registrable Securities, until
there shall no longer be any Registrable Securities or (ii) with respect to an
underwritten offering of Registrable Securities, ninety (90) days after the
commencement of the distribution of all Registrable Securities covered by such
Registration Statement (but not before the expiration of the period referred to
in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable)
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by the Purchaser
set forth in such Registration Statement.
(b) The number of Registrable Securities covered by the initial filing
of the Registration Statement shall equal 200% of the number of Registrable
Securities into which the Notes would be convertible as of the date preceding
date of filing. The Company shall increase (but not decrease) the number of
Registrable Securities covered by such initial Registration Statement on the
date of filing of each subsequent pre-effective amendment to such initial
Registration Statement to an amount equal to 200% of the number of Conversion
Shares into which the Notes would be convertible as of the date preceding the
date of filing of such amendment.
(c) AEC will, prior to filing a Registration Statement or prospectus
or any amendment or supplement thereto, furnish to the Purchaser, and Xxxxxx &
Xxxxxxx LLP, counsel to the Purchaser, and each Underwriter, if any, of the
Registrable Securities covered by such Registration Statement copies of such
Registration Statement as proposed to be filed, together with exhibits thereto,
which documents will be subject to review and approval by the foregoing, and
thereafter furnish to the Purchaser, its counsel and each Underwriter, if any,
for their review and comment such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus) and such other documents or information as the Purchaser, counsel or
each Underwriter may reasonably request in order to facilitate the disposition
of the Registrable Securities.
(d) After the filing of a Registration Statement, AEC will promptly
notify the Purchaser of any stop order issued or threatened by the Commission in
connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
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(e) AEC will use its reasonable efforts to (i) register or qualify
such Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as the Purchaser may reasonably (in light of
its intended plan of distribution) request, and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities in the United States as may be necessary by virtue of the
business and operations of AEC and do any and all other acts and things that may
be reasonably necessary or advisable to enable the Purchaser to consummate the
disposition of the Registrable Securities; provided that AEC will not be
required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (e), (B)
subject itself to taxation in any such jurisdiction or (C) consent or subject
itself to general service of process in any such jurisdiction.
(f) AEC will immediately notify the Purchaser upon the occurrence of
any of the following events in respect of a registration statement or related
prospectus in respect of an offering of Registrable Securities; (i) receipt of
any request for additional information by the Commission or any other federal or
state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to such Registration
Statement or related prospectus; (ii) the issuance by the Commission or any
other federal or state governmental authority of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
which makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in such Registration Statement, related prospectus or documents so that,
in the case of such Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (vi) AEC's
reasonable determination that a post-effective amendment to such Registration
Statement would be appropriate; and AEC will promptly make available to the
Purchaser any such supplement or amendment to the related prospectus.
(g) AEC will enter into customary agreements (including, if
applicable, an underwriting agreement in customary form and which is reasonably
satisfactory to AEC) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable Securities
(the Purchaser
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may, at its option, require that any or all of the representations, warranties
and covenants of AEC or to or for the benefit of such Underwriters also be made
to and for the benefit of the Purchaser).
(h) AEC will make available to the Purchaser (and will deliver to
Purchasers's counsel) and each Underwriter, if any, subject to restrictions
imposed by the United States federal government or any agency or instrumentality
thereof, copies of all correspondence between the Commission and AEC, its
counsel or auditors and will also make available for inspection by the
Purchaser, any Underwriter participating in any disposition pursuant to a
Registration Statement and any attorney, accountant or other professional
retained by the Purchaser or such Underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
AEC (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause AEC's officers
and employees to supply all information reasonably requested by any Inspectors
in connection with such Registration Statement. Records which AEC determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
such registration statement or (ii) the disclosure or release of such Records is
requested or required pursuant to oral questions, interrogatories, requests for
information or documents or a subpoena or other order from a court of competent
jurisdiction or other process; provided that prior to any disclosure or release
pursuant to clause (ii), the Inspectors shall provide AEC with prompt notice of
any such request or requirement so that AEC may seek an appropriate protective
order or waive such Inspectors' obligation not to disclose such Records; and,
provided further, that if failing the entry of a protective order or the waiver
by AEC permitting the disclosure or release of such Records, the Inspectors,
upon advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records which counsel has advised the
Inspectors that the Inspectors are compelled to disclose. The Purchaser agrees
that information obtained by it solely as a result of such inspections (not
including any information obtained from a third party who, insofar as is known
to the Purchaser after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to AEC) shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of AEC or its Affiliates unless and until such
information is made generally available to the public. The Purchaser further
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to AEC and allow AEC, at its
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.
