EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
April 11, 2002 and is by and between TeraForce Technology Corporation, a
Delaware corporation (the "Company") and St. Xxxxx Capital Partners, L.P., a
Delaware limited partnership ("St. Xxxxx"), and SJMB, L.P., a Delaware limited
partnership ("SJMB") (St. Xxxxx and SJMB collectively, the "Investor").
RECITALS
WHEREAS, as of an even date herewith, the Company and the Investor
executed an Exchange Agreement (the "Exchange Agreement"); and
WHEREAS, pursuant to the Exchange Agreement, the Investor will acquire
1,000,000 shares of the Company's Common Stock in exchange for warrants for an
aggregate of 19,500,000 shares of the Company's Common Stock, par value $.01 per
share (collectively, the "Warrants"); and
WHEREAS, pursuant to the Exchange Agreement , the Investor may acquire
an additional 3,000,000 shares of the Company's Common Stock under certain
circumstances; and
WHEREAS, the parties desire to set forth the Investor's rights and the
Company's obligations to cause the registration of the Registrable Securities
(as defined herein) pursuant to the Securities Act (as defined herein);
NOW, THEREFORE, in consideration of the exchange by the Investor of the
Warrants pursuant to the Exchange Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions and Usage.
As used in this Agreement:
1.1 Definitions.
"Blackout Period" shall have the meaning set forth in Section 3.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean (i) the common stock of the Company, par
value $.01 per share, and (ii) shares of capital stock of the Company issued by
the Company in respect of or in exchange for shares of such common stock in
connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such common stock.
"Continuously Effective," with respect to a specified registration
statement, shall mean that it shall not cease to be effective and available for
Transfers of Registrable Securities thereunder for longer
than either (i) any ten (10) consecutive business days, or (ii) an aggregate of
fifteen (15) business days during the period specified in the relevant provision
of this Agreement.
"Effectiveness Period" shall have the meaning set forth in Section 2.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Exchange Agreement" shall have the meaning set forth in the Recitals
to this Agreement.
"Filing Date" shall have the meaning set forth in Section 2.
"Holders" shall mean the Investor and the transferees of the
Registrable Securities of the Investor, at such times as such Persons shall own
Registrable Securities. For purposes of this Agreement, a Person will be deemed
to be a holder and an owner of Registrable Securities whenever such Person has
the right to acquire such Registrable Securities (by conversion, purchase or
otherwise), whether or not such acquisition has actually been effected and
whether or not such right is currently exercisable.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplement by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Register," "registered," and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering by the Commission of effectiveness of such registration statement or
document.
"Registrable Securities" shall mean the Shares; provided, however, that
Registrable Securities shall not include any Registrable Securities which have
theretofore been registered and sold pursuant to the Securities Act or which
have been sold to the public pursuant to Rule 144 or any similar rule
promulgated by the Commission pursuant to the Securities Act, and, provided
further, the Company shall have no obligation under Section 2 or Section 3 to
register any Registrable Securities of a Holder if the Company shall deliver to
the Holders requesting such registration an opinion of counsel to the effect
that the proposed sale or disposition of all of the Registrable Securities for
which registration was requested does not require registration under the
Securities Act for a sale or disposition in a single public sale, and offers to
remove any and all legends restricting transfer from the certificates evidencing
such Registrable Securities.
"Registration Statement" means the registration statement and any
additional registration statements contemplated by Section 2(a) including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
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"Securities Act" shall mean the Securities Act of 1933.
"Shares" shall mean the shares of Common Stock.
"Transfer" shall mean and include the act of selling, giving,
transferring, creating a trust (voting or otherwise) and transferring title
thereto, assigning or otherwise disposing of (other than pledging, hypothecating
or otherwise transferring as security) (and correlative words shall have
correlative meanings); provided however, that any transfer or other disposition
upon foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a "Transfer."
"Violation" shall have the meaning set forth in Section 6.
"Warrant" shall have the meaning set forth in the recitals to this
Agreement.
1.2 Usage.
(i) References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder shall
include Registrable Securities beneficially owned by such Person but which are
held of record in the name of a nominee, trustee, custodian, or other agent.
(iii) References to a document are to a document as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to a statute or other governmental rule as amended and
otherwise modified from time to time (and references to any provision thereof
shall include references to any successor provision).
