REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement")
dated as of February 24, 1997, is among ELECTRONIC FAB
TECHNOLOGY CORP., a Colorado corporation ("Parent"), and the
undersigned SHAREHOLDERS (individually a "Shareholder" and
together, the "Shareholders") of Parent.
RECITALS
A. Parent, Current Merger Corp., an Oregon corporation
("Merger Sub"), and Current Electronics, Inc., an Oregon
corporation ("Target"), have entered into the Agreement and
Plan
of Merger, dated as of January 15, 1997 (the "Merger
Agreement"), pursuant to which Target was merged with and
into
Merger Sub and the Shareholders received in consideration
therefor, among other things, shares of Common Stock, $.01
par
value, of Parent ("Parent Common Stock").
B. This Agreement is executed and delivered pursuant
to
Sections 8.2(e) of the Merger Agreement and sets forth the
terms
on which the Shareholders may require Parent to register
securities of Parent owned by them under the Securities Act
(as
defined in Article I).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and
of
the representations, warranties, covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings as
used in this Agreement:
1.1 "Agreement" has the meaning set forth in the
opening
statement of this Agreement.
1.2 "Demand Registration" has the meaning set forth in
Section 2.1.
1.3 "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor federal statute, and the
rules and regulations of the SEC thereunder.
1.4 "Indemnified Party" has the meaning set forth in
Section 8.2.
1.5 "Indemnifying Party" has the meaning set forth in
Section 8.2.
1.6 "Losses" has the meaning set forth in Section 8.1.
1.7 "Merger Agreement" has the meaning set forth in
Recital A.
1.8 "Merger Sub" has the meaning set forth in Recital
A.
1.9 "Parent" has the meaning set forth in the opening
statement of this Agreement.
1.10 "Parent Common Stock" has the meaning set forth in
Recital A.
1.11 "Person" means any individual, corporation,
partnership, trust, organization, association, governmental
body
or agency.
1.12 "Piggyback Registration" has the meaning set
forth
in Section 3.1.
1.13 "Pro Rata Share" has the meaning set forth in
Section 8.2.
1.14 "Registrable Securities" means any outstanding
shares of Parent Common Stock held by the Shareholders on the
date hereof and any securities issued or issuable with
respect
thereto by way of stock dividend or stock split or in
connection
with a combination of shares, recapitalization, merger,
consolidation, reclassification or other reorganization. A
Registrable Security shall cease to be a Registrable Security
when: (a) a Registration Statement with respect to the sale
of
such security shall have become effective under the
Securities
Act and such security shall have been disposed of in
accordance
with such Registration Statement; (b) such security shall
have
been distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act; (c) such
security
shall have been otherwise transferred, new certificates for
which, not bearing a legend restricting further transfer,
shall
have been delivered by Parent and subsequent disposition of
the
security shall not require registration or qualification of
such
security under the Securities Act or any similar state law
then
in force or (d) such security shall have ceased to be
outstanding.
1.15 "Registration Expenses" means all expenses
incident to Parent's performance of or compliance with this
Agreement, including, all registration and filing fees, fees
and
expenses of compliance with federal and state securities
laws,
printing expenses, messenger and delivery expenses, and fees
and
disbursements of counsel for Parent and all independent
certified public accountants, underwriters (excluding
underwriting discounts, commissions spreads or fees of
underwriters, selling brokers, dealer managers or similar
securities industry professionals), and other Persons
retained
by Parent for the purpose of fulfilling its obligations under
this Agreement.
1.16 "Registration Statement" means any registration
statement or comparable document under section 5 of the
Securities Act through which a public sale or disposition of
Registrable Securities may be registered.
1.17 "SEC" means the Securities and Exchange Commission
or any other federal agency administering the Securities Act.
1.18 "Securities Act" means the Securities Act of 1933,
as amended, or any successor federal statute, and the rules
and
regulations of the SEC thereunder.
1.19 "Shareholder" and the "Shareholders" have the
meanings set forth in the opening statement of this
Agreement.
1.20 "Target" has the meaning set forth in Recital A.
