AMERICAN ACCESS TECHNOLOGIES, INC.
SERIES A 10% SENIOR CONVERTIBLE PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of October 2, 1998
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as
of October 2, 1998, among American Access Technologies, Inc., a Florida
corporation (the "Company"), and those persons and entities who purchase the
shares of the Series A 10% Senior Convertible Preferred Stock, par value $.001
per Share, (the "Shares") of the Company (collectively, the "Purchasers").
This Agreement is made pursuant to the Company's Confidential Private
Placement Memorandum, dated July 27, 1998, (the "Memorandum") pursuant to which
the Company, with the assistance of the Central International Securities Group
("Capital") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. ("MWC" and together with Capital, the
"Placement Agents") offered and sold the Shares (the "Offering") in a private
placement in accordance with Section 4(2) of the Securities Act of 1933, as
amended and Rule 506 thereunder to "Accredited Investors" within the meaning of
Regulation D under the Securities Act. In order to induce the Purchasers to
purchase the Shares, the Company has agreed to provide the registration rights
contained in this Agreement to the Purchasers and to their respective direct and
indirect transferrers. The execution of this Agreement is a condition to the
closing of the transactions contemplated by the Memorandum.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Advice: As defined in the last paragraph of Section 4(p) hereof.
Affiliate of any specified person shall mean any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control," when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
Agreement: This Registration Right Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Articles of Amendment: The Articles of Amendment of Amended and Restate
Articles of Incorporation of American Access Technologies, Inc.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.
Closing Bid Price: With respect to a share of Common Stock, the last
closing bid price for such security on the Nasdaq National Market as reported by
Bloomberg Financial Markets ("Bloomberg"), or if the Nasdaq National Market is
not the principal trading market for such security, the last closing bid price
of such security on the principal national securities exchange or trading market
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where such security is listed or traded, as reported by Bloomberg, or if the
Common is not listed or traded on any national securities exchange or Nasdaq
National Market or SmallCap Market, then the last closing bid price of Common in
the over-the-counter market on the electronic bulletin board as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for Common as
reported in the "pink sheets" by the National Quotation Bureau, Inc.
Common Stock: Common Stock, par value $.001 per share, of the Company.
Company: American Access Technologies, Inc., a Florida corporation, and
any successor corporation thereto.
Company Registration Statement. As defined in Section 9 hereof.
Controlling person: As defined in Section 6(a) hereof.
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 120th day following the Closing Date.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC pursuant thereto.
Filing Date: The 60th day after the Closing Date.
Holder: Each registered holder of any Transfer Restricted Securities.
Indemnified Holder: As defined in Section 6(a) hereof.
Initial Issuance Date: The date of issuance by the Corporation of the
first share of Series A Preferred.
Liquidated Damages: As defined in Section 3(a) hereof.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, limited liability
company, professional corporation, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
Placement Agents: Collectively, Capital International Securities Group
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Transfer Restricted Securities
covered by such Registration Statement, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
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Registration Default: As defined in Section 3(a) hereof.
Registration Statement: Any registration statement of the Company that
covers any of the Transfer Restricted Securities pursuant to the provisions of
this Agreement, including 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, if any, in such registration statement.
Restricted Preferred Shares: As defined in Section 3(a) hereof.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulations hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulations hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 430A: Rule 430A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulations thereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 462: Rule 462 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulations hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Shares: The Shares of Series A 10% Senior Convertible Preferred Stock,
par value $.001 per share.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: As defined in Section 2 hereof.
Special Counsel: Any special counsel to the holders of Transfer
Restricted Securities, for which holders of Transfer Restricted Securities will
be reimbursed pursuant to Section 5 hereof.
