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Exhibit 10.12
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, by and between Xxxxx Xxxx, Inc., a
Delaware corporation (the "Company"), and the person whose name appears on the
signature page attached hereto (individually a "Holder" and collectively, with
the holders of other Units (as defined herein), the "Holders") issued in the
private placement offering by the Company (the "Offering").
WHEREAS, pursuant to a Unit Purchase Agreement dated July 11, 1996 (the
"Unit Purchase Agreement"), the Company is offering for sale ten (10) of the
Company's units ("Units") at a subscription price of $50,000 per Unit for a
total offering of $500,000. Each Unit is comprised of (i) an unsecured
promissory note in the principal amount of $50,000 bearing interest at ten (10%)
percent per annum and (ii) a redeemable common stock purchase warrant ("Class A
Warrant") to purchase one (1) share of the Company's common stock, par value
$.01 per share ("Common Stock"). The exercise price (the "Warrant Exercise
Price") of the Class A Warrants is $7.00 per share and the Class A Warrants are
exercisable for a period of three (3) years from the date of issue; and
WHEREAS, pursuant to the terms of, and in order to induce the Holders
to enter into the Unit Purchase Agreement to purchase the Units, the Company and
the Holders have agreed to enter into this Agreement; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and in the Unit Purchase Agreement, the Company
hereby agrees as follows:
1. Piggyback Registration for Warrants and Warrant Shares. If the
Company at any time proposes to conduct an initial public offering of its
securities under the Securities Act of 1933 (the "Act") wherein the aggregate
gross proceeds to the Company equal or exceed $4,000,000 and Xxxxx Xxxxxxx
Securities, Inc. ("Xxxxx Xxxxxxx") acts as the lead or a co-managing underwriter
(the "Proposed Public Offering"), including the registration of any securities
owned by shareholders of the Company, the Company shall include the Class A
Warrants and shares of Common Stock underlying the Class A Warrants, (the
"Warrant Shares" and sometimes together with the Class A Warrants referred to as
the "Registerable Securities") in any registration statement filed with the
Securities and Exchange Commission ("SEC") with respect to the Proposed Public
Offering. The Holder shall not be required to give any notice to the Company in
order to have his securities included in the registration statement for the
Proposed Public Offering.
2. Piggyback Registration for Warrant Shares.
(A) If at any time the Company proposes to offer for
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sale, in a public offering any of its securities other than in the Proposed
Public Offering (as defined in Section 1 above), then the Company shall be
required to include in such registration only the shares of Common Stock
underlying the Class A Warrants. The Company shall provide each Holder with
written notice at least 30 days in advance of the filing of a registration
statement with respect to such offering. Within 10 days of receipt of the
Company's notice, the Holder shall notify the Company of the number of Warrant
Shares which he wishes to have included in such registration statement.
(B) If a registration under this Section 2 involves the registration
of shares of Common Stock by the Company and other selling shareholders offered
in a firm commitment underwritten offering and the managing underwriter(s) for
the offering advise the Company in writing that in their opinion the number of
shares of Common Stock requested to be included in such registration exceeds the
number of shares of Common Stock which can be sold in such offering without
materially affecting the offering price of the shares of Common Stock to be
included therein, the Company will include in such registration that number of
shares of Common Stock which the managing underwriter(s) have advised the
Company, in their opinion, will not materially affect the offering price of the
shares of Common Stock to be offered by the Company, such number of shares to be
included in such registration in accordance with the following priorities: (i)
first, the Common Stock and other securities, if any, that the Company proposes
to sell and (ii) second, to the extent the registration of (A) the Holders'
Shares requested to be included in such registration pursuant to this Section 2
and (B) any other Common Stock owned by persons other than the Holders having
rights to participate in an underwritten registered offering of Common Stock and
who have notified the Company of their intention to participate in such
registration, does not materially affect the price of the Common Stock to be
offered by the Company in such registration, the Holders' Shares and the shares
of Common Stock owned by such other persons, pro rata among all such holders on
the basis of the total number of shares of Common Stock requested by each such
holder to be included therein. In the event that the underwritten offering does
not involve other selling shareholders, then the Holder hereby agrees (or shall
agree) with the managing underwriter that he shall not sell his Warrant Shares
for a period of 90 days after the effective date of the registration statement
filed for such offering.
