1
EXHIBIT 10.9
SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This is the second amendment (the "Amendment"), dated February 8, 2000,
by and between CRESCENT INTERNATIONAL LIMITED (the "Investor"), an entity
organized and existing under the laws of Bermuda, and FRANKLIN
TELECOMMUNICATIONS CORP. (the "Company"), a corporation organized and existing
under the laws of the State of California, to the Registration Rights Agreement,
dated August 30, 1999, as amended by the Amendment to Registration Rights
Agreement, dated September 14, 1999 (the "Agreement") by and between the
Investor and the Company. All capitalized terms used and not otherwise defined
herein shall have the same meanings as when used in the Stock Purchase
Agreement, dated August 30, 1999, as amended by the Amendment to Stock Purchase
Agreement dated September 14, 1999, and as further amended by the Second
Amendment to Stock Purchase Agreement, dated as of the date hereof (as amended,
the "Stock Purchase Agreement").
WHEREAS, pursuant to the terms of the Stock Purchase Agreement, the
Investor purchased and the Company issued and sold shares of Common Stock
through the Early Put for an Investment Amount of $2,000,000;
WHEREAS, on the date hereof the Investor is purchasing and the Company
is issuing and selling additional shares of Common Stock through the February
Put for an Investment Amount of $1,500,000; and
WHEREAS, the Investor and the Company desire to amend the Agreement to
reflect their current agreements concerning registration for resale of
Registrable Securities relating to the February Put;
NOW, THEREFORE, the parties agree as follows:
1. The first WHEREAS clause of the Agreement is amended and restated in its
entirety to read as follows:
WHEREAS, the Company and the Investor have entered into that certain Stock
Purchase Agreement, dated as of August 30, 1999, as amended by that certain
Amendment to Stock Purchase Agreement, dated as of September 14, 1999, and
as further amended by that certain Second Amendment to Stock Purchase
Agreement, dated as of the date hereof (as amended, the "Stock Purchase
Agreement"), pursuant to which the Company will issue, from time to time,
to the Investor up to $6,500,000 worth of shares of Common Stock, no par
value per share, of the Company (the "Common Stock");
2. Section 1.1(a) of the Agreement is amended and restated in its entirety to
read as follows:
a. Filing of Registration Statements. The Company shall register for
resale all Put Shares issued or issuable to the Investor pursuant to the
Stock Purchase Agreement and all Warrant Shares issued or issuable upon
full exercise of the Warrants. Subject to the terms and conditions of this
Agreement, the Company shall effect such registration in the manner
2
provided in either (i) or (ii) below. The Company shall file with the SEC
either:
(i) on or before September 22, 1999, a registration statement
(the "Initial Registration Statement") on such form promulgated by the
SEC for which the Company qualifies, that counsel for the Company
shall deem appropriate and which form shall be available for the sale
of the shares of Common Stock purchased by the Investor pursuant to
the Early Put (the "Initial Shares"), the Incentive Warrant Shares and
the Early Put Warrant Shares. The aggregate number of shares to be
registered under the Initial Registration Statement shall be equal to
two hundred percent (200%) of the number of Initial Shares, plus the
number of Incentive Warrant Shares. No later than March 9, 2000, the
Company shall file with the SEC a registration statement (the
"February Put Registration Statement") on such form promulgated by the
SEC for which the Company qualifies, that counsel for the Company
shall deem appropriate and which form shall be available for the sale
of Registrable Securities relating to the February Put. The aggregate
number of shares of Common Stock to be registered under the February
Put Registration Statement shall be equal to two hundred percent
(200%) of the number of February Put Shares. Prior to any Put
subsequent to the February Put, the Company shall file with the SEC a
registration statement (the "Subsequent Registration Statement" and
together with the Initial Registration Statement and the February Put
Registration Statement, the "Registration Statements" and each a
"Registration Statement") on such form promulgated by the SEC for
which the Company qualifies, that counsel for the Company shall deem
appropriate and which form shall be available for the sale of the
shares of Common Stock to be purchased by the Investor and any Warrant
Shares which have not previously been registered. The aggregate number
of shares to be registered under the Subsequent Registration Statement
shall be equal to 125% of (X-Y)/Z, where X is the Maximum Commitment
Amount, Y is the sum of the Investment Amount of the Early Put and the
Investment Amount for the February Put and Z is 92% of the Minimum Bid
Price; or
(ii) on or before March 9, 2000, a registration statement (the
"Combined Registration Statement") on such form promulgated by the SEC
for which the Company qualifies, that counsel for the Company shall
deem appropriate and which form shall be available for the sale of all
Put Shares issued or issuable, and which have not already been
registered, pursuant to the terms of the Stock Purchase Agreement and
all Warrant Shares issued or issuable, and which have not already been
registered, upon full exercise of the Warrants, including, without
limitation, the February Put Shares and the February Put Warrant
Shares. The aggregate number of shares to be registered under the
Combined Registration Statement shall be equal to 150% of (A-B)/C,
where A is the Maximum Commitment Amount, B is the Investment Amount
of the Early Put and C is 92% of the Minimum Bid Price.