Transfer Restricted Securities; The shares of Common Stock into which
the Shares are convertible, upon original issuance thereof, and at all times
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subsequent thereto and any shares of Common Stock which would be issuable in
payment of accrued and unpaid dividends thereon or any shares of Common Stock
issuable as a Conversion Failure Payment (as such term is defined in the
Articles of Amendment) or issuable upon the failure of the Company to pay a
Redemption Amount in accordance with Section 8 of the Articles of Amendment,
until, in the case of any such share, the earliest of (i) the date on which it
has been registered effectively pursuant to the Securities Act and disposed of
in accordance with the Registration Statement relating to it, (ii) the date on
which the shares of Common Stock issued upon conversion of such Share is
distributed to the public pursuant to Rule 144 (or any similar provisions then
in effect) or are salable pursuant to Rule 144(k) promulgated by the SEC
pursuant to the Securities Act or (iii) the date on which it ceases to be
outstanding.
Underwritten Registration or Underwritten Offering: A registration in
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
2. Shelf Registration
(a) The Company agrees to file with the SEC as promptly as practicable
after the Initial Issuance Date (assuming at least 30,000 Shares are sold), but
in no event later than sixty (60) calendar days following the Initial Issuance
Date, a Registration Statement (the "Shelf Registration Statement") for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Transfer Restricted Securities; provided that the number of shares
registered pursuant to the Shelf Registration Date on the Effectiveness Date
shall not be less than the Minimum Amount (as defined below). The Shelf
Registration Statement shall be on Form SB-2 under the Securities Act or another
appropriate form permitting registration of the Transfer Restricted Securities
for resale by the Holders thereof in the manner or manners reasonably designated
by them (including, without limitation, one or more underwritten offerings). The
Company shall use its best efforts to cause the Shelf Registration Statement to
be declared effective pursuant to the Securities Act as promptly as practicable
following the filing thereof, but in no event later than one hundred twenty
(120) calendar days following the Initial Issuance Date (the "Effectiveness
Date"), and to keep the Shelf Registration Statement continuously effective
under the Securities Act for 24 months after the Initial Issuance Date (the
"Effectiveness Period"), or such shorter period ending when either (i) all the
Transfer Restricted Securities covered by the Shelf Registration Statement have
been sold in the manner set forth in the Shelf Registration Statement or (ii)
the date on which either the shares of Transfer Restricted Securities are
distributed to the public pursuant to Rule 144 or are saleable pursuant to Rule
144(k) (the period referred to in clauses (i) and (ii), collectively the
"Registration Period").
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective by supplementing and amending the
Shelf Registration Statement to the extent necessary to ensure that it is
available for sales by the Holders entitled to the benefits of this Section
2(a), and to ensure that it conforms with the requirements of this Agreement,
the Securities Act and the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration Statement. Without limiting
the foregoing, if on the 30th day after the Effectiveness Date (the "Initial
Measure Date") and on each 30th day thereafter during the Registration Period
(each a "Subsequent Measure Date" and together with the Initial Measure Date,
the "Measure Dates"), the number of Transfer Restricted Securities registered
pursuant to the Shelf Registration Statement is a number which is less than two
hundred percent (200%) of the number of shares of Common issuable upon
conversion of each Share then outstanding including any accrued and unpaid
dividends paid on such date by delivery of Transfer Restricted Securities and
any shares of Common Stock issuable as a Conversion Failure Payment (as such
term is defined in the Articles of Amendment) or issuable upon the failure of
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the Corporation to pay a Redemption Amount in accordance with Section 8 of the
Articles of Amendment and assuming each Share is converted on such Measure Date
(the "Minimum Amount"), the Company shall file an amendment to the Shelf
Registration Statement (or an additional Shelf Registration Statement) within
five (5) days of each Measure Date to the extent necessary to increase the
number of Transfer Restricted Securities registered pursuant to the Shelf
Registration Statement such that the number of Transfer Restricted Securities
shall be a number no less than the Minimum Amount and shall use its best efforts
to cause such amendment (or additional Shelf Registration Statement) to become
effective promptly thereafter.