ARTICLE II
DEMAND REGISTRATION
2.1 Request for Registration. At any time beginning
two
years after the date hereof, the holders of more than 40% of
the
then outstanding Registrable Securities, on one occasion, may
request registration under the Securities Act of all or part
of
their Registrable Securities. Such holders may exercise
their
right under this Section 2.1 by giving a written request to
Parent signed by them specifying the number of shares of
Registrable Securities requested to be included and the
intended
method of disposition thereof. Within ten days after receipt
of
the request, Parent will give written notice of the request
to
all other holders of Registrable Securities and will include
in
such registration (a "Demand Registration") all Registrable
Securities for which Parent has received written requests for
inclusion within 15 days after Parent's notice is given to
the
holders pursuant to this Section 2.1, so long as the
aggregate
amount of Registrable Securities that the holders request be
included in such registration has a fair market value at the
time of the request equal to $3,000,000 ($1,000,000 if Parent
can use Form S-3 or its equivalent to effect such
registration).
The holders of Registrable Securities will be entitled to
only
one Demand Registration.
2.2 Underwritten Offerings; Priority on Demand
Registrations. If the holders of a majority of the
Registrable
Securities requested to be included so elect, the Demand
Registration may be in the form of an underwritten offering.
If
the Demand Registration is an underwritten offering, Parent
shall select the managing underwriters for the offering and
Parent may elect to include other securities in such
registration on the same terms and conditions as the
Registrable
Securities to be included in such registration; provided
however, if the managing underwriters advise Parent in
writing
that in their opinion the number of Registrable Securities
and
other securities to be included in the registration exceeds
the
number that can be sold in such offering at a price
satisfactory
to the holders of a majority of the Registrable Securities
requested to be included in such registration, Parent will
give
priority for inclusion in such registration: (a) first, to
the
Registrable Securities requested to be included in such
registration (or to such lesser number of Registrable
Securities
that is equal to the number that, in the opinion of the
managing
underwriters, can be sold, pro rata among the holders thereof
based on the number of Registrable Securities owned), (b)
second, to the securities, if any, requested to be included
in
such registration pursuant to warrants or options issued to
the
representatives of the underwriters with respect thereto; (c)
third, to the securities Parent proposes to include in such
registration; (d) fourth, to the securities that Parent is
otherwise obligated to include in such registration; and (e)
fifth, to other securities that Parent may desire to include
in
such registration.
2.3 Restrictions on Demand Registration.
Notwithstanding anything in this Article II to the contrary,
if
Parent shall furnish to the holders of Registrable Securities
requesting registration a certificate signed by the Chief
Executive Officer or President of Parent stating that, in the
good faith reasonable judgment of the Board of Directors of
Parent, such registration of Registrable Securities would
materially interfere with, or require premature disclosure
of,
any financing, acquisition or reorganization involving Parent
or
any of its wholly-owned subsidiaries or would otherwise have
a
material adverse effect on Parent or the selling holders if
undertaken at the time requested, Parent shall have the right
to
defer taking action with respect to such filing for a period
of
not more than 90 days after receipt of the request of the
holders of Registrable Securities; provided, however, that
Parent may not utilize this right more than once in any 12
month
period.
2.4 Expenses. Except as otherwise provided in
this
Article II, Parent will pay all Registration Expenses in
connection with a Demand Registration. In a Demand
Registration
that is an underwritten offering, all underwriting discounts,
commissions spreads or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals
relating to the Registrable Securities being offered thereby
will be paid by the holders thereof pro rata based on the
number of Registrable Securities that each such holder has
requested be registered.
2.5 Payment of Expenses by Holders. A majority of the
holders of Registrable Securities requesting registration
under
Section 2.1 may request that a Demand Registration as to
which
no sale of Registrable Securities has been made thereunder be
withdrawn by Parent. If such requesting holders elect not to
have such registration counted as a Demand Registration under
Section 2.1, the requesting holders shall pay, pro rata with
in
accordance with the number of Registrable Securities
requested
to be included in such registration, all Registration
Expenses
of such registration.