3. Cooperation with Company. Holders will cooperate with the Company in
all respects in connection with this Agreement, including, timely supplying all
information reasonably requested by the Company and executing and returning all
documents reasonably requested in connection with the registration and sale of
the Registerable Securities. Each Holder shall provide the Company such
information regarding the Holder and the distribution of the Registerable
Securities as the Company may from time to time
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reasonably request or as shall be required by law.
4. Registration Procedures. If and whenever the Company is required by
any of the provisions of this Agreement to effect the registration of any of the
Registerable Securities under the Act, the Company shall (except as otherwise
provided in this Agreement), as expeditiously as possible:
a. use its best efforts to cause such registration statement to
remain effective for a period of (1) year.
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 and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Holder or Holders of such securities shall desire to sell or otherwise
dispose of the same within one (1) year (including prospectus supplements with
respect to the sales of securities from time to time in connection with a
registration statement pursuant to Rule 415 of the Commission);
c. furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Act, and such other documents, as such Holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such Holder;
d. use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holders, shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable each
Holder to consummate the public sale or other disposition in such jurisdiction
of the securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
e. use its best efforts to list such securities on any securities
exchange on which any securities of the Company is then listed, if the listing
of such securities is then permitted under the rules of such exchange or the
Nasdaq Stock Market ("Nasdaq");
f. notify each Holder of Registerable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Act, of the
happening of any
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event of which it has knowledge as a result of which the prospectus included 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 the light of the
circumstances then existing; and
g. furnish, at the request of any Holder on the date such
Registerable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registerable Securities are not being sold through
underwriters, on the date the registration statement with respect to such
Registerable Securities becomes effective, (i) an opinion, dated such date, of
the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registerable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registerable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registerable Securities may reasonably request and are
customarily included in such letters; and
5. Restrictions on Transfer of Registerable Securities. In the event
the Company has declared effective a registration statement for an underwritten
public offering of its securities prior to the date that the Holder's
registration becomes effective, then (i) the Holder shall deliver to the
underwriter a lock-up letter whereby the Holder agrees that his shares of Common
Stock underlying the Class A Warrants and all Class A Warrants shall be subject
to a lock up for up to two (2) years from the date of the underwritten offering.
6. Expenses. All expenses incurred in any registration of the Holders'
Registerable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company and each participating Holder, expenses of any audits to
which the Company shall agree or which shall be necessary to comply with
governmental requirements in connection with any such registration, all
registration and filing fees for the Holders' Registerable Securities under
federal and State securities laws, and expenses of complying with the securities
or blue sky laws of any jurisdictions; provided, however, the Company shall not
be liable
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for (a) any discounts or commissions to any underwriter; (b) any stock transfer
taxes incurred with respect to Registerable Securities sold in the Offering or
(c) the fees and expenses of counsel for any Holder, provided that the Company
will pay the costs and expenses of Company counsel when the Company's counsel is
representing any or all selling security holders.
7. Indemnification. In the event any Registerable Securities are
included in a registration statement pursuant to this Agreement:
a. Company Indemnity. Without limitation of any other indemnity
provided to any Holder, either in connection with the Offering or otherwise, to
the extent permitted by law, the Company shall indemnify and hold harmless each
Holder, the affiliates, officers, directors and partners of each Holder, any
underwriter (as defined in the Act) for such Holder, and each person, if any,
who controls such Holder or underwriter (within the meaning of the Act or the
Securities Exchange Act of 1934 (the "Exchange Act")) against any losses,
claims, damage or liabilities (joint or several) to which they may become
subject under the Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein not misleading, or
necessary to make the statements therein, (iii) any violation or alleged
violation by the Company of the Act, the Exchange Act, or any state securities
law or any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law, and the Company shall reimburse each such Holder,
affiliate, officer or director or partner, underwriter or controlling person for
any legal or other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to any Holder in any such case for any such
loss, claim, damage, liability or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder or any other officer, director or controlling
person thereof.