3. Liquidated Damages
(a) The Company agrees that the holders of Transfer Restricted
Securities will suffer damages if the Company fails to fulfill its obligations
pursuant to Section 2(a) hereof and that it would not be possible to ascertain
the extent of such damages. Accordingly, in the event of such failure by the
Company to fulfill such obligations and to the extent the holders of Shares then
convertible into Transfer Restricted Securities ("Restricted Preferred Shares")
do not receive a special dividend as defined in the Articles of Amendment of the
Shares as a result of a Registration Default (as defined below), the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to each holder of
Restricted Preferred Shares who has complied with such holder's obligations
under this Agreement under the circumstances and to the extent set forth below
(clauses (i) through (iv) individually, a "Registration Default"):
(i) if the Shelf Registration Statement has not been filed
with the SEC or prior to the Filing Date; or
(ii) if the Shelf Registration Statement is not declared
effective by the SEC on or prior to the date which is 180 calendar days
following the Initial Issuance Date; or
(iii) if the number of Transfer Restricted Securities
registered pursuant to the Shelf Registration Statement is not the
Minimum Amount on the Effectiveness Date or on the fifth day following
each Measure Date in accordance with Section 2(b) hereof; or
(iv) if the Shelf Registration Statement has been declared
effective by the SEC and thereafter ceases to be effective or usable
(including as a result of a suspension of the use of the Shelf
Registration Statement as described in Section 2(b) hereof) provided
that any suspension of the use of the Shelf Registration Statement
which is a result of an acquisition or disposition of assets by the
Company, an acquisition of a business by the Company, a merger,
consolidation or reorganization of the Company or a tender offer by or
for the Company and which does not exceed a period of 75 calendar days
shall not be deemed a Registration Default.
then the Company shall pay Liquidated Damages to each holder of Restricted
Preferred Shares during the first 30-day period immediately following the
occurrence of such Registration Default in the form of a special payment on each
share of Restricted Preferred Shares as to which the underlying Transfer
Restricted Securities is not so registered in an amount equal to $1.00 per share
for the first 30-day period, and $2.00 per share every 30-days thereafter, in
cash, or at the Holder's option, in the number of shares of Common Stock equal
to the quotient of (x) the dollar amount of the Liquidated Damages on the
Payment Date (as defined below) by (y) the Conversion Price on the date of the
Registration Default, accruing daily, until all Registration Defaults have been
cured. The Liquidated Damages payable pursuant hereto shall be payable within
five (5) business days from the end of the calendar month commencing on the
first calendar month in which the Registration Default occurs (each, a "Payment
Date"). In the event the Holder elects to receive the Liquidated Damages amount
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in shares of Common Stock, such shares shall also be considered Transfer
Restricted Shares. A Registration Default under clause (i) above shall be deemed
cured on the date that the Shelf Registration Statement is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that the
Shelf Registration Statement is declared effective by the SEC; a Registration
Default under clause (iii) above shall be cured on the date on which the Shelf
Registration Statement covers the Minimum Amount and is declared effective; and
a Registration Default under clause (iv) above shall be deemed cured on the date
the Shelf Registration Statement is again declared effective or the Prospectus
contained therein again become usable, or the Effectiveness Period terminates.
Under no circumstances shall a holder of Transfer Restricted Securities be
entitled to Liquidated Damages to the extent such holder of Restricted Preferred
Shares receives a special dividend as defined in the Articles of Amendment of
the Shares upon such Registration Default.