ARTICLE III
PIGGYBACK REGISTRATION
3.1 Right to Piggyback. Whenever Parent proposes to
register any of its securities under the Securities Act
(other
than as (a) a Demand Registration; (b) a registration of
securities in connection with a merger, an acquisition, an
exchange offer, other business combination or an employee
benefit plan maintained by Parent or its subsidiaries; or (c)
a
registration of securities on Form S-4 or S-8 or any
successor
or similar form) and the registration form to be used may be
used for the registration of Registrable Securities (a
"Piggyback Registration"), Parent will give prompt written
notice to all holders of Registrable Securities of its
intention
to effect such a registration and will include in such
registration, subject to Section 3.3, all Registrable
Securities
with respect to which Parent has received written requests
for
Piggyback Registration within 15 days after Parent's notice
is
given to the holders of Registrable Securities.
3.2 Piggyback Expenses. Parent will pay all
Registration Expenses in connection with a Piggyback
Registration. In a Piggyback Registration that is an
underwritten offering, all underwriting discounts,
commissions
spreads or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals
relating
to the Registrable Securities being offered thereby will be
paid
by the holders thereof pro rata based on the number of
Registrable Securities that each such holder has requested be
registered.
3.3 Restrictions on Piggyback Registrations.
Notwithstanding anything to the contrary in this Article III,
(a) if, at any time after receiving such requests and prior
to
the effective date of the Registration Statement filed in
connection with the Piggyback Registration, Parent for any
reason decides not to register securities of Parent, Parent
will
give written notice of its decision to the holders of
Registrable Securities and thereupon be relieved of its
obligation to register any Registrable Securities in
connection
with such registration and (b) if Parent determines for any
reason to delay a Piggyback Registration, Parent may do so by
giving written notice of its decision to the holders of
Registrable Securities.
3.4 Priority on Underwritten Primary Registrations. If
a Piggyback Registration is an underwritten offering
initiated
on behalf of Parent and the managing underwriters advise
Parent
in writing that in their opinion the number of securities to
be
included in such registration exceeds the number that can be
sold in such offering at a price satisfactory to Parent,
Parent
will give priority for inclusion in such registration: (a)
first, to the securities Parent proposes to include in such
registration; (b) second, to the securities, if any,
requested
to be included in such registration pursuant to warrants or
options issued to the representatives of the underwriters
with
respect thereto; (c) third, to the Registrable Securities
requested to be included in such registration and any other
securities that Parent is obligated to included in such
registration (or to such lesser number of Registrable
Securities
and other securities, which is equal to the number that, in
the
opinion of the managing underwriters, can be sold, pro rata
among the holders thereof based on the number of Registrable
Securities and other securities owned), and (d) fourth, to
other
securities that Parent may desire to include in such
registration.
3.5 Priority on Underwritten Secondary Registrations.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of Parent's securities, and
the managing underwriters advise Parent in writing that in
their
opinion the number of securities requested to be included in
the
registration exceeds the number that can be sold in the
offering, Parent will give priority for inclusion in such
registration (a) first, to the securities requested to be
included by the holders requesting such registration, (b)
second, to the securities sought to be included in such
registration pursuant to the warrants or options issued to
the
representatives of the underwriters with respect thereto; (c)
third, to the Registrable Securities requested to be included
in
such registration (or to such lesser number of Registrable
Securities, which is equal to the number that, in the opinion
of
the managing underwriters, can be sold, pro rata among the
holders thereof based on the number of Registrable Securities
owned), and (d) fourth, to other securities that Parent may
desire to include in such registration.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Procedures Parent Will Follow. Whenever the
holders
of the Registrable Securities duly request that any
Registrable
Securities be registered pursuant to this Agreement, Parent
will
use its best efforts to effect the registration of the
Registrable Securities on an available form for which Parent
then qualifies and that counsel for Parent deems appropriate
and
which form is available for the sale of the Registrable
Securities in accordance with the intended method of
disposition, and pursuant thereto Parent will do the
following
as expeditiously as possible:
(a) Registration Statement. Parent will prepare
and file with the SEC, and use its best efforts to cause to
become effective, a Registration Statement with respect to
the
Registrable Securities Parent has been so requested to
register
on an available form for which Parent then qualifies and that
counsel for Parent deems appropriate and which form is
available
for the sale of the Registrable Securities in accordance with
the intended method of disposition.
