Exhibit 10(h)
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of January 15, 1999, is made and entered into by and between SYTRON
INC., a corporation organized and existing under the laws of the Commonwealth of
Pennsylvania (the "Company"), and CRESCENT INTERNATIONAL LIMITED, an entity
organized and existing under the laws of Bermuda (the "Investor").
WHEREAS, the Company and the Investor entered into a Private Equity Line
Agreement, dated as of May 14, 1998 (the "Equity Line Agreement");
WHEREAS, pursuant to the terms of the Equity Line Agreement, the Company
has issued to the Investor 166,667 shares of Common Stock;
WHEREAS, pursuant to the terms of the Equity Line Agreement, the Company
has issued to the Investor a warrant dated as of May 14, 1998, exercisable from
time to time within five (5) years following the date of issuance (the
"Warrant") for the purchase of an aggregate of up to 100,000 shares of Common
Stock at a price specified in such Warrant;
WHEREAS, the parties have agreed to terminate the Equity Line Agreement and
shall terminate the Equity Line Agreement on the date hereof;
WHEREAS, the Company and the Investor have entered into that certain Note
Purchase Agreement, dated as of the date hereof (the "Note Purchase Agreement"),
pursuant to which, upon certain terms and subject to certain conditions, the
Company has the right to issue and sell to the Investor and the Investor has the
obligation to purchase up to $750,000 worth of convertible notes (the
"Convertible Notes");
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor's agreement to enter into the Note Purchase Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the securities issued to the Investor and any additional shares of Common Stock
issued or distributed to the Investor by way of a dividend, stock split, or
other distribution with respect of the Shares, or acquired by way of any rights
offering or similar offering made in respect of the shares (collectively, the
"Registrable Securities");
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrants, in the
Convertible Notes and in the Note Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows (capitalized terms used herein and not defined herein shall have the
respective meanings ascribed to them in the Note Purchase Agreement):
1
ARTICLE I
REGISTRATION RIGHTS
SECTION 1.1. REGISTRATION STATEMENTS.
(a) Filing of Registration Statements. Subject to the terms and
conditions of this Agreement the Company shall file with the SEC on or before:
(i) January 31, 1999, a registration statement or statements 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 Put Shares, the maximum number of shares of Common Stock into which
Convertible Note No. 1 could be converted, the Commitment Shares, the Warrant
Shares and the Indemnity Shares (the "Initial Registration Statement"); and
(ii) the end of a thirty (30) calendar day period immediately
following the date of issuance of Convertible Note No. 2, 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 maximum number of shares of Common Stock into
which Convertible Note No. 2 could be converted (the "Second Registration
Statement" and together with the Initial Registration Statement, the
"Registration Statements").
(b) Effectiveness of the Registration Statements. The Company shall
use its best efforts: (i) to have the Initial Registration Statement declared
effective by the SEC in no event later than 150 days after such Registration
Statement has been filed, (ii) to have the Second Registration Statement
declared effective by the SEC in no event later than ninety (90) calendar days
after the date of issuance of Convertible Note No. 2 and (iii) to ensure that
each Registration Statement remains in effect for a period ending 180 days
following termination of the Commitment Period; provided that such period shall
be extended one day for each day after the applicable Effective Date, that a
Registration Statement covering is not effective during the period such
Registration Statement is required to be effective pursuant to this Agreement.
(c) Failure to Obtain or Maintain Effectiveness of Registration
Statements. In the event the Company fails for any reason (including, without
limitation, the occurrence or continuation of any Blackout Period (as defined in
Section 2.1 (p)) to obtain the effectiveness of a Registration Statement within
the time periods set forth in Section 1.1(b) or to maintain the effectiveness of
a Registration Statement (or the underlying prospectus) throughout the period
set forth in Section 4.2 and the Investor holds any Registrable Securities at
any time during any period of such ineffectiveness (an "Ineffective Period"),
then in either event the Company shall pay to the Investor in immediately
available funds into an account designated by the Investor (i) with respect to
the Initial Registration Statement, an amount equal to six thousand dollars
($6,000) for each calendar month (or portion thereof) during an Ineffective
Period and (ii) with respect to the Second Registration Statement, an amount
equal to four thousand dollars ($4000) for each calendar month (or portion
thereof) during an Ineffective Period. Such payments shall be made on the first
Trading Day after the earlier to occur of (i) the expiration of the applicable
Ineffective Period and (ii) the last day of each calendar month during an
Ineffective Period. On the date hereof, the Company shall place $50,000 in
escrow, which amount shall be released to the Company on the date the Initial
2
Registration Statement is declared effective by the SEC. On the date that the
Company issues and sells, and the Investor purchases Convertible Note No. 2, the
Company shall place $30,000 in escrow, which amount shall be released to the
Company on the date the Second Registration Statement is declared effective by
the SEC. Such amounts shall be applied against the liquidated damages referred
to in clauses (i) and (ii) of this Section 1.1(c) until the applicable
Registration Statement is declared effective by the SEC.
