POWER SPECTRA, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into effective this 30th day of September, 1997 by and among POWER
SPECTRA, INC., a California corporation (the "Company") and certain holders of
the Company's securities, including the subscriber signing on the signature page
hereof and all other subscribers executing similar forms of Registration Rights
Agreements and/or persons for whose benefit this Agreement is being entered into
as described elsewhere herein.
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises contained herein, the parties do agree as follows:
1. REGISTRATION UNDER THE SECURITIES ACT OF 1933
1.1 Definitions. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act and the declaration or ordering of
effectiveness of such registration statement.
(c) The term "Registrable Securities" means: (i) the Common
Stock, no par value of the Company (the "Common Stock) sold in a non-registered
placement, as more fully described in the Company's September 1997 Confidential
Offering Memorandum, as amended or supplemented from time to time (the
"Offering" and "Memorandum"); (ii) shares of Common Stock issuable upon exercise
of warrants issued in connection with the Offering; and (iii) any Common Stock
of the Company issued or issuable with respect to such shares of Common Stock
upon any stock split, stock dividend, recapitalization, or similar event, or any
Common Stock otherwise issued or issuable with respect to such Common Stock;
provided, however, that such securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Act under Section 4(1) thereof so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale;
(d) The term "Holder" means the person or entity holding
Registrable Securities, who is also a party to this Agreement;
(e) Unless otherwise indicated, any other capitalized term
used herein shall have the meaning set forth in the Memorandum.
1.2 Registration of Registrable Securities. Within 60 days following
the final closing of the offering, the Company shall use its reasonable efforts
to file a registration under the Act of all of the Registrable Securities and to
use its best efforts to effect the registration thereunder as promptly as
possible thereafter. In the event the Registrable Securities have not been
registered pursuant to an effective registration statement within 120 days of
the final closing of the offering, the Company agrees to issue to the Holders
additional shares of Common Stock in a dollar amount equal to 2% of the total
financing proceeds from the Offering, at an effective price of $0.375, for each
30-day delay. The Company is obligated to effect only one registration pursuant
to this Section 1.2 unless the Company fails to effect the registration of all
Registrable Securities for which registration is required and have such
registration declared or ordered effective. The foregoing notwithstanding, here
can be no assurance that the registration statement, once filed by the Company,
will be declared effective by the Securities and Exchange Commission (the
"Commission").
1.3 Company Registration.
(a) If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders exercising their respective demand registration rights (other than
pursuant to Section 1.2 hereof), other than a registration relating solely to
employee benefit plans, or a registration relating to a corporate reorganization
or other transaction under Rule 145, or a registration on any registration form
that does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as section forth in Section 1.3(b) below, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder and received by the Company
within ten days after the written notice from the Company described in clause
(i) above is mailed or delivered by the Company. Such written request may
specify all or a part of the Holder's Registrable Securities.
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
1.3(a)(i). In such event, the right of any Holder to registration pursuant to
this Section 1.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
other holders of securities of the Company with registration rights to
participate therein distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected by the Company.
(c) Notwithstanding any other provision of this Section 1.3,
if the representative of the underwriters advises the Company in writing that
marketing factors require
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a limitation on the number of shares to be underwritten, the representative may
(subject to the limitations set forth below) exclude all Registrable Securities
from, or limit the number of Registrable Securities to be included in, the
registration and underwriting. The Company shall so advise all holders of
securities requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall be
allocated first to the Company for securities being sold for its own account and
thereafter as set forth in Section 1.3(d). If any person does not agree to the
terms of any such underwriting, he shall be excluded therefrom by written notice
from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
If shares are so withdrawn from the registration or if the number of
shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to allocated among the persons requesting additional inclusion in accordance
with Section 1.3(d).