(iv) References to Sections or to Schedules or Exhibits are to sections
hereof or schedules or exhibits hereto, unless the context otherwise requires.
(v) The definitions set forth herein are equally applicable both to the
singular and plural forms and the feminine, masculine and neuter forms of the
terms defined.
(vi) The term "including" and correlative terms shall be deemed to be
followed by "without limitation" whether or not followed by such words or words
of like import.
(vii) The term "hereof" and similar terms refer to this Agreement as a
whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 11.
Section 2. Shelf Registration.
(i) On or prior to June 30, 2002 (the "Filing Date") as it relates to
1,000,000 shares of Common Stock and within 120 days of the issuance of shares
related to the Additional Consideration, if any, the Company shall prepare and
file with the Commission a "Shelf" Registration Statement covering all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The
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Registration Statement shall be on Form S-3 (if the Company is not then eligible
to register for resale the Registrable Securities on Form S-3 such registration
shall be on another appropriate form in accordance herewith). The Company shall
use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, and shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the date when all
Registrable Securities covered by such Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144(k) as determined by
the counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company's transfer agent (the "Effectiveness
Period"), provided, however, that the Company shall not be deemed to have used
its best efforts to keep the Registration Statement effective during the
Effectiveness Period if it voluntarily takes any action that would result in the
Holder not being able to sell the Registrable Securities covered by such
Registration Statement during the Effectiveness Period, unless such action is
pursuant to a Blackout Period (as defined in Section 3) permitted hereunder,
required under applicable law or the Company has filed a post-effective
amendment to the Registration Statement and the Commission has not declared it
effective.
Section 3. Registration Procedures.
In connection with the Company's registration obligations hereunder,
the Company shall:
(a) Prepare and file with the Commission on or prior to the Filing
Date, a Registration Statement on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form in accordance herewith) which
shall contain the "Plan of Distribution" and cause the Registration Statement to
become effective and remain effective as provided herein; provided, however,
that not less than ten (10) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish to the Holder
copies of all such documents proposed to be filed, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject to
the review of the Holder, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to the Holder, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holder shall reasonably object on
a timely basis.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Holder true and
complete copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holder set forth in the Registration Statement as so amended
or in such Prospectus as so supplemented.
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(c) Notify the Holder as promptly as reasonably possible (and, in the
case of (i)(A) below, not less than five (5) days prior to such filing) and (if
requested by such Holder) confirm such notice in writing no later than one (1)
Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to the Holder); and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to
the Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or
the initiation of any Proceedings for that purpose; (iv) if at any time any of
the representations and warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company 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; and (vi) the occurrence of any event that makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, 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 light of the
circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish to Holder, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Holder (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(f) Promptly deliver to Holder, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Holder may reasonably request; and the
Company hereby consent to the use of such Prospectus and each amendment or
supplement thereto by the selling Holder in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment
or supplement thereto.
(g) If the Registration Statement refers to the Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
(h) Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as
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contemplated in Section 3(g) and notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 3(c) and (ii) it and its officers, directors or
affiliates, if any, will comply with the prospectus delivery requirements of the
Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.
(i) If there is a significant business opportunity (including but
not limited to the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or
similar transaction) available to the Company which its Board of Directors
reasonably determines not to be in the Company's best interest to disclose, then
the Company may suspend the right of the Holder to sell Registrable Securities
under a Registration Statement for a period not to exceed 20 Business Days
during the Effectiveness Period (the "Blackout Period").
(j) Use all reasonable efforts to cause the Common Stock, if the
Common Stock is then listed on a securities exchange or included for quotation
in a recognized trading market, to continue to be so listed or included for a
reasonable period of time after the offering.
(k) Use all reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other United States of state governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable the
selling Holders of Registrable Securities to consummate the disposition of such
Registrable Securities.
Section 4. Holders' Obligations. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any Selling Holder of Registrable
Securities that such selling Holder shall:
4.1 Furnish to the Company such information regarding such Selling
Holder, the number of the Registrable Securities owned by it, and the intended
method of disposition of such securities as shall be required to effect the
registration of such selling Holder's Registrable Securities, and to cooperate
with the Company in preparing such registration; and
Section 5. Expenses of Registration.