(b) Maintenance of Effectiveness. Parent will
prepare and file with the SEC such amendments and supplements
to
the Registration Statement and prospectus used for the sale
of
the Registrable Securities as may be necessary to keep the
Registration Statement effective until the earlier of (i) the
date on which the sale of the Registrable Securities is
completed and (ii) the date 90 days after the Registration
Statement with respect to the Registrable Securities becomes
effective, and comply with the provisions of the Securities
Act
with respect to the disposition of all securities covered by
the
Registration Statement during its effectiveness in accordance
with the intended methods of disposition of such securities.
(c) Copies of Prospectuses. Parent will furnish
to the holders the number of copies of the Registration
Statement, each amendment and supplement thereto, the
prospectus
included in the Registration Statement (including each
preliminary prospectus) and such other documents that the
holders may reasonably request to facilitate the disposition
of
the Registrable Securities Parent has been so requested to
register. At any time when a prospectus with respect to the
Registrable Securities is required to be delivered under the
Securities Act, Parent will notify the holders of the
occurrence
of any material change in the information contained in the
prospectus included in the Registration Statement. Whenever
in
Parent's judgment it is necessary, Parent will prepare a
supplement or amendment to the prospectus so that, as
thereafter
delivered to the proposed purchasers of the Registrable
Securities, the prospectus will not contain, to Parent's
knowledge, any untrue statement of material fact or omit to
state any fact necessary to make the statements in it not
misleading, and the holders will discontinue disposition of
the
Registrable Securities until the holders are advised in
writing
by Parent that the use of the prospectus may be resumed and
are
furnished with a supplement or amendment to the prospectus.
If
Parent shall give any notice to suspend the disposition of
Registrable Securities pursuant to a prospectus, Parent shall
extend the period of time during which Parent is required to
maintain the Registration Statement effective pursuant to
this
Agreement by the number of days during the period from and
including the date of the giving of such notice through and
including the date the holders are advised by Parent that the
use of the prospectus may be resumed or receive the copies of
the supplement or amendment to the prospectus.
(d) Blue Sky Compliance. Parent will use its best
efforts to register or qualify the Registrable Securities
Parent
has been so requested to register under the securities or
blue
sky laws of such jurisdictions within the United States of
America as any holder of Registrable Securities selling
Registrable Securities in connection with the registration
reasonably requests, and do any and all other acts and things
reasonably necessary or advisable to enable the holder to
dispose of the holder's Registrable Securities in such
jurisdictions; except Parent will not be required to (i)
qualify
generally to do business in any jurisdiction where it is not
then so qualified or (ii) consent to, or take any action that
would subject it to, general service of process or taxation
in
any jurisdiction where it is not then so subject.
(e) Listing; Transfer Agent. Parent will use its
best efforts to cause all such Registrable Securities to be
listed on all securities exchanges or quoted on all automated
quotation systems on which securities of the same class
issued
by Parent are then listed or quoted and will provide a
transfer
agent and registrar for all such Registrable Securities no
later
than the effective date of the Registration Statement.
(f) Customary Agreements. In the case of an
underwritten offering, Parent will enter into customary
agreements, including an underwriting agreement in customary
form, as the holders of a majority of the Registrable
Securities
being registered or the underwriters, if any, reasonably
request
in order to expedite or facilitate the disposition of the
Registrable Securities being so registered.
(g) Certain Information. Parent will make
available for inspection upon reasonable request by any
holder
of Registrable Securities being registered, any underwriter
participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent
retained
by the holder or underwriter, all financial and other
records,
pertinent corporate documents and properties of Parent, and
cause Parent's officers, directors and employees to supply
all
information reasonably requested by the holder, underwriter,
attorney, accountant or agent in connection with the
Registration Statement, upon receipt by Parent of
confidentiality agreements satisfactory to Parent.
(h) Compliance with Law. Parent will comply with
all rules and regulations of the SEC and applicable state
securities laws governing the manner of sale of securities in
connection with the disposition of any Registrable Securities
pursuant to any Registration Statement.