(d) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the sums payable under subsection 1(c) above shall
constitute liquidated damages and not penalties. The parties further acknowledge
that (i) the amount of loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (ii) the amounts specified in such subsections
bear a reasonable proportion and are not plainly or grossly disproportionate to
the probable loss likely to be incurred in connection with any failure by the
Company to obtain or maintain the effectiveness of a Registration Statement,
(iii) one of the reasons for the Company and the Investor reaching an agreement
as to such amounts was the uncertainty and cost of litigation regarding the
question of actual damages, and (iv) the Company and the Investor are
sophisticated business parties and have been represented by sophisticated and
able legal and financial counsel and negotiated this Agreement at arm's length.
ARTICLE II
REGISTRATION PROCEDURES
SECTION 2.1. FILINGS; INFORMATION. The Company will effect the registration
of such Registrable Securities in accordance with the intended methods of
disposition thereof as furnished to the Company by any proposed seller of such
Registrable Securities. Without limiting the foregoing, the Company in each such
case will do the following as expeditiously as possible, but in no event later
than the deadline, if any, prescribed therefor in this Agreement:
(a) The Company shall (i) prepare and file with the SEC Registration
Statements on Form SB-1 or such other form promulgated by the SEC for which the
Company then qualifies, that counsel for the Company shall deem appropriate and
which form shall be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the provisions of this Agreement and in
accordance with the intended method of distribution of such Registrable
Securities); (ii) use its best efforts to cause such filed Registration
Statements to become and remain effective (pursuant to Rule 415 under the
Securities Act or otherwise); (iii) prepare and file with the SEC such
amendments and supplements to such Registration Statements and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statements effective for the time periods prescribed by Section 1.1(b); and (iv)
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the Investor set forth in
such Registration Statement.
(b) The Company shall file all necessary amendments to a Registration
Statement in order to effectuate the purpose of this Agreement, the Note
Purchase Agreement, the Warrant and the Convertible Notes.
(c) If so requested by the managing underwriters (if any), with
respect to, or the holders of, a majority in aggregate amount of the Registrable
Securities to be sold in connection with the filing of a Registration Statement
3
under the Securities Act for the offering on a continuous or delayed basis in
the future of all of the Registrable Securities (a "Shelf Registration"), the
Company shall (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters, if any,
and such holders agree should be included therein, and (ii) make all required
filings of such prospectus supplement or post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any action
pursuant to this Section 2.1(c)(ii) that would, in the opinion of counsel for
the Company, violate applicable law.
(d) In connection with the filing of a Shelf Registration, the Company
shall enter into such agreements and take all such other reasonable actions in
connection therewith (including those reasonably requested by the managing
underwriters (if any), with respect to, or the holders of, a majority in
aggregate amount of the Registrable Securities being sold) in order to expedite
or facilitate the disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, the Company shall (i)
make such representations and warranties to the holders of such Registrable
Securities and the underwriters, if any, with respect to the business of the
Company (including with respect to businesses or assets acquired or to be
acquired by the Company), and any Registration Statement, prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings, and confirm such
representations and warranties if and when requested; (ii) if an underwriting
agreement is entered into, it shall contain indemnification provision and
procedures no less favorable to the selling holders of such Registrable
Securities and the underwriters, if any, than those set forth herein (or such
other provisions and procedures acceptable to the holders of a majority in
aggregate amount of Registrable Securities covered by such Registration
Statement and such managing underwriters, if any); and (iii) deliver such
documents and certificates as may be reasonably requested by the holders of a
majority in aggregate amount of the Registrable Securities being sold, their
counsel and the managing underwriters, if any, to evidence the continued
validity of their representations and warranties made pursuant to clause (i)
above and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
(e) Five (5) Trading Days prior to filing a Registration Statement or
prospectus, or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein), the
Company shall deliver to the Investor and one firm of counsel representing the
Investor, in accordance with the notice provisions of Section 4.8, copies of
such Registration Statement as proposed to be filed, together with exhibits
thereto, which documents will be subject to review and comment by the Investor
and such counsel, and thereafter deliver to the Investor and such counsel, in
accordance with the notice provisions of Section 4.8, such number of copies of
the Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in the Registration
Statement (including each preliminary prospectus) and such other documents or
information as the Investor or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities.