5.1 The Company shall bear and pay all expenses and fees incurred in
connection with the Registration Statement pursuant to Section 2 for any Holder
(which right may be Transferred to any Person to whom Registrable Securities are
Transferred as permitted by Section 8), including registration , qualification
and filing fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses and the
expenses of any special audits incident to or required by any such registration,
but excluding underwriting discounts and commissions relating to Registrable
Securities (which shall be paid by the Holders) and fees and expenses of counsel
to the Holder.
Section 6. Indemnification; Contribution. If any Registrable Securities are
included in a registration statement under this Agreement:
6.1 To the extent permitted by applicable law, the Company shall
indemnify and hold harmless each Holder, each Person, if any, who controls such
Holder within the meaning of the Securities Act, and each officer, director,
partner, and employee of such Holder and such controlling Person, against any
and all losses, claims, damages, liabilities and expenses (joint or several),
including attorneys' fees and disbursements and expenses of investigation,
incurred by such party pursuant to any actual or threatened
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action, suit, proceeding or investigation, or to which any of the foregoing
Persons may become subject under the Securities Act, the Exchange Act or other
federal or state laws, insofar as such losses, claims, damages, liabilities and
expenses 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 the 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, or necessary to make the
statements therein not misleading; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law
or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section
6.1 shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or expense if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished to
the Company by the indemnified party expressly for use in connection with such
registration; provided, further, that the indemnity agreement contained in this
Section 6 shall not apply to any Holder to the extent that any such loss is
based on or arises out of an untrue statement or alleged untrue statement of a
material fact, or an omission or alleged omission to state a material fact,
contained in or omitted from any preliminary prospectus if the final prospectus
shall correct such untrue statement or alleged untrue statement, or such
omission or alleged omission, and a copy of the final prospectus has not been
sent or given to such person at or prior to the confirmation of sale to such
person if such Holder was under an obligation to deliver such final prospectus
and failed to do so.
6.2 To the extent permitted by applicable law, the Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who shall have signed the Registration Statement, each Person, if any,
who controls the Company within the meaning of the Securities Act, against any
and all losses, claims, damages, liabilities and expenses, including attorneys'
fees and disbursements and expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may otherwise become subject under the
Securities Act, the Exchange Act or other federal or state laws, insofar as such
losses, claims, damages, liabilities and expenses arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
provided, however, that the indemnification required by this Section 6.2 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if settlement is effected without the consent of the
relevant Holder of Registrable Securities, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the liability of the
Holder under this section 6.2 shall be limited in an amount equal to the net
proceeds from the sale of the shares sold by such Holder, unless such liability
arises out of or is based on willful conduct or gross negligence by such Holder.
6.3 Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, suit, proceeding, investigation or
threat thereof made in writing for which such indemnified party may make a claim
under this Section 6, such indemnified party shall deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have
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the right to participate in, and, to the extent the indemnifying party so
desires, 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 disbursements and expenses to be paid by the
indemnifying party, if 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 following the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 6 but shall not relieve the indemnifying
party of any liability that it may have to any indemnified party otherwise than
pursuant to this Section 6. Any fees and expenses incurred by the indemnified
party (including any fees and expenses incurred in connection with investigating
or preparing to defend such action or proceeding) shall be paid to the
indemnified party, as incurred, within thirty (30) days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
6.4 If the indemnification required by this Section 6 from the
indemnifying party is unavailable or insufficient to hold harmless an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to in this Section 6:
(i) The 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 losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or
parties, on the one hand and the indemnified party on the other, from
the sale of the Registrable Securities, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable
law, not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party on the one hand and
indemnified parties on the other in connection with the actions which
resulted in
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such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been
committed by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
Section 6.1 and Section 6.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6.4 were determined
by pro rata allocation or by any other method of allocation which does
not take into account the equitable considerations referred to in
Section 6.4(i). 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.
6.5 Not withstanding the provisions of Section 6.4, a Holder shall not
be required to contribute any amount or make any payment under this Agreement
that in the aggregate exceed the net proceeds received by the Holder from the
sales of the Registrable Securities.
6.6 The obligations of the Company and the selling Holders of
Registrable Securities under this Section 6 shall survive the completion of any
offering of Registrable Securities pursuant to a registration statement under
this Agreement, and otherwise.