(i) AEC will furnish to the Purchaser and to each Underwriter, if any,
a signed counterpart, addressed to the Purchaser or such Underwriter, of (1) an
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opinion or opinions of counsel to AEC, and (2) a comfort letter or comfort
letters from AEC's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Purchaser or the managing Underwriter
therefor reasonably requests. AEC agrees that, upon effectiveness of the initial
Registration Statement, it will cause to be delivered to the Purchaser (i) a
comfort letter in customary form from its independent public accountants and
(ii) an opinion of Xxxxx & Wood, counsel to the Company, covering customary
matters, including the absence of any untrue statement of a material fact or
omission to state any material fact required to be stated therein or necessary
to make the statements contained in the Initial Registration Statement and the
related prospectus not misleading.
(j) AEC will otherwise comply with all applicable rules and
regulations of the Commission, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act, and will make
available to its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(k) AEC will (i) if the Common Stock shall be listed on the New York
Stock Exchange or the American Stock Exchange at the time of effectiveness of a
Registration Statement, use commercially reasonable efforts to cause all such
Registrable Securities covered thereby to be listed on such exchange (if the
listing of such Registrable Securities is then permitted under the rules of such
exchange) and, if not, (ii) use commercially reasonable efforts to secure
designation of all such Registrable Securities covered by such Registration
Statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 of the Commission, and, in the case of clause (ii) above, to
arrange for at least two market makers to register as such with respect to such
Registrable Securities with the National Association of Securities Dealers, Inc.
(the "NASD").
(l) AEC will appoint a transfer agent and registrar for all such
Registrable Securities covered by a Registration Statement not later than the
effective date of such Registration Statement.
(m) AEC shall take all steps necessary to enable the Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Securities Act, if available.
(n) In connection with an underwritten offering, AEC will participate,
to the extent reasonably requested by the managing Underwriter for the offering
or the Purchaser, in customary efforts to sell the securities under the
offering, including, without limitation, participating in "road shows"; provided
that
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AEC shall not be obligated be to participate in more than one such offering in
any twelve (12)-month period and any such participation by AEC shall be at the
expense of the managing Underwriter or the Purchaser unless AEC shall also be
offering securities in such underwritten offering.
AEC may require the Purchaser to promptly furnish in writing to AEC
such information regarding the distribution of the Registrable Securities as AEC
may from time to time reasonably request and such other information as may be
legally required in connection with such registration including, without
limitation, all such information as may be requested by the Commission or the
NASD. If the Purchaser fails to provide such information requested in connection
with such registration within ten (10) business days after receiving such
written request, then AEC may cease pursuit of such registration until such
information is provided.
The Purchaser agrees that, upon receipt of any notice from AEC of the
happening of any event of the kind described in Section 3.1(e) hereof, the
Purchaser will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until the Purchaser's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.1(e) hereof, and, if so directed by AEC,
the Purchaser will deliver to AEC all copies, other than permanent file copies
then in the Purchaser's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event AEC
shall give such notice, AEC shall extend the period during which a Registration
Statement shall be maintained effective (including the period referred to in
Section 3.1(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 3.1(e) hereof to
the date when AEC shall make available to the Purchaser a prospectus
supplemented or amended to conform with the requirements of Section 3.1(e)
hereof.
SECTION 2.2 Additional Registration. In the event the number of Registrable
Securities available under a Registration Statement filed pursuant to this
Agreement is for any three (3) consecutive trading days (the last of such three
(3) trading days being the "Registration Trigger Date"), insufficient to cover
one hundred twenty-five percent (125%) of the Registrable Securities issued or
issuable upon conversion of the Notes outstanding (based on the conversion
formula set forth in the Notes), AEC shall file an additional Registration
Statement so as to cover two hundred percent (200%) of the Registrable
Securities issued or issuable to such Purchaser as of the date immediately
preceding such filing, as soon as practicable, but in any event within fifteen
(15) business days after the Registration Trigger Date. Notwithstanding the
foregoing, the number of shares of Common Stock which the Company is obligated
to cover pursuant to Registration Statements is limited to the Maximum Share
Issuance (as defined in the Note). The Purchaser agrees to provide to AEC such
information as it reasonably requests to allow AEC to
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assess whether a Registration Trigger Date has occurred or may occur. AEC shall
cause such additional Registration Statement to become effective as soon as
practicable following the filing thereof. The requirement of AEC to file further
additional Registration Statements under this Section 2.2 shall continue to
apply with respect to each additional Registration Statement.
