EXHIBIT 4.10
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as of December 10,
2007 (the "EXECUTION DATE"), by and among RADA Electronic Industries Ltd., a
public company organized under the laws of the State of Israel, of ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ (the "COMPANY"), and ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, of
2202 Kodak House II, 39 Healthy Street East, Hong Kong, or his assigns (the
"INVESTOR").
WHEREAS:
A. The Company has agreed, to issue and sell to the Investor (i) senior
secured convertible note of the Company dated as of even date hereof (the
"NOTE"), which will be convertible into Ordinary Shares, (as converted, the
"CONVERSION SHARES") in accordance with the terms of the Note, and (iii) warrant
dated as of the date hereof (the "WARRANT"), which will be exercisable to
purchase Ordinary Shares (as exercised collectively, the "WARRANT SHARES").
B. The Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "1933 ACT"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Note. As used in this Agreement, the
following terms shall have the following meanings:
a. "EFFECTIVE DATE" means the date the Registration Statement has been
declared effective by the SEC.
b. "EFFECTIVENESS DEADLINE" means the date which is 60 days after the
Fling Deadline, or if there is an SEC review, 120 days after the Filing
Deadline.
c. "FILING DEADLINE" means 30 days after the Company files its Annual
Report on Form 20F for the period ending on December 31, 2007, but in any
event not later than April 15, 2008.
d. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to Rule 415 and the declaration or ordering of effectiveness of such
Registration Statement(s) by the SEC.
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e. "REGISTRABLE SECURITIES" means (i) the Conversion Shares, (ii) the
Warrant Shares issued or issuable upon exercise of the Warrant, and (iii)
any share capital of the Company issued or issuable with respect to the
Conversion Shares and the Warrant Shares as a result of any share split,
share dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on conversions of the Note or exercises
of the Warrant.
f. "REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
the Registrable Securities.
g. "RULE 415" means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous or delayed basis.
h. "SEC" means the United States Securities and Exchange Commission.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall use its best efforts to
prepare, and, as soon as practicable but in no event later than the Filing
Deadline, file with the SEC the Registration Statement on Form F-3 covering
the resale of all of the Registrable Securities. In the event that Form F-3
is unavailable for such a registration, the Company shall use such other
form as is available for such a registration, subject to the provisions of
Section 2(c). The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Effectiveness Deadline.
b. EXCLUSIVITY OF REGISTRABLE SECURITIES. In no event shall the
Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the Investor,
which consent shall not be unreasonably withheld or delayed.
c. INELIGIBILITY FOR FORM F-3. In the event that Form F-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the
Investor and (ii) undertake to register the Registrable Securities on Form
F-3 as soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect
until such time as a Registration Statement on Form F-3 covering the
Registrable Securities has been declared effective by the SEC.
d. SUFFICIENT NUMBER OF SHARES REGISTERED. In the event the number of
shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities required to
be covered by such Registration Statement, the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as to cover
all of the Registrable Securities required to be covered as of the trading
day immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any
event not later than thirty (30) Business Days after the necessity therefor
arises. The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as
practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement
shall be deemed "insufficient to cover all of the Registrable Securities"
if at any time the number of Registrable Securities issued and issuable
upon conversion of the Note and upon exercise of the Warrants covered by
such Registration Statement is greater than 110% of the number of Ordinary
Shares available for resale under such Registration Statement. The
calculation set forth in the foregoing sentence shall be made without
regard to any limitations on the conversion of the Note or the exercise of
the Warrant and such calculation shall assume that the Note is then
convertible into Ordinary Shares at the then prevailing Conversion Rate (as
defined in the Note) and that the Warrant is then exercisable for Ordinary
Shares at the then prevailing Exercise Price (as defined in the Warrant).