(i) Stop-Orders. Parent will promptly notify all
holders of Registrable Securities being registered of its
receipt of (i) any stop-order, injunction or order suspending
the effectiveness of any Registration Statement covering any
Registrable Securities or, to Parent's knowledge, the
initiation
of any proceeding for that purpose, or (ii) any notification
with respect to the limitation, restriction or suspension of
the
offer or sale of any Registrable Securities in any
jurisdiction
in which the Registrable Securities were qualified to be sold
or, to Parent's knowledge any proceeding for that purpose.
If
Parent notifies the holders of any such event, the holders
will
immediately discontinue all sales or other dispositions of
the
Registrable Securities pursuant to the Registration Statement
until Parent notifies the holders that such stop-order,
injunction, order, limitation, restriction or suspension has
been lifted, except, unless Parent notifies the holders
otherwise, if a stop-order, injunction, order, limitation,
restriction or suspension issued by a state securities or
blue
sky administrator applies only to offers and sales in such
state, the holders will immediately discontinue all sales and
other disposition of the Registrable Securities in such
state.
Parent, with cooperation of the holders, will use its
reasonable
efforts to contest any such proceeding and to obtain the
withdrawal of any such stop-order, injunction, order,
limitation, restriction or suspension.
4.2 Procedures Holders of Registrable Securities Will
Follow. Whenever the holders of the Registrable Securities
duly
request that any Registrable Securities be registered
pursuant
to this Agreement, the holders will do the following as
expeditiously as possible:
(a) Certain Information. The holders will provide
Parent with such information and affidavits about the holders
and the intended manner of disposition of the Registrable
Securities and otherwise use their best efforts to cooperate
with Parent and the underwriters, if any, Parent may require
to
satisfy any obligation of Parent under this Agreement to
register the Registrable Securities under federal and state
securities laws and otherwise take actions related thereto.
If
the holders fail to provide the information required under
this
Section 4.2(a), Parent may delay the registration until the
information is provided and the holders agree to pay Parent
its
out-of-pocket expenses that arise from the failure to provide
such information. The holders will notify Parent of the
occurrence of any material change in the information provided
by
them that is contained in the prospectus included in the
Registration Statement, as then in effect. Whenever in
Parent's
judgment it is necessary, Parent will prepare a supplement or
amendment to the prospectus so that, as thereafter delivered
to
the proposed purchasers of the Registrable Securities, the
prospectus will not contain, to Parent's knowledge, any
untrue
statement of material fact or omit to state any fact
necessary
to make the statements in it not misleading, and the holders
will discontinue disposition of the Registrable Securities
until
the holders are advised in writing by Parent that the use of
the
prospectus may be resumed and are furnished with a supplement
or
amendment to the prospectus. If Parent shall give any notice
to
suspend the disposition of Registrable Securities pursuant to
a
prospectus, Parent shall extend the period of time during
which
Parent is required to maintain the Registration Statement
effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving
of
such notice through and including the date the holders are
advised by Parent that the use of the prospectus may be
resumed
or receive the copies of the supplement or amendment to the
prospectus.
(b) Compliance with Law. The holders will comply
with all rules and regulations of the SEC and applicable
state
securities laws governing the manner of sale of securities in
connection with the disposition of any Registrable Securities
pursuant to any Registration Statement.
(c) Participation in Underwritten Offerings. No
holder of Registrable Securities may participate in any
underwritten offering hereunder unless such holder (i) agrees
to
sell such holder's securities on the basis provided in any
underwriting arrangements approved, subject to the terms and
conditions hereof, by the holders of a majority (by number of
shares) of Registrable Securities to be included in such
underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and
other
documents (other than powers of attorney) reasonably required
under the terms of such underwriting arrangements.
ARTICLE V
BLACK OUT PERIODS
5.1 Restrictions on Public Sale by Holders. Whenever
Parent proposes to register any of its securities under the
Securities Act in an underwritten offering (other than as (a)
a
Demand Registration; (b) a registration of securities in
connection with a merger, an acquisition, an exchange offer,
other business combination or an employee benefit plan
maintained by Parent or its subsidiaries; or (c) a
registration
of securities on Form S-4 or S-8 or any successor or similar
form) and if requested by the managing underwriters and the
Shareholder then beneficially owns more than 2% of the
outstanding Parent Common Stock, such holder of Registrable
Securities will not effect any public sale or disposition of
securities of Parent the same as or similar to those being
registered, or any securities convertible into or
exchangeable
or exercisable for such securities, including a sale pursuant
to
Rule 144 under the Securities Act, except as part of such
registration, during the 14-day period prior to, and during
the
90-day period (or, with respect to a Piggyback Registration,
such longer period of up to 120 days as may reasonably be
requested by such managing underwriters) beginning on the
effective date of the related Registration Statement, to the
extent timely notified in writing by Parent or the managing
underwriters.