4. Registration Procedures
In connection with the Company's registration obligations pursuant to
Section 2 above, the Company shall as expeditiously as possible:
(a) use reasonable efforts to keep such Shelf Registration Statement
continuously effective and provide all requisite financial statements required
by such Shelf Registration Statement for the period specified in Section 2 of
this Agreement. Upon the occurrence of any event that would cause any such Shelf
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the Effectiveness Period, the
Company shall file promptly an appropriate amendment to such Shelf Registration
Statement, (1) in the case of clause (A), correcting any such misstatement or
omission, and (2) in the case of clauses (A) and (B), use its best efforts to
cause such amendment to be declared effective and such Shelf Registration
Statement and the related Prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep the
Shelf Registration Statement effective for the duration of the Effectiveness
Period; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424, and to
comply fully with Rules 424, 430A and 462, as applicable, in a timely manner;
and otherwise comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement or supplement to the Prospectus;
(c) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (i) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (ii) of
any request by the SEC for amendments to the Shelf Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Shelf Registration Statement under the Securities Act
or of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, and (iv) of
the existence of any fact or the happening of any event that makes any statement
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of a material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Shelf Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the SEC
shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(d) furnish to each selling Holder named in any Shelf Registration
Statement or Prospectus and each of the underwriter(s) in connection with such
sale, if any, before filing with the SEC, copies of any Shelf Registration
Statement or any Prospectus included therein or any amendments or supplements to
any such Shelf Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Shelf Registration
Statement), which documents will be subject to the review and comment of such
Holders and underwriter(s) in connection with such sale, if any, for a period of
at least five Business Days, and the Company will not file any such Shelf
Registration Statement or Prospectus or any amendment or supplement to any such
Shelf Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holder covered by such Shelf
Registration Statement or the underwriter(s) in connection with such sale, if
any, shall reasonably object within five Business Days after the receipt
thereof. A selling Holder or underwriter, if any, may be objected to such filing
only if such Holder or underwriter, if any, reasonably believes that such Shelf
Registration Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains a material misstatement or omission or fails to
comply with the applicable requirements of the Securities Act;
(e) promptly following the filing of any document that is to be
incorporated by reference into a Shelf Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the underwriter(s)
in connection with such sale, if any, make the Company's representatives
available for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably may
request.
(f) make available at reasonable times for inspection by the selling
Holders, any managing underwriter participating in any disposition pursuant to
such Shelf Registration Statement and any attorney or accountant retained by
such selling Holders or any of such underwriter(s), all relevant financial and
other records, pertinent corporate documents and properties of the Company and
cause the Company's officers, directors and employees to supply all relevant
information reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Shelf Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness;
(g) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Shelf Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriter(s), if any,
may reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriter(s), the purchase price
being paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all required filings
of such Prospectus supplement or post-effective amendment as soon as practicable
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after the Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(h) furnish to each selling Holder and each of the underwriter(s) in
connection with such sale, if any, without charge, at least one copy of the
Shelf Registration Statement, as first filed with the SEC, and of each amendment
thereto, including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(i) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
reasonably may request; the Company hereby consents to the use (in accordance
with law) of the Prospectus and any amendment or supplement thereto by each of
the selling Holders and each of the underwriter(s), if any, in connection with
the offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(j) enter into such agreements (including an underwriting agreement)
and make such representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to any Shelf Registration Statement
contemplated by this Agreement as may be reasonably requested by any Holder or
underwriter in connection with any sale or resale pursuant to any Shelf
Registration Statement contemplated by this Agreement, and, at or prior to each
closing under the applicable underwriting agreement, the Company shall:
(A) furnish (or in the case of subparagraphs (2) and (3)
below, use its best efforts to furnish) to each selling Holder and each
underwriter, if any, upon the effectiveness of the Shelf Registration
Statement:
(1) a customary certificate, dated the date of
effectiveness of the Shelf Registration Statement, as the case
may be, signed on behalf of the Company by (x) the President
or any Vice President and (y) a principal financial or
accounting officer of the Company, confirming, as of the date
thereof, the matters similar to those covered in an Officers
Certificate to underwriters in connection with primary
underwritten offerings and such other similar matters as the
Holders or underwriter(s) may reasonably request;
(2) a customary opinion, dated the date of
effectiveness of the Shelf Registration Statement, as the case
may be, of counsel for the Company in customary form covering
matters similar to those customarily covered in opinion
letters of counsel to underwriters in connection with primary
underwritten offerings and such other matter as the Holders or
underwriters may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness
of such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and
other representatives of the Company and without independent
check or verification), no facts came to such counsel's
attention that caused such counsel to believe that the
applicable Shelf Registration Statement, at the time such
Shelf Registration Statement or any post-effective amendment
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thereto became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus contained in such Shelf
Registration Statement as of its date, contained an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy, completeness
or fairness of the financial statements, notes and schedules
and other financial data included in any Shelf Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(3) customary comfort letters, dated as of the date
of effectiveness of the Shelf Registration Statement, from the
independent accountants of the Company in the customary form
and covering matters of the type customarily covered in
comfort letters to underwriters in connection with primary
underwritten offerings.