SECTION 2.3. Registration Expenses. In connection with any registration
hereunder, AEC shall pay the following registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"): (i)
all registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (iii) printing expenses, (iv) AEC's internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), (v) the fees and expenses incurred in
connection with the listing of the Registrable Securities, (vi) reasonable fees
and disbursements of counsel for AEC and customary fees and expenses for
independent certified public accountants retained by AEC (including the expenses
of any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters requested
pursuant to Section 3.1(h) hereof), (vii) the fees and expenses of any special
experts retained by AEC in connection with such registration and (viii)
reasonable fees and expenses of one firm of counsel for the Holders retained as
the Holder's counsel with respect to such registration. AEC shall have no
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or the cost of any special audit required
by the Purchaser, such costs to be borne by the Purchaser.
ARTICLE III
PAYMENTS BY AEC
SECTION 3.1 Payments by AEC. In the event the initial Registration
Statement is not filed by the Filing Deadline or declared effective by the
Effectiveness Deadline (or after the initial Registration Statement has been
declared effective by the Commission, sales of all the Registrable Securities
(including any Registrable Securities required to be registered pursuant to
Section 3.2 hereof) cannot be made pursuant to the initial or any additional
Registration Statement (by reason of a stop order or AEC's failure to update
such Registration Statement, the lack of an adequate number of Registrable
Securities covered by the initial (or any additional) Registration Statement or
any other reason outside the control of the Purchaser), then the Company will
make payments to the Purchaser in such amounts and at such times as shall be
determined pursuant to this Section 3.1 as partial relief for the damages to the
Purchaser by reason of any such delay in or reduction of their ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
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remedies available at law or in equity). The Company shall pay to the Purchaser
an amount equal to (i) (A) .01 times (B) the aggregate principal amount of the
Notes held by the Purchaser (including, without limitation, Notes that have been
converted into Registrable Securities then held by such Purchaser but excluding
any Notes as to which the Notes received upon conversion or exercise, as the
case may be, have been sold) times (ii) the sum of: (A) the number of months
following the Filing Deadline that the initial Registration Statement is not
filed pursuant to Section 2.1(a) or following the Effectiveness Deadline that
the initial Registration Statement is not declared effective by the SEC, as the
case may be, plus (B) the number of months (prorated per day for partial months)
following the Effectiveness Deadline that sales cannot be made pursuant to the
initial or any additional Registration Statement after the initial Registration
Statement has been declared effective. Such amounts shall be paid in cash or, at
the Purchaser's option, may be convertible into Common Stock at the Conversion
Price (as defined in the Notes). Any shares of Common Stock issued upon
conversion of such amounts shall constitute Registrable Securities. If the
Purchaser desires to convert or exercise the amounts due hereunder into
Registrable Securities it shall so notify AEC in writing within two (2) business
days prior to the date on which such amounts are first payable in cash and such
amounts shall be so convertible (pursuant to the terms of the Notes), beginning
on the last day upon which the cash amount would otherwise be due in accordance
with the following sentence. Payments of cash pursuant hereto shall be made
within three (3) business days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than thirty
(30) days, payments shall be made for each such thirty (30) day period within
three (3) business days after the end of such thirty (30) day period.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by AEC. AEC agrees to indemnify and hold
harmless the Purchaser, its partners, Affiliates, officers, directors, employees
and duly authorized agents, and each Person or entity, if any, who controls the
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, together with the partners, Affiliates, officers,
directors, employees and duly authorized agents of such controlling Person or
entity (collectively, the "Controlling Persons"), from and against any loss,
claim, damage, liability, reasonable attorneys' fees, costs or expenses and
costs and expenses of investigating and defending any such claim (collectively,
"Damages"), joint or several, and any action in respect thereof to which the
Purchaser, its partners, Affiliates, officers, directors, employees and duly
authorized agents, and any such Controlling Person may become subject under the
Securities Act or otherwise, insofar as such Damages (or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Securities or any preliminary prospectus,
or
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arises out of, or are based upon, 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, except insofar as the same are based upon
information furnished in writing to AEC by the Purchaser or an Underwriter
expressly for use therein, and shall reimburse the Purchaser, its partners,
Affiliates, officers, directors, employees and duly authorized agents, and each
such Controlling Person for any legal and other expenses reasonably incurred by
the Purchaser, its partners, Affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person in investigating or defending
or preparing to defend against any such Damages or proceedings; provided,
however, that AEC shall not be liable to the Purchaser to the extent that any
such Damages arise out of or are based upon an untrue statement or omission made
in any preliminary prospectus if (i) the Purchaser failed to send or deliver a
copy of the final prospectus with or prior to the delivery of written
confirmation of the sale by the Purchaser to the Person asserting the claim from
which such Damages arise, and (ii) the final prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission; provided further, however, that AEC shall not be liable in any such
case to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
any prospectus if (x) such untrue statement or omission or alleged omission is
corrected in an amendment or supplement to such prospectus, and (y) having
previously been furnished by or on behalf of AEC with copies of such prospectus
as so amended or supplemented, the Purchaser thereafter fails to deliver such
prospectus as so amended or supplemented prior to or concurrently with the sale
of a Registrable Security to the Person asserting the claim from which such
Damages arise. AEC also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person or entity who controls
such Underwriters on customary terms.