5.2 Restrictions on Public Sale by Parent and Others.
In connection with any Demand Registration that is an
underwritten offering and if requested by the managing
underwriters, Parent will not effect any public sale or
disposition of any securities the same as or similar to those
being registered by Parent, except as part of such
registration,
during the 14-day period prior to, and during the 90-day
period
beginning on the effective date of the related Registration
Statement to the extent timely notified in writing by the
managing underwriters. Notwithstanding anything to the
contrary
in the foregoing, the restrictions under this Section 6.2
shall
not limit the issuance of securities of Parent, or options or
warrants to purchase such securities, that Parent is required
to
issue pursuant to (a) any employee stock option plan or
non-employee director stock option plan in effect at the time
Parent
receives a request for Demand Registration, (b) the exercise
of
any outstanding options or warrants with respect to
securities
of Parent, (c) the exercise of any conversion or exchange
right
in accordance with the terms of any other outstanding
security
convertible into or exchangeable for securities of Parent,
and
(d) the terms of any business combination.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Parent. Parent will indemnify
and hold harmless, to the extent permitted by law, each each
holder of Registrable Securities and, if applicable, the
officers and directors of the holder, and each Person who
controls the holder (within the meaning of the Securities Act
or
the Exchange Act) from and against any action, suit,
proceeding,
hearing, investigation, charge, complaint, claim, demand,
injunction, judgment, order, decree, ruling, damage, dues,
penalty, fines, costs, amounts paid in settlement,
liabilities,
obligations, losses, expenses and fees, including court costs
and attorneys' fees and expenses (collectively, "Losses")
that
the holder and, if applicable, the officers and directors of
the
holder, and each Person who controls the holder may suffer
through and after the date of the claim for indemnification
caused by or arising out of any untrue or alleged untrue
statement of material fact contained in any Registration
Statement, prospectus, preliminary prospectus, or other
related
filing with the SEC or any other federal or state
governmental
agency, or any omission or alleged omission to state therein
a
material fact required to be stated therein or necessary to
make
the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished
in
writing to Parent by any holder of Registrable Securities
expressly for use therein or by any holder's failure to
comply
with any legal requirement applicable to such holder and not
contractually assumed by Parent to deliver a copy of the
Registration Statement or prospectus or any amendments or
supplements thereto after Parent has furnished the holder
with a
sufficient number of copies of the same. In connection with
an
underwritten offering, Parent shall indemnify the
underwriters,
their officers and directors, and each Person who controls
the
underwriters (within the meaning of the Securities Act or the
Exchange Act) to the extent customary.
6.2 Indemnification by Holders. In connection with any
registration in which a holder of Registrable Securities is
participating, each such Holder will indemnify and hold
harmless, to the extent permitted by law, Parent, its
directors
and officers and each Person who controls Parent (within the
meaning of the Securities Act or the Exchange Act) from and
against the holder's Pro Rata Share (as defined in this
Section
6.2) of all Losses that Parent, its directors and officers
and
each Person who controls Parent may suffer through and after
the
date of the claim for indemnification caused by or arising
out
of any untrue or alleged untrue statement of material fact
contained in any Registration Statement, prospectus,
preliminary
prospectus, or other related filing with the SEC or any other
federal or state governmental agency, or 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, but only to the extent that the same are caused
by
or contained in any information furnished in writing to
Parent
by such holder of Registrable Securities expressly for use
therein or by any holder's failure to comply with any legal
requirement applicable to such holder and not contractually
assumed by Parent to deliver a copy of the Registration
Statement or prospectus or any amendments or supplements
thereto
after Parent has furnished the holder with a sufficient
number
of copies of the same. For purposes of the foregoing, a
holder's "Pro Rata Share" means that fraction equal to the
amount of the proceeds received or to be received by the
holder
in connection with the registration over the total proceeds
received or to be received by all holders in connection with
the
registration.