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 6 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders and the underwriter(s), if
any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company pursuant to this clause (j).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any time
the representations and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise the underwriter(s), if
any, and the selling Holders promptly and if requested by such Persons, shall
confirm such advice in writing;
(k) prior to any public offering of Transfer Restricted Securities,
cause the registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws as of such jurisdictions as the selling
Holders, if any, may request and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Shelf Registration Statement;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Shelf Registration
Statement, in any jurisdiction where it is not now so subject;
(l) in connection with any sale of Transfer Restricted Securities that
will result in such securities no longer being restricted securities as defined
in Rule 144, cooperate with the selling Holders and the underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the Holders or the underwriter(s), if any, may
request at least two Business Days prior to such sale of Transfer Restricted
Securities;
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(m) its best efforts to cause the disposition of the Transfer
Restricted Securities covered by the Shelf Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities subject to the proviso contained in clause (k) above;
(n) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Shelf Registration Statement covering such
Transfer Restricted Securities;
(o) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
to be retained in accordance with the rules and regulations of the NASD; and
(p) Each Holder agrees by acquisition of Transfer Restricted Securities
that, upon receipt of any notice from the Company pursuant to Section 4(c)
hereof or of the happening of any event of the kind described in Section
4(c)(iv) hereof, such Holder will forthwith discontinue disposition of such
Transfer Restricted Securities covered by such Shelf Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(d) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus and, if so directed by the Company,
such Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such Holder's possession of the
Prospectus covering such Transfer Restricted Securities at the time of receipt
of such notice.
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5. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by it whether or not any Shelf
Registration Statement is filed or becomes effective and whether or not any
securities are issued or sold pursuant to any Shelf Registration Statement. The
fees and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the NASD,
(B) in compliance with securities or Blue Sky laws (including, without
limitation and in addition to that provided for in (b) below, reasonable fees
and disbursements of counsel for the underwriters or Special Counsel for the
Holders in connection with Blue Sky qualifications of the Transfer Restricted
Securities, and determination of the eligibility of the Transfer Restricted
Securities for investment under the laws of such jurisdictions as the managing
underwriters, if any, or Holders of a majority (on a fully converted basis) may
designate) and (C) the fees payable in connection with the printing of
Prospectuses if the printing of Prospectuses is requested by the managing
underwriters, if any), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel for the
Holders (plus any local counsel, in accordance with the provisions of Section
5(b) hereof), (v) fees and disbursements of all independent certified special
audit and "cold comfort" letters required by or incident to such performance,
(vi) Securities Act liability insurance, if the Company so desires such
insurance, and (vii) fees and expenses of all other persons retained by the
Company. In addition, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, and the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange.
(b) In connection with any registration hereunder, the Company shall
reimburse the Holders being registered in such registration for the reasonable
fees and disbursements of not more than one firm of attorneys representing the
selling Holders (in addition to any local counsel), which firm, if any, shall be
chosen by the majority of Holders (on a fully diluted basis).