4
(f) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable Securities covered by a
Registration Statement such number of conformed copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in the Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
seller's Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of its Registrable Securities.
(g) After the filing of a Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(h) The Company shall use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as the Investor may reasonably (in light of
its intended plan of distribution) request, and (ii) cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities in the United States as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable the Investor to
consummate the disposition of the Registrable Securities; provided, however,
that the Company will not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (h), subject itself to taxation in any such jurisdiction, or consent
or subject itself to general service of process in any such jurisdiction.
(i) The Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities: (i)
receipt of any request by the SEC or any other federal or state governmental
authority for additional information, amendments or supplements to a
Registration Statement or related prospectus; (ii) the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) except during a Blackout
Period, the happening of any event that makes any statement made in a
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in a Registration Statement, related
prospectus or documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
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; (v) the declaration by the SEC of the effectiveness of a
Registration Statement and (vi) the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate and,
except during a Blackout Period, the Company will promptly make available to the
Investor any such supplement or amendment to the related prospectus.
5
(j) The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).
(k) The Company shall make available to the Investor (and will deliver
to Investor's counsel), subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, concerning a Registration
Statement, and except during a Blackout Period, will also make available for
inspection by the Investor and any attorney, accountant or other professional
retained by the Investor (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers
and employees to supply all information reasonably requested by any Inspectors
in connection with a Registration Statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in a Registration Statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided,
however, that prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waive such Inspectors' obligation not to disclose such Records; and, provided,
further , that if failing the entry of a protective order or the waiver by the
Company permitting the disclosure or release of such Records, the Inspectors,
upon advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records that counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Investor agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Investor after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its affiliates unless
and until such information is made generally available to the public. The
Investor further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
(l) To the extent required by law or reasonably necessary to effect a
sale of Registrable Securities in accordance with prevailing business practices
at the time of any sale of Registrable Securities pursuant to a Registration
Statement, the Company shall deliver to the Investor a signed counterpart,
addressed to the Investor, of (1) an opinion or opinions of counsel to the
Company, and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Investor therefor reasonably requests.
6
(m) The Company shall otherwise comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.
(n) The Company shall appoint a transfer agent and registrar for all
of the class that includes the Registrable Securities covered by such
Registration Statement not later than the effective date of such Registration
Statement.
(o) The Company may require the Investor to promptly furnish in
writing to the Company such information as may be legally required in connection
with such registration including, without limitation, information regarding the
intended method of disposition of Registrable Securities, all such information
as may be requested by the SEC or the National Association of Securities
Dealers. The Investor agrees to provide such information requested in connection
with such registration within ten (10) business days after receiving such
written request and the Company shall not be responsible for any delays in
obtaining or maintaining the effectiveness of a Registration Statement caused by
the Investor's failure to timely provide such information. Each seller of
Registrable Securities shall notify the Company as promptly as practicable of
any inaccuracy or change in information previously furnished by such seller to
the Company or of the occurrence of any event, in either case as a result of
which any prospectus relating to the Registrable Securities contains or would
contain an untrue statement of a material fact regarding such seller or its
intended method of disposition of such Registrable Securities or omits to state
any material fact regarding such seller or such seller's intended method of
disposition of such Registrable Securities 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, and promptly furnish to the Company
any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such seller or the disposition of such Registrable Securities,
an 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 light
of the circumstances under which they were made, not misleading.