(d) If any circumstance in which all of the Registrable
Securities and other shares of Common Stock of the Company (including shares of
Common Stock issued or issuable upon conversion of shares of any currently
unissued series of Preferred Stock of the Company) with registration rights (the
"Other Shares") requested to be included in a registration on behalf of the
holders or other selling shareholders cannot be so included as a result of
limitations of the aggregate number of shares of Registrable Securities and
Other Shares that may be so included, the number of shares of Registrable
Securities and Other Shares that may be so included shall be allocated among the
Holders and the other selling shareholders requesting inclusion of shares pro
rata on the basis of the number of shares of Registrable Securities and Other
Shares that would be held by such Holders and other selling shareholders,
assuming conversion; provided, however, that such allocation shall not operate
to reduce the aggregate number of Registrable Securities and Other Shares to be
included in such registration, if any Holder or other selling shareholder does
not request inclusion of the maximum number of shares of Registrable Securities
and Other Shares allocated to him pursuant to the above-described procedure, the
remaining portion of his allocation shall be reallocated among those requesting
Holders and other selling shareholders whose allocations did not satisfy their
requests pro rata on the basis of the number of shares of Registrable Securities
and Other Shares that would be held by such Holders and other selling
shareholders, assuming conversion, and this procedure shall be repeated until
all of the shares of Registrable Securities and Other Shares that may be
included in the registration on behalf of the Holders and other selling
shareholders have been so allocated. The Company shall not limit the number of
Registrable Securities to be included in a registration pursuant to this
Agreement in order to include shares held by shareholders with no registration
rights or any shares of stock issued to employees, officers, directors or
consultants pursuant to the Company's stock options plans, in order to include
such registration securities registered for the Company's own account.
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1.4 Obligations of the Company. Whenever required under Section 1.2 or
1.3 to use its reasonable efforts to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its reasonable
efforts to cause such registration statement to be declared or ordered
effective;
(b) Prepare and file with the Commission such amendments or
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to keep such registration
statement effective for a period ending the earlier of (i) the completion of the
distribution of the Registrable Securities included in the registration
statement of (ii) one year from the effective date of such registration
statement;
(c) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them;
(d) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and further provided that (anything
in this Agreement to the contrary notwithstanding with respect to the bearing of
expenses) if any jurisdiction in which the securities shall be qualified shall
require that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by selling shareholders, then such
expenses shall be payable to selling shareholders pro rata, to the extent
required by such jurisdiction.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement as to
any Holder that such Holder shall furnish to the Company such information
regarding him or it, the Registrable Securities held by him or it, and the
intended method of disposition of such securities as the Company shall
reasonably request and as shall be requested or required by the SEC or otherwise
in connection with the action to be taken by the Company.
1.6 Expenses of Registration. All expenses incurred in connection with
the registration, qualification or compliance pursuant to Sections 1.2 and 1.3
hereof (excluding underwriters' discounts and commissions), including, without
limitation, all registration and qualification fees, printers' and accounting
fees and fees and disbursements of counsel for the Company, shall be borne by
the Company. The foregoing notwithstanding, to the extent any applicable state
securities statutes or regulations require selling shareholders to bear the
costs of registration of their securities, the Holders shall be responsible for
such costs to the extent required by applicable state law.
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1.7 Delay of Registration. Notwithstanding any other provision of this
Agreement, no Holder shall have any right to take any action to restrain, enjoin
or otherwise delay any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Agreement.
1.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
each Holder, each of its officers and directors and partners, and each person
controlling such Holder within the meaning of Section 15 of the Act, with
respect to which registration, qualification or compliance has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter within the meaning of Section 15 of the Act, against
all expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of the Act or any rule or regulation
promulgated under the Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, each of its officers and directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or alleged omission, made in reliance upon and in conformity with
written information furnished to the Company by such Holder, officer, director,
partner, controlling person or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its officers and directors, each underwriter of the Company's securities covered
by such a registration statement, each person who controls the Company or such
underwriting within the meaning of Section 15 of the Act, and each other such
Holder, each of its officers and directors and partners and each person
controlling such Holder within the meaning of Section 15 of the Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to such registration, qualification or
compliance, or any omission (or alleged omission) to state therein a
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material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, partners, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or allege omission) is made
in such registration statement, prospectus, offering circular or other document
in reliance upon and in conformity with written information furnished to the
Company by any instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this subsection (b) shall be limited in an amount equal to the
initial public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this Section
1.8 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnified Party's ability to defend such action;
and provided further that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.9 Proposed Transfers of Registrable Securities. The Holder
of each certificate representing Registrable Securities by accepting those
securities, agrees to comply in all respects with the following provisions:
(a) Prior to any proposed transfer of any Registrable
Securities (other than under the circumstances described in Section 1.2 above),
the Holder of those Registrable Securities shall give written notice to the
Company of such Holder's intention to effect the transfer;
(b) Each such notice shall describe the manner and
circumstances of the proposed transfer, shall be accompanied by such information
as is necessary in order to establish that such transfer may be made without
registration under the Act and except with respect to transactions not involving
a change in beneficial ownership or transactions involving the distribution
without consideration of Registrable Securities by any of the Holders to any of
their partners, retired partners, or any estate of their partners or retired
partners, or to any
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affiliated venture capital partnership, or to any members of the immediate
family of the Holders, shall also be accompanied by either (i) a written opinion
of legal counsel who shall be reasonably satisfactory to the Company and its
counsel stating that the proposed transfer of the Registrable Securities may be
effected without registration under the Act and without qualification under the
state securities or Blue Sky laws; or (ii) a "no action" letter from the
Commission; or (iii) an appropriate registration statement with respect to such
Registrable Securities filed by the Company with the Commission and declared
effective by the Commission.
(c) Having satisfied Section 1.9(b), above, the Holder of such
Registrable Securities shall be entitled to transfer the Registrable Securities
in accordance with the terms of the notice delivered by the Holder to the
Company.
(d) Each certificate evidencing the Registrable Securities
transferred shall bear the appropriate restrictive legends as set forth on the
Registrable Securities themselves prior to transfer. However, the Company shall
remove such restrictive legend upon the request of the Holder if (i) the Company
has received from or on behalf of the investor an opinion of counsel who is
reasonably acceptable to the Company and its counsel to the effect that
registration of any and all future transfers is not required; or (ii) an
appropriate registration statement with respect to such Registrable Securities
has been filed by the Company with the Commission and declared effected by the
Commission.
1.10 Transfer of Registration Rights. The registration rights
of the Holders under this Agreement may be transferred to any transferee who
acquires Registrable Securities; provided, however, that such transfer of rights
shall be effective only where the Company is given written notice by the Holder
stating the name and address of the transferee and identifying the securities
with respect to which the rights under this Agreement are being assigned.
2. MISCELLANEOUS
2.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and no party shall be liable or bound to the other in
any manner by any warrants, representations or covenants except as specifically
set forth herein. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors, heirs, personal
representatives, and permitted assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provide herein.
2.2. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California, without reference to conflicts of
laws principles.
2.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute and the same instrument.
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2.4. Titles and Subtitles; Gender. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience and are not to be considered
in construing this Agreement. References to the masculine gender are for
convenience and shall be deemed to include the feminine or neuter genders as the
context may require.
2.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon delivery to the party to be notified in person or by courier service or
five days after deposit with the United States mail, by registered or certified
mail, postage prepaid, addressed (i) if to a Holder, to such Holder's address
set forth in the securities records of the Company, or at such other address as
such Holder shall have furnished to the Company in writing, or (ii) if to any
other holder of any Registrable Securities, to such address as such holder shall
have furnished the Company in writing, or until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
securities who has so furnished an address to the Company, then to and at the
address of the last holder of such securities who has so furnished an address to
the Company, or (iii) if to the Company, to its address set forth on the first
page of this Agreement, to the attention of the Chief Financial Officer, or at
such other address as the Company shall have furnished to the Holders.
2.6. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be severed from
this Agreement as if such provision were not included and the balance of this
Agreement shall be enforceable in accordance with its terms, unless the effect
of such severance is to change the economic benefits accruing hereunder to
either party.
2.7. Expenses. Each party hereto shall bear its own expenses in
connection with the executive of this Agreement.
2.8. Amendments and Waivers. Neither this Agreement nor any term hereof
or thereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided, however, that
the holders of a majority of the Registrable Securities may, with the Company's
written consent, amend, waive, discharge or terminate any provision hereof on
behalf of the holders of all Registrable Securities. In addition, the Company
may waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that any underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from this Agreement, as to any such Holder, the terms of such
underwriting agreement shall govern. The Holders and their successors and
assigns acknowledge that by the operation of this Section 2.8, hereof the
Holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights and/or increase the obligations pursuant to this
Agreement.
2.9. Attorneys' Fees. In the event of any action at law, suit in equity
or arbitration proceeding in relation to this Agreement or the transactions
contemplated hereby, the prevailing
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party shall be entitled to a reasonable sum for attorneys' fees and litigation
expenses, whether or not such action is prosecuted to judgment.
2.10. Remedies. In the event of a dispute between the Company and any
Holder (including any person who is added as a party to this Agreement in the
future), such Holder shall be deemed to have irrevocably waived his right to
bring suit to enjoin or otherwise prevent the Company or any other Holder from
performing their obligations under this Agreement, including, but not limited
to, the filing of a registration statement by the Company under Section 1.3 or
Section 1.4 hereof and payment of amounts under Section 1.8 hereof. This
paragraph is not intended to prevent such a Holder for exercising any other
rights or remedies to which he is otherwise entitled in the event of such a
dispute.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day indicated below.
Date: September 30 1997 POWER SPECTRA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Its: Chief Financial Officer
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HOLDER (non-individual):
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By: /s/
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Its:
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HOLDER (individual)
/s/
--------------------------------
(Joint Owner, if applicable)
/s/
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