x. Xxxxxx Indemnity. Each Holder shall indemnify and hold harmless
the Company, its affiliates, its counsel, officers, directors, shareholders and
representatives, any underwriter (as defined in the Act) and each person, if
any, who controls the Company or the underwriter (within the meaning of the Act
the Exchange Act) against any losses, claims, damages or liabilities
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(joint or several) to which they may become subject under the Act, the Exchange
Act or any state securities law, and the Company shall reimburse each such
Holder, affiliate, officer or director or partner, underwriter or controlling
person for any legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
insofar as such losses, claims, damages or liabilities (or actions and respect
thereof) arise out of or are based upon any statements or information provided
by such Holder to the Company in connection with the offer or sale of
Registerable Securities.
c. Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action
(including any governmental action), such indemnified party 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 if the
indemnifying party agrees in writing that it will be responsible for any costs,
expenses, judgments, damages and losses incurred by the indemnified party with
respect to such claim, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes based upon
advice of counsel that representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Agreement only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Agreement.
d. Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the indemnifying party on the one hand
and the indemnified party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense as
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as any other relevant equitable considerations. The relevant fault of the
indemnifying party and the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
any Holder shall be obligated to contribute pursuant to the Agreement shall be
limited to an amount equal to the proceeds to such Holder of the Registerable
Securities sold pursuant to the registration statement which gives rise to such
obligation to contribute (less the aggregate amount of any damages which the
Holder has otherwise been required to pay in respect of such loss, claim,
damage, liability or action or any substantially similar loss, claim, damage,
liability or action arising from the sale of such Registerable Securities).
e. Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registerable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
8. Remedies. Remedies Upon Default or Delay. The Company acknowledges
the breach of any part of this Agreement may cause irreparable harm to a Holder
and that monetary damages alone may be inadequate. The Company therefore agrees
that the Holder shall be entitled to injunctive relief or such other applicable
remedy as a court of competent jurisdiction may provide. Nothing contained
herein will be construed to limit a Holder's right to any remedies at law,
including recovery of damages for breach of any part of this Agreement.
9. Notices.
a. All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid, or telegraphed or telexed
with confirmation of receipt or delivered by hand or by overnight delivery
service,
b. If to the Company, at:
Xxxxx Xxxx Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
Xxxxx Xxxxxxx, Esq.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
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or at such other address as it may have furnished in writing to the Holders of
Registerable Securities at the time outstanding, or
c. if to any Holder of any Registerable Securities, to the address
of such Holder as it appears in the stock or warrant ledger of the Company.
d. Any notice so addressed, when mailed by registered or certified
mail shall be deemed to be given three days after so mailed, when telegraphed or
telexed shall be deemed to be given when transmitted, or when delivered by hand
or overnight shall be deemed to be given when delivered.
10. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and each of the Holders.
11. Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holders of securities representing a
majority of the Registerable Securities; provided, however, that no such
amendment or waiver shall take away any registration right of any Holder of
Registerable Securities or reduce the amount of reimbursable costs to any Holder
of Registerable Securities in connection with any registration hereunder without
the consent of such Holder; further provided, however, that without the consent
of any other Holder of Registerable Securities, any Holder may from time to time
enter into one or more agreements amending, modifying or waiving the provisions
of this Agreement if such action does not adversely affect the rights or
interest of any other Holder of Registerable Securities. No delay on the part of
any party in the exercise of any right, power or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise by any party of any
right, power or remedy preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy.
12. Counterparts. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and same instrument.
13. Governing Law. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of New York, without giving
effect to conflicts of law principles.
14. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
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15. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
16. Arbitration. Any controversy, claim, or dispute arising out of or
relating to this Agreement, or any breach thereof, including without limitation
any dispute concerning the scope of this arbitration clause, shall be settled by
arbitration in New York, New York before three (3) arbitrators of the American
Arbitration Association ("AAA") in accordance with the Commercial Arbitration
Rules of the AAA as supplemented herein, and judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof. Each
party shall choose 1 arbitrator and the two shall then choose the third
arbitrator. Pending final award, arbitrator compensation and expenses shall be
advanced equally by both parties. The final award may grant such other, further,
and different relief as authorized by the AAA Commercial Arbitration Rules, but
may not include punitive damages.
17. Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day of , 1996.
XXXXX XXXX, INC.
By:___________________________ _________________________
NAME: Print Name of Holder
TITLE:
_________________________
Signature of Holder
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