(p) Notwithstanding anything in this Agreement to the contrary, the
Company shall be entitled to postpone for a period of time in its reasonable
judgment, but not to exceed 120 days (a "Blackout Period"), the filing of a
Registration Statement in accordance with this Agreement, and the preparation
and/or filing of any prospectus or any amendments or supplements to a
Registration Statement or prospectus, if the Company reasonably determines that
any such filing or the offering of any Registrable Securities would (i) impede,
delay or otherwise interfere with any financing, offer or sale of securities,
acquisition, corporate reorganization or other significant transaction involving
the Company or any of its affiliates, or (ii) require disclosure of material
information that, if disclosed at that time, would be harmful to the interests
of the Company and its stockholders; provided, however, that, during the
Blackout Period pursuant to (ii) above, the Blackout Period shall earlier
terminate upon public disclosure by the Company or public admission by the
Company of such material information. Upon notice by the Company to any holder
of Registrable Securities of such determination, the holder covenants that it
shall (i) keep the fact of any such notice strictly confidential, (ii) promptly
halt any offer, sale, trading or transfer by it or any of its affiliates of any
7
of the Registrable Securities for the duration of the Blackout Period set forth
in such notice (or until earlier terminated in writing by the Company) and (iii)
promptly halt any use, publication, dissemination or distribution of a
Registration Statement, each prospectus included therein, and any amendment or
supplement thereto by it and any of its affiliates for the duration of the
Blackout Period set forth in such notice (or until earlier terminated in writing
by the Company). During any Blackout Period, liquidated damages shall accrue
pursuant to Section 1(c) hereof, at a rate of six thousand dollars ($6,000) per
calendar month.
SECTION 2.2. REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities exchange
listing and fees required by the National Association of Securities Dealers,
(ii) all registration, filing, qualification and other fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) all of the Company's word processing,
duplicating, printing, messenger and delivery expenses, (iv) the Company's
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred by the Company in connection with the listing of the
Registrable Securities, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with the delivery by independent
certified public accountants of such special audit(s) or comfort letter(s)
requested pursuant to Section 2.1(l) hereof), (vii) the fees and expenses of any
special experts retained by the Company in connection with such registration,
(viii) premiums and other costs of policies of insurance purchased at the
discretion of the Company against liabilities arising out of any public offering
of the Registrable Securities being registered, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
SECTION 3.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Investor, its partners, affiliates, officers,
directors, employees and duly authorized agents, and each Person or entity, if
any, who controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the partners,
Affiliates, officers, directors, employees and duly authorized agents of such
controlling Person or entity (collectively, the "Controlling Persons"), from and
against any loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements and costs and
expenses of investigating and defending any such claim) (collectively,
"Damages"), joint or several, and any action or proceeding in respect thereof to
which the Investor, its partners, affiliates, officers, directors, employees and
duly authorized agents, and any Controlling Person, may become subject under the
8
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are based upon, 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, and shall reimburse the Investor,
its partners, affiliates, officers, directors, employees and duly authorized
agents, and each such Controlling Person, for any legal and other expenses
reasonably incurred by the Investor, its partners, affiliates, officers,
directors, employees and duly authorized agents, or any such Controlling Person,
as incurred, in investigating or defending or preparing to defend against any
such Damages or actions or proceedings; provided, however, that the Company
shall not be liable to the extent that any such Damages arise out of the
Investor's failure to send or give a copy of the final prospectus or supplement
to the persons asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such person if such statement or omission was
corrected in such final prospectus or supplement; provided, further, that the
Company shall not be liable to the extent that any such Damages arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, or any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Investor or any other person who participates as a seller or as
an underwriter in the offering or sale of such securities, in either case,
specifically stating that it is for use in the preparation thereof.
Each seller of any Registrable Securities shall, and the Company may
require (as a condition to entering into any underwriting or similar agreement
with respect to the offer or sale of any Registrable Securities) that the
Company shall have received an undertaking reasonably satisfactory to it from
each agent or underwriter named in any such agreement to, (i) indemnify the
Company, its affiliates, officers, directors, employees and duly authorized
agents and any Controlling Persons from and against any Damages, joint or
several, and any action or proceeding in respect thereof to which the Company,
its affiliates, officers, directors, employees and duly authorized agents and
any Controlling Person may become subject under the Securities Act or otherwise,
as incurred, insofar as such Damages (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Registration Statement, or
any preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by that seller or any other person who participates with that
seller or as an underwriter in the offering or sale of such securities, in
either case, specifically stating that it is for use in preparation of a
Registration Statement; provided, however, such indemnification shall in no
event exceed $150,000.