6. Indemnification
(a) The Company agrees to indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) any Holder (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by (a) any untrue statement or
alleged untrue statement of a material fact contained in any Shelf Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto), (b) 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 or (c) any other material violation of the Federal or state
securities laws, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any such untrue statement or omission or alleged untrue
statement or omission that is made in reliance upon and in conformity with
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information relating to any of the Holders furnished in writing to the Company
by any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought against any Indemnified
Holder based upon the Shelf Registration Statement and with respect to which
indemnity may be sought against the Company, such Indemnified Holder (or the
Indemnified Holder controlled by such controlling person) shall promptly notify
the Company in writing (provided, that the failure to give such notice shall not
relieve the Company of their obligations pursuant to this Agreement). Such
Indemnified Holder shall have the right to employ its own counsel in any such
action and the fees and expenses of such counsel shall be at the expense of the
such Indemnified Holder, unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded parties) include both the
Indemnified Holder and the Company, and such Indemnified Holder shall have been
advised by counsel that there may be one or more legal defense available to it
which are different from or additional to those available to the Company (in
which case the Company shall not have the right to assume the defense) it being
understood, however, that the Company shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions 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 (in addition to any local counsel) for such
Indemnified Holders, which firm shall be designated by the Holders. The Company
shall be liable for any settlement of any such action or proceeding effected
with the Company's prior written consent, which consent shall not be withheld
unreasonably, and the Company agrees to indemnify and hold harmless each
Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Company. In addition, the Company shall be liable for any
settlement of any such action or proceeding effected without the Company's prior
written consent if such settlement is entered into more than twenty business
days after the Company shall have received a request from the Indemnified
Holders for reimbursement for the fees and expenses of counsel (in any case
where such fees and expenses are at the expense of the Company) and, prior to
the date of such settlement, the Company shall have failed to comply with such
reimbursement request, and the Company agrees to indemnify and hold harmless
each such Indemnified Holder from and against any loss, claim, damage, liability
or expense by reason of such settlement. The Company shall not, without the
prior written consent of such Indemnified Holder, settle or compromise or
consent to the entry of judgment in or otherwise seek to terminate any pending
or threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of such Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company and its respective directors, officers, and any person
controlling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company, and its officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Company to each of the Indemnified Holders, but
only with respect to claims and actions based on information relating to such
Holder furnished in writing by such Holder expressly for use in any Shelf
Registration Statement. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person
in respect of which indemnity may be sought against a Holder, such Holder shall
have the rights and duties given the Company (except that if the Company shall
have assumed the defense thereof, such Holder shall not be required to do so,
13
but may employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Holder, its directors or officers or such controlling persons) and
the Company shall have the rights and duties given to each Holder by the
preceding paragraph. In no event shall any Holder be liable or responsible for
any amount in excess of the amount by which the total received by such Holder
with respect to its sale of Transfer Restricted Securities, pursuant to a Shelf
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities, and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
(c) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a) or Section 6(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable 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 the relative fault of the Company, on
the one hand, and of the Indemnified Holder, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company, on the one hand, and of the Indemnified
Holder, on the other hand, 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 the Company or by the Indemnified Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. 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 the second paragraph
of Section 6(a), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 6(c) were determined by pro
rata allocation (even if the Holders 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 losses,
claims, damages, liabilities or expenses 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 6, no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total amount received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to a Shelf Registration Statement exceeds the sum
of (A) the amount paid by such Holder for such Transfer Restricted Securities,
plus (B) the amount of any damages which such Holder 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 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 6(c) are several in
proportion to the respective principal amount of Series A Shares held by each of
the Holders hereunder and not joint.
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7. Rules 144 and 144A
The Company shall file the reports required to be filed by it under the
Securities Act and the Exchange Act in a timely manner and, if at any time it is
not required to file such reports but in the past had been required to or did
file such reports, it will, upon the request of any holder of Transfer
Restricted Securities, make available other information as required by, and so
long as necessary to permit, sales of its Transfer Restricted Securities
pursuant to Rule 144 and Rule 144A.
8. Underwritten Registrations
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Company; provided that nothing
contained herein shall be construed as to require the Company to engage the
services of an underwriter in connection with such Shelf Registration Statement
or to grant the Holders the right to Demand an Underwritten Registration or
Underwritten Offering.
(b) No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, and other documents required under the terms of such underwriting
arrangements.