2
3
3. Section 1.1(b) of the Agreement is amended and restated in its entirety to
read as follows:
b. Effectiveness of the Registration Statements. The Company shall use
its best efforts either: (i) to have the Initial Registration Statement
declared effective by the SEC in no event later than ninety-seven (97)
calendar days after the Subscription Date, and to have the February Put
Registration Statement declared effective by the SEC no later than June 7,
2000, and to have the Subsequent Registration Statement declared effective
by the SEC in no event later than June 7, 2000 or (ii) to have the Combined
Registration Statement declared effective by the SEC in no event later than
June 7, 2000. The Company shall ensure that all Registration Statements
remain in effect for a period ending 180 days following the earlier of
termination of the Commitment Period and termination of the Investor's
obligations pursuant to Section 2.4 of the Stock Purchase Agreement;
provided that such period shall be extended one day for each day after the
applicable Effective Date that any Registration Statement covering
Registrable Securities is not effective during the period such Registration
Statement is required to be effective pursuant to this Agreement; and
provided further that the Company shall not be required to ensure that any
Registration Statement covering Registrable Securities remain in effect for
such 180 day period if the shares registered thereunder shall have become
freely tradable pursuant to Rule 144(k) of the Securities Act or have
otherwise been sold.
4. Section 1.1(e) of the Agreement is amended and restated in its entirety to
read as follows:
e. Failure to Register Sufficient Number of Shares.
(i) If the Early Put Warrant shall become exercisable for a
number of shares in excess of the number of Early Put Warrant Shares
included in the Initial Registration Statement ("Excess Shares"), then
the Company shall immediately amend such Registration Statement (or
file a new Registration Statement) to cover the Excess Shares (such
amended or new Registration Statement is referred to herein as an
"Excess Registration Statement") and the Company shall pay to the
Investor in immediately available funds into an account designated by
the Investor an amount equal to one and a half percent (1.5%) of the
product of (x) the number of Excess Shares multiplied by (y) the Bid
Price of the Common Stock on the applicable Effective Date, for each
calendar month and for each portion of a calendar month, pro rata,
during the period from the Effective Date of the applicable
Registration Statement and the Effective Date of the applicable Excess
Registration Statement.
(ii) If the February Put Warrant shall become exercisable for a
number of shares in excess of the number of February Put Warrant
Shares included in the February Put Registration Statement ("February
Excess Shares"), then the Company shall immediately amend such
Registration Statement (or file a new Registration Statement) to cover
the February Excess Shares (such amended or new Registration Statement
is referred to herein as a "February Excess Registration Statement")
and the Company shall pay to the Investor in immediately available
funds into an account designated by the Investor an amount equal to
one and a half percent (1.5%) of the product of (x) the number of
February Excess Shares multiplied by (y) the
3
4
Bid Price of the Common Stock on the Effective Date of the February
Put Registration Statement, for each calendar month and for each
portion of a calendar month, pro rata, during the period from the
Effective Date of the February Put Registration Statement until the
Effective Date of the February Excess Registration Statement.
5. Section 4.9 of the Agreement is amended and restated in its entirety to
read as follows:
Section 4.9. GOVERNING LAW. This Agreement shall be construed under
the laws of the State of New York.
6. Copies of any notices, demands, requests, consents, approvals and other
communications required to be sent to ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP pursuant to
Section 4.8 shall instead be sent to ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇,
Esq./▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (212)
878-8375
4
5
IN WITNESS WHEREOF, this Amendment has been entered into on the day and
year first herein written.
CRESCENT INTERNATIONAL LIMITED
By: /s/ ▇▇▇ ▇▇▇▇ /s/ Maxi Brezzi
--------------------------------
Name: ▇▇▇ ▇▇▇▇ Maxi Brezzi
Title:
FRANKLIN TELECOMMUNICATIONS CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: VP - CFO
5