Section 7. Transfer of Registration Rights. The rights of a Holder hereunder may
be Transferred to (i) any affiliate (as defined in Rule 12b-2 under the Exchange
Act) of a Holder or (ii) any other Person upon the prior written consent of the
Company; provided, however, that any such transferee that is not a party to this
Agreement shall have executed and delivered to the Secretary of the Company a
properly completed agreement substantially in the form of Exhibit A, and
provided, further, that the transferor shall have delivered to the Secretary of
the Company, no later than 15 days following the date of the Transfer, written
notification of such Transfer setting forth the name of the transferor, name and
address of the transferee and the number of Registrable Securities which shall
have been so Transferred.
Section 8. Amendment, Modification and Waivers; Further Assurances.
(i) This Agreement may be amended with the consent of the
Company and the Company may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent of the Holder.
(ii) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and
conditions or any other term or condition, nor shall any failure to
enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof. No written waiver hereunder, unless it
by its own terms explicitly provides to the contrary, shall be
construed to effect a continuing waiver of the provisions being waived
and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the
party against whom such waiver is claimed in all other instances or for
all other purposes to require full compliance with such provision.
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(iii) Each of the parties hereto shall execute all such
further instruments and documents and take all such further action as
any other party hereto may reasonably require in order to effectuate
the terms and purposes of this Agreement.
Section 9. Assignment; Benefit. This Agreement and all of the provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, assigns, executors, administrators or successors;
provided, however, that except as specifically provided herein with respect to
certain matters, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated by the Company without the
prior written consent of the Holder. A Holder may Transfer its rights hereunder
to a successor in interest to the Registrable Securities owned by such assignor
as permitted by Section 8.
Section 10. Miscellaneous.
10.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF. EACH OF THE PARTIES HEREBY SUBMITS TO
PERSONAL JURISDICTION AND WAIVES ANY OBJECTION AS TO VENUE IN THE COUNTY OF
DALLAS, STATE OF TEXAS. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT.
10.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been
sufficiently given (a) if sent by facsimile transmission, upon telephonic
confirmation of receipt, (b) if sent by registered or certified mail, upon the
sooner of the expiration of five (5) days after deposit in the post office
facilities properly addressed with postage prepaid or acknowledgment of receipt,
(c) if personally delivered, when delivered to the party to whom notice is sent,
or (d) if delivered by a recognized overnight courier, upon receipt evidencing
proof of delivery, addressed to the appropriate party or parties, at the address
of such party set forth below, (or at such other address as such party may
designate by written notice furnished to all other parties in accordance
herewith):
(a) if to the Holder:
St. Xxxxx Capital Partners, L.P.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (fax)
Attn: Mr. Xxxx Xxxxxxxx
and to:
SJMB, L.P.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (fax)
Attn: Mr. Xxxx Xxxxxxxx
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(b) if to the Company:
TeraForce Technology Corporation
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Attn: Xxxxxx X. Xxxxx
10.3 Entire Agreement; Integration. This Agreement supersedes all prior
agreements between or among any of the parties hereto with respect to the
subject matter contained herein and therein, and this Agreement embodies the
entire understanding among the parties relating to such subject matter.
10.4 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
10.6 Severability. If any provision of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not affect the
validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
10.7 Filing. A copy of this Agreement and of all amendments thereto
shall be filed at the principal executive office of the Company with the
corporate recorder of the Company.
10.8 Termination. This Agreement may be terminated at any time by a
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 6
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Securities outstanding or issuable by the Company.
10.9 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended to confer upon any Person, other than the parties hereto or their
respective permitted assigns, successors, heirs and legal representatives, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
TERAFORCE TECHNOLOGY CORPORATION
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
ST. XXXXX CAPITAL PARTNERS, L.P.
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SJMB, L.P.
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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EXHIBIT A
To
Registration Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee of 500,000 shares of Common Stock
of TeraForce Technology Corporation, a Delaware corporation (the "Company"), as
a condition to the receipt of such securities, acknowledges that matters
pertaining to the registration of the transferred securities is governed by the
Registration Rights Agreement dated as of April ___, 2002, by and between the
Company and St. Xxxxx Capital Partners, L.P. and SJMB, L.P. (the "Agreement"),
and the undersigned hereby (1) acknowledges receipt of a copy of the Agreement,
and (2) agrees to be bound as a Holder by the terms of the Agreement, as the
same has been or may be amended from time to time.
Agreed to this ___ day of _____, 2002.
-----------------------------
Transferee
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