6.3 Indemnification Procedure. If any Person has a
claim for Losses hereunder (an "Indemnified Party"), the
Indemnified Party will (a) notify the party or parties hereto
from which it is entitled to make such claim (individually,
an
"Indemnifying Party" and, together, the "Indemnifying
Parties")
of such claim, specifying the nature of the Losses and the
amount or estimated amount thereof if feasible and (b) unless
in
the Indemnified Party's reasonable judgment (based on written
advice of counsel) a conflict of interest between the
Indemnified Party and the Indemnifying Parties may exist with
respect to the matter giving rise to such claim, permit the
Indemnifying Party to assume and thereafter conduct the
defense
of the matter with counsel of the Indemnifying Party's choice
reasonably satisfactory to the Indemnified Party. If the
defense is so assumed, the Indemnifying Party will not be
subject to any liability for any settlement made with respect
to
such claim by the Indemnified Party without its consent,
which
will not be unreasonably withheld. An Indemnifying Party who
is
not entitled to or elects not to assume the defense of a
claim,
will not be obligated to pay the fees and expenses of more
than
one counsel for all parties it indemnifies with respect to
such
claim, unless in the reasonable judgment of any Indemnified
Party (based on written advice of counsel) a conflict of
interest may exist between such Indemnified Party and any
other
Indemnified Parties with respect to such claim.
ARTICLE VII
RESTRICTIONS ON TRANSFER
7.1 Legends. Each certificate representing Registrable
Securities shall bear a legend to the following effect:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES
CANNOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH RESTRICTIONS ON THE TRANSFERABILITY
CONTAINED IN AN AGREEMENT RELATING TO THE
SECURITIES
AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS
AND
NO TRANSFER WILL BE RECOGNIZED UNLESS MADE IN
COMPLIANCE WITH SUCH LAWS."
Any holder of Registrable Securities who disposes of
Registrable
Securities in accordance with Section 7.2 shall be entitled
to
have Parent cause new unlegended certificates to be issued
promptly to the holder in exchange for outstanding legended
certificates representing the disposed shares if (a) the
opinion
to counsel referred to in Section 7.2 is to the further
effect
that such legend is not required in order to establish
compliance with any provisions of the Securities Act or (b)
such
Registrable Securities cease to be Registrable Securities for
any of the reasons set forth in clauses (a) or (b) of Section
1.14.
7.2 Notice of Proposed Dispositions. Prior to any
proposed disposition of any Registrable Securities (unless
there
is proposed to be in effect a Registration Statement with
respect to the sale of such securities and such securities
will
be disposed of in accordance with such Registration
Statement),
the holder thereof shall give written notice to Parent of
such
holder's intention to effect such disposition. Each such
notice
shall describe the manner and circumstances of the proposed
disposition and shall be accompanied by either (a) a written
opinion of legal counsel addressed to Parent and reasonably
satisfactory in form and substance to Parent, to the effect
that
the proposed disposition of Registrable Securities may be
effected without registration of such Registrable Securities
or
(b) a "no action" letter from the SEC to the effect that such
disposition without registration of such Registrable
Securities
will not result in recommendation by the staff of the SEC
that
enforcement action be taken with respect thereto, whereupon
the
holder of such Registrable Securities shall be entitled to
transfer such Registrable Securities in accordance with the
terms of the notice delivered by the holder to Parent. The
provisions of this Section 7.2 shall not apply to any
securities
that cease to be Registrable Securities.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Remedies. Any Person having rights under this
Agreement will be entitled to enforce them specifically, to
recover damages caused by reason of any breach of any
provision
of this Agreement, and to exercise all other rights granted
by
law.
8.2 Successors and Assigns. This Agreement will bind
and inure to the benefit of the respective successors and
assigns of the parties hereto, whether so expressed. Any
provision of this Agreement for the benefit of the holders of
Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable
Securities
to which the subsequent holder has been expressly assigned
such
rights at the time of the transfer of the Registrable
Securities
to him, but not otherwise.