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e. FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS OF
REGISTRATION STATEMENT. If (i) a Registration Statement covering all of the
Registrable Securities required to be covered thereby and required to be
filed by the Company pursuant to this Agreement is (A) not filed with the
SEC on or before the Filing Deadline (a "FILING FAILURE") or (B) not
declared effective by the SEC on or before the respective Effectiveness
Deadline (an "EFFECTIVENESS FAILURE") or (ii) on any day after the
Effective Date sales of all of the Registrable Securities required to be
included on such Registration Statement cannot be made pursuant to such
Registration Statement (including, without limitation, because of a failure
to keep such Registration Statement effective, to disclose such information
as is necessary for sales to be made pursuant to such Registration
Statement or to register a sufficient number of Ordinary Shares) (a
"MAINTENANCE FAILURE") then, as partial relief for the damages to Investor
by reason of any such delay in or reduction of its ability to sell the
underlying Ordinary Shares (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to the
Investor relating to such Registration Statement an amount in cash equal to
one (1%) of the aggregate Principal Amount (as such term is defined in the
Note) of the Investor's Registrable Securities included in such
Registration Statement on each of the following dates: (i) the day of a
Filing Failure and on every thirtieth day (pro rated for periods totaling
less than thirty days) thereafter until such Filing Failure is cured; (ii)
the day of an Effectiveness Failure (pro rated for periods totaling less
than thirty days) and on every thirtieth day thereafter until such
Effectiveness Failure is cured; (iii) the initial day of a Maintenance
Failure and on every thirtieth day (pro rated for periods totaling less
than thirty days) thereafter until such Maintenance Failure is cured. The
payments to which the Investor shall be entitled pursuant to this Section
2(e) are referred to herein as "REGISTRATION DELAY PAYMENTS." Registration
Delay Payments shall be paid on the earlier of (I) the last day of the
calendar month during which such Registration Delay Payments are incurred
and (II) the third Business Day after the event or failure giving rise to
the Registration Delay Payments is cured. In the event the Company fails to
make Registration Delay Payments in a timely manner, such Registration
Delay Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2, the Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
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a. The Company shall submit to the SEC, within three (3) Business Days
after the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff has no
further comments on a particular Registration Statement, as the case may
be, a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than 48 hours after the submission
of such request. The Company shall keep each Registration Statement
effective pursuant to Rule 415 at all times until the earlier of (i) the
date as of which the Investor may sell all of the Registrable Securities
covered by such Registration Statement without restriction pursuant to Rule
144(k) (or any successor thereto) promulgated under the 1933 Act or (ii)
the date on which the Investor shall have sold all of the Registrable
Securities covered by such Registration Statement (the "REGISTRATION
PERIOD"). The Company shall ensure that each Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of
the circumstances in which they were made) not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such
period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 6-K, Form 20-F or any analogous report
under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), the
Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is
filed which created the requirement for the Company to amend or supplement
such Registration Statement.
c. The Company shall furnish to the Investor, without charge, (i)
promptly after any Registration Statement is prepared and filed with the
SEC, at least one copy of such Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, and if requested by the Investor and not
otherwise available on the ▇▇▇▇▇ System, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten
(10) copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies as
the Investor may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as the Investor
may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
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d. The Company shall use its reasonable efforts to (i) register and
qualify, unless an exemption from registration and qualification applies,
the resale by Investor of the Registrable Securities covered by a
Registration Statement under such other securities or "blue sky" laws of
all applicable jurisdictions in the United States, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (y) subject itself to general taxation
in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify
Investor of the receipt by the Company of any notification with respect to
the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws of
any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.
e. The Company shall notify the Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of such
event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided that in no event shall
such notice contain any material, nonpublic information), and promptly
prepare a supplement or amendment to such Registration Statement to correct
such untrue statement or omission, and deliver ten (10) copies of such
supplement or amendment to the Investor (or such other number of copies as
the Investor may reasonably request). The Company shall also promptly
notify the Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective, (ii) of any request by the SEC for amendments or supplements to
a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
f. The Company shall use its reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of
the Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension as early as possible and to notify the Investor of the issuance
of such order and the resolution thereof or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
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g. The Company shall hold in confidence and not make any disclosure of
information concerning the Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other final, non-appealable order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning the Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow
such Investor, at the Investor's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such
information.
h. The Company shall use its best efforts either to (i) cause all of
the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure designation and quotation of all of the Registrable
Securities covered by a Registration Statement on the Nasdaq Capital
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(h).
i. The Company shall cooperate with the Investor and, to the extent
applicable, facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable
such certificates to be in such denominations or amounts, as the case may
be, as the Investor may reasonably request and registered in such names as
the Investor may request.
j. If requested by the Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective
amendment such information as the Investor reasonably requests to be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price
being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering; (ii) as soon as practicable make
all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor holding any Registrable Securities.
k. The Company shall use its reasonable efforts to cause the
Registrable Securities covered by a Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be necessary to consummate the disposition of such Registrable Securities.
l. The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying
with, and in the manner provided by, the provisions of Rule 158 under the
▇▇▇▇ ▇▇▇) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the effective date of a
Registration Statement.