SECTION 4.2. Indemnification by the Purchaser. The Purchaser agrees to
indemnify and hold harmless AEC, its partners, Affiliates, officers, directors,
employees and duly authorized agents and each Person or entity, if any, who
controls AEC within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, together with the partners, Affiliates, officers,
directors, employees and duly authorized agents of such controlling Person, to
the same extent as the foregoing indemnity from AEC to the Purchaser, but only
with reference to information related to the Purchaser or its plan of
distribution, furnished in writing by the Purchaser or on the Purchaser's behalf
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against AEC or its partners, Affiliates, officers, directors, employees or duly
authorized agents or any such controlling Person or its partners, Affiliates,
officers, directors, employees or duly authorized agents, in respect of which
indemnity may be sought against the Purchaser, the Purchaser shall have the
rights
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and duties given to AEC, and AEC or its
partners, Affiliates, officers, directors, employees or duly authorized agents,
or such controlling Person, or its partners, Affiliates, officers, directors,
employees or duly authorized agents, shall have the comparable rights and duties
given to the Purchasers by Section 4.1. The Purchaser also agrees to indemnify
and hold harmless any Underwriters of the Registrable Securities with reference
to the same information as to which it agrees to indemnify AEC referenced above,
their officers and directors and each Person who controls such Underwriters on
customary terms. AEC shall be entitled to receive indemnities on customary terms
from Underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same extent as
provided above, with respect to information so furnished in writing by such
persons specifically for inclusion in any prospectus or registration statement.
SECTION 4.3. Conduct of Indemnification Proceedings. Promptly after receipt
by any person or entity in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the person or entity against whom such indemnity
may be sought (an "Indemnifying Party"), notify the Indemnifying Party in
writing of the claim or the commencement of such action; in the event an
Indemnified Party shall fail to give such notice as provided in this Section 4.3
and the Indemnifying Party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, the indemnification provided for in Section
4.1 or 4.2 shall be reduced to the extent of any actual prejudice resulting from
such failure to so notify the Indemnifying Party; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2. If any
such claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its controlling persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
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or (ii) in the reasonable judgment of AEC and such Indemnified Party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
claim or action or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for all
Indemnified Parties, or for fees and expenses that are not reasonable. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding. Whether or not the
defense of any claim or action is assumed by the Indemnifying Party, such
Indemnifying Party will not be subject to any liability for any settlement made
without its consent, which consent will not be unreasonably withheld.
SECTION 4.4. Contribution. If the indemnification provided for in this
Article IV is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages (i) as between AEC and the
Purchaser on the one hand and the Underwriters on the other, in such proportion
as is appropriate to reflect the relative benefits received by AEC and the
Purchaser on the one hand and the Underwriters on the other from the offering of
the Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of AEC and the Purchaser on the one hand
and of the Underwriters on the other in connection with the statements or
omissions which resulted in such Damages, as well as any other relevant
equitable considerations, and (ii) as between AEC on the one hand and the
Purchaser on the other, in such proportion as is appropriate to reflect the
relative fault of AEC and of the Purchaser in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by AEC and the Purchaser on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by AEC and the Purchaser bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the prospectus. The relative
fault of AEC and the Purchaser on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by AEC and
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the Purchaser or by the Underwriters. The relative fault of AEC on the one hand
and of the Purchaser on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
AEC and the Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of the Damages referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission, and
the Purchaser shall in no event be required to contribute any amount in excess
of the amount by which the total price at which the Registrable Securities of
the Purchaser were offered to the public (less underwriting discounts and
commissions) exceeds the amount of any damages which the Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Term. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate on such date as there shall be
no Registrable Securities; provided, however, that the provisions of Article IV
hereof shall survive any termination of this Agreement.