8.3 Term; Effect of Expiration or Termination. This
Agreement shall be effective as of the date hereof, and
unless
earlier terminated in accordance with this Agreement, shall
expire on the earliest of: (a) 10 years from the date of this
Agreement or (b) such time as all Registrable Securities have
been sold pursuant to an effective Registration Statement
under
the Securities Act or may be publicly sold without
registration.
Moreover, the obligation of Parent to register its securities
under this Agreement as to any Shareholder shall terminate at
such time as such Shareholder can then publicly sell all of
its
Registrable Securities without registration under the
Securities
Act during a three-month period pursuant to Rule 144 under
the
Securities Act or otherwise. In the event of termination or
expiration of this Agreement, this Agreement shall forthwith
become void and there shall be no liability or obligation on
the
part of the parties hereto, except the provisions of Article
VI
(Indemnification) and this Article VII (General Provisions)
shall remain in full force and effect and survive any
termination of this Agreement.
8.4 Amendments; Modifications. This Agreement may be
amended or modified in writing by Parent and the holders of a
majority of the Registrable Securities at the time of such
amendment or modification.
8.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally or by commercial delivery service, or
mailed by registered or certified mail, return receipt
requested, or sent via facsimile, with confirmation of
receipt,
to the parties at the following address or at such other
address
for a party as shall be specified by notice hereunder:
(a) if to Parent, to:
Electronic Fab Technology Corp.
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(b) if to the Shareholders, to:
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8.6 Entire Agreement. This Agreement and the documents
and instruments and other agreements specifically referred to
herein or delivered pursuant hereto constitute the entire
agreement among the parties hereto with respect to the
subject
matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties
hereto
with respect to the subject matter hereof.
8.7 Severability. In the event that any provision of
this Agreement, or the application thereof, becomes or is
declared by a court of competent jurisdiction to be illegal,
void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such
provision to other persons or circumstances will be
interpreted
so as reasonably to effect the intent of the parties hereto.
The parties hereto further agree to replace such void or
unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent
possible,
the economic, business and other purposes of such void or
unenforceable provision.
8.8 Remedies Cumulative; No Waiver. Except as
otherwise
provided herein, any and all remedies herein expressly
conferred
upon a party will be deemed cumulative with and not exclusive
of
any other remedy conferred hereby, or by law or equity upon
such
party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. No failure or
delay
on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a
waiver
of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise
thereof or of any other right.
8.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Colorado (without regard to the principles of conflicts of
law
thereof).
8.10 Rules of Construction. The parties hereto agree
that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and,
therefore, waive the application of any law, regulation,
holding
or rule of construction providing that ambiguities in an
agreement or other document will be construed against the
party
drafting such agreement or document.
8.11 Interpretation. When a reference is made in this
Agreement to Articles, Recitals or Sections, such reference
shall be to an Article, Recital or Section to this Agreement
unless otherwise indicated. The words "include," "includes"
and
"including" when used herein shall be deemed in each case to
be
followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information
referred to has been made available if requested by the party
hereto to whom such information is to be made available. The
table of contents and Article and Section headings contained
in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. In this Agreement, any reference to a party's
"knowledge" means such party's actual knowledge after due and
diligent inquiry of officers, directors and other employees
of
such party reasonably believed to have knowledge of such
matters. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter
forms.
8.12 Counterparts. This Agreement may be executed in
one
or more counterparts, all of which shall be considered one
and
the same agreement and shall become effective when one or
more
counterparts have been signed by each of the parties hereto
and
delivered to the other parties hereto, it being understood
that
all parties hereto need not sign the same counterpart.
8.13 Attorneys Fees. In the event of any proceeding to
enforce this Agreement, the prevailing party shall be
entitled
to receive from the losing party all reasonable costs and
expenses, including the reasonable fees of attorneys,
accountants and other experts, incurred by the prevailing
party
in investigating and prosecuting (or defending) such action
at
trial or upon any appeal.
IN WITNESS WHEREOF, the parties hereto have duly
executed
this Registration Rights Agreement as of the date first
written
above.
Parent:
ELECTRONIC FAB TECHNOLOGY
CORP.
By:
_______________________________
Shareholders:
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The undersigned persons join in this Agreement to the
extent of any community property interest held by them and
consent hereto with respect to such interest.
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