9. Piggy Back Rights of Holders.
If the Company at any time proposes or is required to register any of
its securities under the Securities Act or any applicable state securities or
blue sky laws on a form which permits inclusion of the Transfer Restricted
Securities (a "Company Registration Statement"), the Company shall notify the
Holders of the Company's intention to prepare a Company Registration Statement.
The Company shall thereafter use its best efforts to cause the Transfer
Restricted Securities, to which such Holders shall have requested be registered
within 20 days of such Notice from the Company, to be registered under the
Securities Act and any applicable state securities or blue sky laws all to the
extent requisite to permit the sale or other disposition by such Holders of the
Transfer Restricted Securities so registered. No registrations pursuant to this
Section 9 shall relieve the Company of its obligation to effect registrations
under Section 2 hereof. If, in the reasonable opinion of the underwriter of the
Company Registration, the size of the offering of the securities to be
registered pursuant to the Company Registration Statement has to be reduced,
then the Holders will participate in such registration, with priority to all
other Persons, including the Company, participating in such Company Shelf
Registration Statement and pari passu among the Holders pro rata in accordance
with the number of shares each such Holder requested be registered. The
provisions of Section 5 and Section 6 shall apply to a Company Registration
Statement as if such Company Registration Statement was the Shelf Registration
Statement. Notwithstanding anything to the contrary contained herein, the
Holders shall have no right to participate in a Company Registration Statement
at any time when a Shelf Registration Statement shall be effective.
15
10. Miscellaneous
(a) Remedies. Each holder of Transfer Restricted Securities or the
Company, in addition to being entitled to exercise all rights provided herein,
or granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each holder of
Transfer Restricted Securities agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by the Company
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the holders of Transfer Restricted Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(c) No Piggyback on Registrations. The Company shall not include and
shall not grant to any of its security holders, including the Placement Agents,
(other than the Holders of Transfer Restricted Securities in such capacity) the
right to include any of its securities, including the warrant shares issued to
the Placement Agents, in any Shelf Registration Statement other than Transfer
Restricted Securities, except any such rights that exist as of the date hereof.
Notwithstanding the foregoing, nothing shall prevent the Company from filing a
registration statement simultaneously with the Shelf Registration Statement so
long as the holders of Transfer Restricted Securities have priority with respect
to the removal of any restrictive legend upon the resale by such holder of the
Transfer Restricted Securities.
(d) Amendments and Waivers. 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, without the written consent of the Holders of a majority of the then
outstanding Transfer Restricted Securities (on a fully convened basis);
provided, however, that, for the purposes of this Agreement, Transfer Restricted
Securities that are owned, directly or indirectly, by either the Company shall
not be deemed outstanding.
(e) Notices. All notices and other communications provided for herein
shall be made in writing by hand-delivery, next-day air courier, certified
first-class mail, return receipt requested, or telecopy:
(i) if to the Company, to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to ▇▇▇▇
▇▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) if to the Placement Agents, to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and Capital International Securities Group ▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., and
(iii) if to any other person who is then the registered Holder
of any Transfer Restricted Securities, to the address of such Holder as
it appears in the Transfer Restricted Securities or Common Stock
register of the Company.
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: when delivered by hand, if personally
delivered; one Business Day after being timely delivered to a next-day air
16
courier; five Business Days after being deposited in the mail, postage prepaid,
if mailed; and when receipt is acknowledged by the recipient's telecopier
machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including subsequent Holders of Transfer Restricted Securities provided such
subsequent Holders acquire such Transfer Restricted Securities directly from
such Holder but without the need for an express assignment.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, as applied to contracts made
and performed within the State of Illinois without regard to principles of
conflicts of law. Any action or proceeding seeking to enforce any provision of,
or based on any right arising out of, this Agreement may be brought against any
of the parties only in the courts of the State of Florida, County of Orange.
(i) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, shall be
entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
17
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of the date first written above.
AMERICAN ACCESS TECHNOLOGIES, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
18