SECTION 5.2. Rule 144. AEC covenants that it will file all reports required
to be filed by it under the Securities Act and the Exchange Act and that it will
take such further action as holders of Registrable Securities may reasonably
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request, all to the extent required from time to time to
enable the Purchaser to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. If at any time AEC is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144. Upon the request of the
Purchaser, AEC will deliver to the Purchaser a written statement as to whether
it has complied with such requirements.
SECTION 5.3. Restrictions on Sale by AEC and Others. AEC agrees and it
shall use its best efforts to cause its affiliates to agree (i) not to effect
any public sale or distribution of any securities similar to those being
registered in accordance with Section 2.1 hereof, or any securities convertible
into or exchangeable or exercisable for such securities, during the thirty (30)
days prior to, and during the period beginning on the effective date of any
registration statement (except as part of such registration statement) until all
of the Registrable Securities offered thereof have been sold if, and to the
extent, reasonably requested by the managing Underwriter or Underwriters in the
case of an underwritten public offering, provided, however, that such period
shall not exceed ninety (90) days, and (ii) to use commercially reasonable
efforts to ensure that any agreement entered into after the date hereof shall
contain a provision under which holders of such securities agree not to effect
any sale or distribution of any such securities during the periods described in
(i) above, in each case including a sale pursuant to Rule 144 under the
Securities Act (except as part of any such registration, if permitted);
provided, however, that the provisions of this Section 5.3 shall not prevent (x)
the conversion or exchange of any securities pursuant to their terms into or for
other securities, (y) the issuance of any securities to employees of AEC or
pursuant to any employee plan or (z) issuances of shares of Common Stock and the
registration and resale thereof, in connection with the Xxxxx Transaction.
SECTION 5.4. Amendment and Modification. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
the party against whom the enforcement of such waiver is sought. The provisions
of this Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless AEC has obtained the written
consent of the holders of a majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, the waiver of any provision hereof
with respect to a matter that relates exclusively to the rights of holders of
Registrable Securities whose securities are being sold pursuant to a
registration statement and does not directly or indirectly affect the rights of
other holders of Registrable Securities may be given by holders of at least a
majority of the Registrable Securities being sold by such holders; provided that
the provisions of this sentence may not be amended,
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modified or supplemented except in accordance with the provisions of the
immediately preceding sentence. No course of dealing between or among any Person
having any interest in this Agreement will be deemed effective to modify, amend
or discharge any part of this Agreement or any rights or obligations of any
person under or by reason of this Agreement.
SECTION 5.5. Successors and Assigns; Entire Agreement. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Purchaser
may assign its rights under this Agreement to any subsequent holder of Notes or
Conversion Shares, provided that AEC shall have the right to require any holder
of Notes or Registrable Securities to execute a counterpart of this Agreement as
a condition to such holder's claim to any rights hereunder. This Agreement,
together with the Subscription Agreement and the Notes sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
SECTION 5.6. Separability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
SECTION 5.7. Notices. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be personally
served or deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice: (i) if to the Company, to: Xxxxxx
Electronics Corporation, 00-00 00xx Xxxx, Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxx, Facsimile No.: (000) 000-0000; with copies (which
shall not constitute notice) to: Xxxxx & Wood LLP, Xxx Xxxxx Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxx, Esq., Facsimile No.: (212)
839-5599; and (ii) if to the Purchaser: c/o Societe Generale Securities
Corporation, 1221 Avenue of the Americas, New York, New York, Attention:
Xxxxxxxxx Xxxxxx, Facsimile No.: (000) 000-0000, with copies (which shall not
constitute notice) to: Xxxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: J. Xxxx Xxxx, Esq., Facsimile No. (212) 953- 7201. Notice
shall be deemed given on the date of service or transmission if personally
served or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided
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herein shall be deemed given on the third
business day following the date mailed or on the second business day following
delivery of such notice by a reputable air courier service.
SECTION 5.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
SECTION 5.9. Headings. The headings in this Agreement are for convenience
of reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
SECTION 5.10. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute one and the same instrument.
SECTION 5.11. Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
SECTION 5.12. Remedies. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by the undersigned, thereunto duly authorized, as of the date first
set forth above.
XXXXXX ELECTRONICS CORPORATION
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Executive Vice President,
Chief Financial Officer
SOCIETE GENERALE
By: /s/ Xxxxxxxxx Xxxxxx
Name: Xxxxxxxxx Xxxxxx
Title: Authorized Signatory
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