SECTION 3.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by any person or entity in respect of which indemnity may be sought pursuant to
Section 3.1 (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity may be sought
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the
9
claim or the commencement of such action. In the event an Indemnified Party
shall fail to give such notice as provided in this Section 3.2 and the
Indemnifying Party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, the indemnification provided for in Section 3.1
shall be reduced to the extent of any actual prejudice resulting from such
failure to so notify the Indemnifying Party; provided, however, that the failure
to notify the Indemnifying Party shall not relieve the Indemnifying Party from
any liability that it may have to an Indemnified Party otherwise than under
Section 3.1. If any such claim or action shall be brought against an Indemnified
Party, and it shall notify the Indemnifying Party thereof, the Indemnifying
Party shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified Indemnifying Party, to assume
the defense thereof with counsel reasonably satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or action, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its Controlling Persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
the Company and such Indemnified Party, representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
SECTION 3.3. OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
10
SECTION 3.4. CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any Damages
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and the Investor or seller on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Investor or
seller in connection with such statements or omissions, as well as other
equitable considerations. The relative fault of the Company on the one hand and
of the Investor or seller on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Investor agree that it would not be just and equitable
if contribution pursuant to this Section 3.4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor or seller shall in no event be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of the Investor or seller were sold to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
the Investor or seller has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. NO OUTSTANDING REGISTRATION RIGHTS. Except as set forth on
Schedule 4.1, the Company represents and warrants to the Investor that there is
not in effect on the date hereof any agreement by the Company pursuant to which
any holders of securities of the Company have a right to cause the Company to
register or qualify such securities under the Securities Act or any securities
or blue sky laws of any jurisdiction.
SECTION 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities.
Notwithstanding the foregoing, paragraphs (c) and (d) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.
SECTION 4.3. RULE 144. If the Company is required to file reports under the
Exchange Act, the Company will file in a timely manner, information, documents
and reports in compliance with the Securities Act and the Exchange Act and will,
at its expense, promptly take such further action as holders of Registrable
11
Securities may reasonably request to enable such holders of Registrable
Securities to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act ("Rule 144"), as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. If at
any time the Company is not required to file such reports, it will, at its
expense, forthwith upon the written request of any holder of Registrable
Securities who intends to make a sale under Rule 144, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
financial officer, as to whether it has complied with such requirements. This
Section 9.3 shall terminate at the same time as the registration rights as
provided in Section 9.2.
SECTION 4.4. CERTIFICATE. The Company will, at its expense, forthwith upon
the request of any holder of Registrable Securities, deliver to such holder a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
SECTION 4.5. AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
both parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
SECTION 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement and agree
to be bound by the provisions of this Agreement as a condition to such holder's
claim to any rights hereunder. This Agreement, together with the Note Purchase
Agreement, the Security Agreement and the Warrant(s) sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
12
SECTION 4.7. SEPARABILITY. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
SECTION 4.8. NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing and
shall be (i) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (ii) delivered by reputable air courier service with
charges prepaid, or (iii) transmitted by hand delivery, telegram or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
If to the Company:
Sytron, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., or
▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Investor:
Crescent International Limited
Greenlight (Switzerland) SA
84, av Louis-Casai, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇/Maxi Brezzi
Telephone: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
Facsimile: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
13
with a copy (which communication shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq./▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 4.8 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the other
party hereto.
SECTION 4.9. GOVERNING LAW. This Agreement shall be construed under the
laws of the State of New York.
SECTION 4.10. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
SECTION 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
SECTION 4.12. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
SECTION 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
SECTION 4.14. REMEDIES. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision may be inadequate
compensation for any loss.
14
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Registration Rights Agreement to be executed by the undersigned,
thereunto duly authorized, as of the date first set forth above.
SYTRON INC.
By:
-----------------------------------
Name
Title
CRESCENT INTERNATIONAL LIMITED
By:
-----------------------------------
Name
Title
15