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m. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.
4. OBLIGATIONS OF THE INVESTOR.
a. At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify the
Investor in writing of the information the Company requires from the
Investor. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities that the Investor shall furnish to
the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may reasonably request.
b. The Investor, by acceptance of the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder.
c. The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until the Investor's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3(e) or
receipt of notice that no supplement or amendment is required.
Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended Ordinary Shares to a transferee of an
Investor in connection with any sale of Registrable Securities with respect
to which an Investor has entered into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of any
event of the kind described in Section 3(e) and for which the Investor has
not yet settled.
d. The Investor covenants and agrees that he will comply with the
prospectus delivery requirements of the 1933 Act as applicable to him in
connection with sales of Registrable Securities pursuant to any
Registration Statement.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company. The Company shall also
reimburse the Investor for the standard and customary fees and disbursements of
legal counsel to the Investor in connection with registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement.
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6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor, the
Investor's employees, agents, and representatives (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid
in settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory
agency, body or the SEC, whether pending or threatened, whether or not an
Indemnified Person is or may be a party thereto ("INDEMNIFIED DAMAGES"), to
which any of them may become subject insofar as such Claims arise out of or
are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements
therein were made, not misleading, (iii) any violation or alleged violation
by the Company of the 1933 Act, the 1934 Act, any other law, including,
without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities
pursuant to a Registration Statement or (iv) any material violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "VIOLATIONS"). Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company
pursuant to Section 3; (ii) with respect to any preliminary prospectus,
shall not inure to the benefit of any such Person from whom the Person
asserting any such Claim purchased the Registrable Securities that are the
subject thereof (or to the benefit of any Person controlling such Person)
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to
a violation and such Indemnified Person, notwithstanding such advice, used
it or failed to deliver the correct prospectus as required by the 1933 Act
and such correct prospectus was timely made available pursuant to Section
3; (iii) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, including a corrected prospectus,
if such prospectus or corrected prospectus was timely made available by the
Company pursuant to Section 3; and (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld or delayed.
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b. In connection with any Registration Statement, the Investor agrees
to indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person,
if any, who controls the Company within the meaning of the 1933 Act or the
1934 Act (each, an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the
1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement;
and, subject to Section 6(c), the Investor will reimburse any legal or
other expenses reasonably incurred by an Indemnified Party in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of the Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a
Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the case may be; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the
fees and expenses of not more than one counsel for such Indemnified Person
or Indemnified Party to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Indemnified Party or Indemnified Person shall cooperate
fully with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person reasonably apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim
or proceeding effected without its prior written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay
or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to
the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action.
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d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no Person
involved in the sale of Registrable Securities and who is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) in
connection with such sale, shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.
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8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable provisions
of Rule 144; and
c. furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual report
of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by the
Investor to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; and (iv) at
or before the time the Company receives the written notice contemplated by
clause (ii) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.
10. RIGHT OF FIRST REFUSAL.
For the eighteen (18) month period following the Effective Date, the
Investor will have a right of first refusal to participate, to the extent
determined by the Investor, in any Financing Transaction (as defined hereafter)
to be commenced by the Company during that period. "Financing Transaction" means
the offer by the Company of any debt or equity securities for any purpose other
than compensation to employees, consultants and directors and does not include
(a) a firm commitment, fully underwritten public offering by the Company with
minimum proceeds to the Company of at least $25,000,000 or (b) a rights offering
made by the Company pro rata to its existing stockholders, including the
Investor on an "as converted" basis.
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11. MISCELLANEOUS.
a. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) three (3) Business Days
after deposit with a internationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be those
detailed in the Note.
b. Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of
the Company and the Investor.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
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e. This Agreement, the Note and the Warrant constitute the entire
agreement among the parties hereto with respect to the subject matter
hereof and thereof. This Agreement, the Note and the Warrant supersede all
prior agreements and understandings among the parties hereto with respect
to the subject matter hereof.
f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.
k. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
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IN WITNESS WHEREOF, the Investor and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.
INVESTOR: COMPANY:
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇ ELECTRONIC INDUSTRIES LTD.
By: ____________________ By: _________________________
Name:
Title: