REGISTRATION UNDERTAKING
This Registration Undertaking (this "Agreement") is made and
entered into as of February 3, 1997 by American Film Technologies, Inc., a
Delaware corporation (the "Company") for the benefit of ▇▇▇▇▇ ▇▇▇▇▇▇ (the
"Holder") in connection with that certain Secured Note Purchase Agreement dated
as of February 3, 1997 between the Company and the Holder (the "Purchase
Agreement").
NOW, THEREFORE, in consideration of the mutual
representations, covenants and agreements contained herein, the Company hereto
agrees and undertakes as follows:
1. Piggyback Registration.
(a) Registrable Securities: The term "Registrable
Securities" means each of the following:
(i) the Shares as such term is defined in the
Purchase Agreement; and
(ii) any other shares or securities or distributions
resulting from a reverse split, stock split, stock dividend, reclassification of
the capital stock of the Company, consolidation or reorganization of the
Company, and any shares or other securities of the Company or of any successor
company which the Holder may receive by virtue of their ownership of the Shares
or may be entitled to receive pursuant to the Purchase Agreement;
provided, however, that any of the securities described in the foregoing clauses
(i) and (ii) shall be treated as Registrable Securities only if and so long as
(x) they are held by the Holder or the Holder's estate or legatee(s), (y) have
not been sold or disposed of, pursuant to a registration statement covering such
Registrable Securities which has been declared effective pursuant to the
Securities Act of 1933, as amended (the "Act") or if such securities have not
been sold or disposed of such registration statement including the Registrable
Securities remains effective; or (z) have not been sold or disposed of to the
public pursuant to Rule 144 (or any similar provision then in force) promulgated
under the Act.
(b) Piggyback Registration Rights. Subject to the terms
and conditions contained in this Agreement, during the Piggyback Period, as
hereinafter defined, the Holder shall be entitled to include in any Piggyback
Registration Statement, as hereinafter defined, all Registrable Securities.
(c) Piggyback Period. Except as otherwise provided
herein, the Holder shall be entitled to include all or any portion of the
Registrable Securities held by Holder in a Piggyback Registration Statement, as
such term is hereinafter
defined, during the period commencing as of the date hereof and ending on the
first to occur of: (i) September 19, 1999; (ii) all of the Registrable
Securities which Holder desires to sell can be sold in one sale pursuant to Rule
144(k) or any successor rule of similar provision; or (iii) the sale of the
Registrable Securities have been or could have been included as part of a
Registration Statement which has been declared effective by the Securities and
Exchange Commission (the "SEC") and if the Registrable Securities are included
therein, the effectiveness thereof is not terminated prior to the contemplated
distribution period (the "Piggyback Period").
(d) Notice of Registration. In the event that during the
Piggyback Period the Company proposes to file a registration statement to
register under the Act, the sale or other transfer of any class of its
securities of which the Registrable Securities are a part: (i) by the Company
(the "Company Securities"); or (ii) by any other present or future holder of the
Company's securities (the "Shareholder Securities") (the Company Securities and
Shareholder Securities hereinafter collectively referred to as the Registration
Securities), the Company shall deliver to the Holder, at least twenty (20) days
prior to the filing with the Commission of the registration statement covering
such Registration Securities (the "Piggyback Registration Statement"), a written
notice (a "Registration Notice") of its intention so to register such offering
of Registration Securities and the manner in which such Registration Securities
are proposed to be sold.
(e) Supplemental Notice. In the event that a
Registration Notice shall have been delivered, the Holder may elect to include
in the offering covered by the Piggyback Registration Statement all or a portion
of the Registrable Securities by delivering notice to the Company (the
"Supplemental Notice") on or before the tenth (10th) day after delivery of the
Registration Notice specifying the number of shares of Registrable Securities
(the "Piggyback Securities") proposed to be sold or otherwise transferred by the
Holder. In the event the Holder fails to notify the Company of its election to
include all or any portion of the Registrable Securities in such Piggyback
Registration Statement in a timely manner; Holder's Piggyback Registration
Rights pursuant to this Agreement shall automatically terminate as to that
portion of the Registrable Securities with respect to which a notice has not
been received.
(f) Registration of Supplemental Registration
Securities. Subject to the terms, conditions, restrictions and limitations
contained elsewhere herein, from and after receipt of a Supplemental Notice, the
Company shall use its best efforts to cause the Piggyback Securities to be
registered under the Act pursuant to the Piggyback Registration Statement,
subject to the sale or other transfer thereof prior to the effectiveness of the
Piggyback Registration Statement, and to effect and to comply with all
qualifications, compliances and requirements necessary
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to permit the sale or other transfer of the Piggyback Securities pursuant to the
Piggyback Registration Statement, including, without limitation, qualifications
under the applicable blue sky or other state securities laws.
(g) Priorities.
(i) Underwritten Offerings by the Company. If, in
the case of delivery of a Supplemental Notice relating to an underwritten
offering of securities proposed to be made by the Company, the managing
underwriter shall make a determination, in its sole discretion, in a writing
delivered to the Company and the Holder that inclusion of some or all of the
Piggyback Securities together with the Registration Securities, which are to be
included in such Piggyback Registration Statement would have an adverse effect
on the proposed distribution of the Company Securities ("Adverse Distribution
Effect"), then the Company shall, upon written notice to the Holder and to all
holders of Shareholder Securities included in such Piggyback Registration
Statement only the number of securities other than Company Securities which, in
the sole discretion of the managing underwriter, can be sold without any such
Adverse Distribution Effect, selected from the Holder and the holders of
Shareholder Securities seeking to exercise piggyback registration rights, on a
pro rata basis in proportion to the number of securities sought to be included
in such Piggyback Registration Statement.
(ii) Underwritten Offerings of Shareholder
Securities. If, in the case of delivery of a Supplemental Notice by the Holder
relating to an underwritten offering of Shareholder Securities in connection
with a demand registration right by such holders, where the managing underwriter
shall make a determination, in its sole discretion, in a writing delivered to
the Company and the Holder and holders of Shareholder Securities included in
such Piggyback Registration Statement that inclusion of some or all of the
Registrable Securities would have an Adverse Distribution Effect on the proposed
sale of the Shareholder Registration Securities then the Company shall, upon
written notice to the Holder and holders of such Shareholder Securities, include
in such registration only the number of Securities which, in the sole discretion
of the managing underwriter, can be sold without an Adverse Distribution Effect
on the proposed sale of the Shareholder Securities covered by the Demand
Registration Right, selected from the Holder and the holders of Shareholder
Securities seeking to exercise piggyback registration rights, on a pro rata
basis in proportion to the number of securities sought to be included in such
Piggyback Registration Statement.
(iii) Non-Underwritten Offerings. The Holder shall
have the right to include all Registrable Securities in a Piggyback Registration
Statements of non-underwritten offerings of securities of the Company.
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(h) Underwriters. In the case of Piggyback Registration
Statements, the underwriter designated by the initiating party shall serve as
the managing underwriter for the entire offering. Holder shall be entitled to
utilize any other underwriter in connection with the sale of its securities
unless the managing underwriter reasonably determines participation by such
underwriter in the offering would materially delay or otherwise be materially
adverse to the transaction.
(i) Exceptions. The provisions of this Section shall not
apply to (i) any registration statement on Form S-8 or Form S-4, or any
successor form, or (ii) any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation.
2. Restrictions on Public Sale by the Holder. Notwithstanding
anything contained herein to the contrary, if the Holder has received a
Registration Notice during the Piggyback Period, for so long as the Holder holds
one percent (1%) or more, on a fully diluted basis of such Registrable
Securities, the Holder agrees not to effect any public sale or distribution of
any such securities during the fifteen (15) days prior to, and during the 90-day
period beginning on, the effective date of such registration statement (or until
its termination or abandonment, if earlier), except for a sale pursuant to such
registration statement, if permitted.
3. Registration Procedures.
(a) The Holder shall provide to the Company such
information regarding the distribution of the Piggyback Securities and such
other information relating to the Holder and his or her ownership of securities
of the Company as the Company may from time to time reasonably request in
writing.
(b) Notwithstanding anything contained herein to the
contrary, the SEC may issue a "stop order" or refuse to allow the effectiveness
of any Piggyback Registration Statement or the Company, may in its sole
discretion terminate any Piggyback Registration Statement at any time prior to
or after the effectiveness thereof without liability to the Holder. In such
event, the Company shall promptly notify the Holder thereof.
(c) The Holder agrees, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(b)
hereof, he or she will forthwith discontinue distribution of Piggyback
Securities.
4. Registration Expenses
All expenses incident to the Company's performance of or
compliance with this Agreement including, without limitation (i) all
registration and filing fees, all fees and
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expenses associated with filings required to be made with the NASD, as may be
required by rules and regulations of the NASD (other than fees required in
excess of fees which would otherwise pertain in the event that the Holder is a
member of the NASD), fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel in connection with blue sky
qualifications for the Registrable Securities), rating agency fees, printing
expenses (including expenses of printing certificates for the Registrable
Securities in a form eligible for deposit with the Depository Trust Company and
of printing prospectuses if the printing of prospectuses is reasonably requested
by the holders of a Majority Amount), messenger and delivery expenses, (ii)
internal expenses (including, without limitation, all salaries and expenses of
their officers and employees performing legal or accounting duties), securities
acts liability insurance (if the Company elects to obtain such insurance), (iii)
fees and expenses of counsel for the Company and its independent certified
public accountants (including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance), (iv) fees and
expenses of any special experts retained by the Company in connection with such
registration, and (v) fees and expenses of other persons retained by the
Company, (all such expenses being herein called "Registration Expenses"), shall
be allocated between the Company (and, if applicable holders of other
Shareholder Securities) and the Holder on a pro-rata basis based upon the total
number of shares included in the Piggyback Registration Statement and the
Piggyback Securities, provided that in no event shall Registration Expenses
include (A) any underwriting discounts or commissions attributable to the sale
of the Registrable Securities, (B) any fees and expenses of counsel for the
Holder if such counsel is different than counsel for the Company or any
accountant or other professional engaged by the Holder, or (C) any direct
out-of-pocket expenses of the Holder.
In the event that following effectiveness of a Piggyback
Registration Statement, pursuant to which the Holder is a selling stockholder,
it becomes necessary for the Company to prepare and file a supplemental
prospectus or amended prospectus in order to maintain the effectiveness of such
registration statement, the cost thereof shall be apportioned as set forth
above.
5. Indemnification; Contribution
(a) Indemnification by the Company. To the extent that any
Piggyback Securities are included in a Piggyback Registration Statement pursuant
to the terms hereof, the Company agrees to indemnify, to the full extent
permitted by law, the Holder, and any agent therefor against all losses, claims,
damages, liabilities and expenses (including reasonable legal fees and expenses)
arising out of or based upon any such untrue statement or alleged untrue
statement of a material fact contained in any registration statement, prospectus
or
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preliminary prospectus, or any amendment thereof or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus or preliminary prospectus, in light of the circumstances under which
they are made) not misleading, except insofar as such losses, claims, damages
arise out of or are based upon an untrue statement or omission so made in
reliance upon and in conformity with information with respect to the Holder
furnished in writing to the Company by the Holder or its representatives
expressly for use therein or any acts of negligence or misfeasance by Holder.
(b) Indemnification by the Holder. In connection with any
Piggyback Registration Statement in which the Holder is a selling stockholder,
the Holder agrees to indemnify, to the extent permitted by law, the Company, its
directors, officers, employees and agents and each person who controls the
Company (within the meaning of applicable federal and state securities laws),
and any investment advisor thereof or agent therefor against any losses, claims,
damages, liabilities and expenses (including reasonable legal fees and expenses)
resulting from (i) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus or preliminary
prospectus, or any amendment thereof or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus or
prelimi nary prospectus, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is made in reliance upon and in conformity with or failed
to be contained in any information with respect to the Holder furnished in
writing by the Holder or its representatives specifically for inclusion therein;
(ii) Holder's negligence; or (iii) Holder's misfeasance. In no event shall the
liability of the Holder hereunder be greater in amount than the dollar amount of
the proceeds received by the Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person
entitled to indemnification hereunder agrees to give prompt written notice to
the indemnifying party after the receipt by such person of any written notice of
the commencement of any action, suit or proceeding against such person or
investigation thereof made in writing or for which such person will claim
indemnification or contribution pursuant to this Agreement, but the failure so
to give written notice to the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party hereunder except if and to
the extent such indemnifying party is materially prejudiced by such failure nor
shall it relieve the indemnifying party from any liability which it may have to
any indemnified party other than under this Agreement. The indemnified party
shall permit the indemnifying party to assume the defense of such claim with
counsel reasonably
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satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be defenses available to it that are different from or additional
to those available to the indemnifying party or if the interests of the
indemnified party may reasonably be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to control the defense of such action, with the reasonable
fees and expenses of such separate counsel to be reimbursed by the indemnifying
party. If the indemnifying party is not entitled to, or does not, assume the
defense of a claim, it will not be obligated to pay the fees and expenses of
more than one counsel (and any required local counsel) with respect to such
claim. No indemnified party will be required to consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. The
indemnifying party will not be subject to any liability for any settlement made
without its consent, which shall not be unreasonably withheld.
(d) Conflict with Underwriting Agreement. In the event that
any provision of any indemnification clause in the underwriting agreement to
which the Company and the Holder are parties in connection with the registration
statement or prospectus in question differs from a provision in this Section 5,
such provision in the underwriting agreement shall determine the Holder's rights
in respect thereof.
6. Participation in Underwritten Registrations
The Holder may not participate in any underwritten
registration hereunder unless it (a) agrees to sell the Piggyback Securities, as
the case may on be, the basis provided in the underwriting arrangements approved
by it, (b) completes and executes all questionnaires, powers of attorneys,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and (c) agrees to pay all
underwriting discounts and commissions on the Piggyback Securities sold under
such underwriting arrangements.
7. Miscellaneous
(a) Entire Agreement. This Agreement contains the entire
agreement among the parties hereto and except as set forth herein, supersedes
all prior oral or written agreements, promises, representations, commitments or
understandings with respect to the matters provided for herein.
(b) Amendment. This Agreement may be modified or amended
only by a writing duly executed by the parties hereto.
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(c) Assignment and Binding Effect. This Agreement and the
rights and obligations of any party hereunder may not be assigned by any party
without the prior written consent of the other party hereto. All covenants,
agreements, and indemnities in this Agreement by and on behalf of any of the
parties hereto shall be binding on and inure to the benefit of their respective
successors and permitted assigns.
(d) Waivers. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
(e) Notices. Unless applicable law requires a different
method of giving notice, any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing.
Assuming that the contents of a notice meet the requirements of the specific
Section of this Agreement which mandates the giving of that notice, a notice
shall be validly given or made to another party if served either personally or
if deposited in the United States mail, certified or registered, postage
prepaid, or if transmitted by telegraph, telecopy or other electronic written
transmission device or if sent by overnight courier service, and if addressed to
the applicable party as set forth below. If such notice, demand or other
communication is served personally, service shall be conclusively deemed given
at the time of such personal service. If such notice, demand or other
communication is given by mail, service shall be conclusively deemed given
seventy-two (72) hours after the deposit thereof in the United States mail. If
such notice, demand or other communication is given by overnight courier, or
electronic transmission, service shall be conclusively given at the time of
confirmation of delivery. The addresses for the parties are as follows:
(i) If to the Holder:
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇/▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Company:
American Film Technologies, Inc.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which shall not constitute notice) to:
Jeffer, Mangels, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
2121 Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address for the purpose of
receiving notices, demands and other communications as herein provided, by a
written notice given in the aforesaid manner to the other parties hereto.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.
(g) Jurisdiction. The parties hereto agree to submit to the
exclusive jurisdiction of the Superior Court, Los Angeles County any
controversy, claim or dispute arising out of or relating to this Agreement or
the method and manner of performance thereof or the breach thereof.
(h) Cost of Litigation. Should any party hereto institute
any action or proceeding at law or in equity to enforce any provision of this
Agreement, including an action for declaratory relief, or for damages by reason
of an alleged breach of any provision of this Agreement, or otherwise in
connection with this Agreement, or any provision hereof, the Court shall
apportion the costs and fees thereof (including all attorneys' fees between the
parties based on its determination of the merits of their respective positions
in the proceeding prevailing party shall be entitled to recover from the losing
party or parties reasonable attorneys' fees and costs for services rendered to
the prevailing party in such action or proceeding.
(i) Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(j) Severability. If any provisions of this Agreement shall
under any circumstances be deemed invalid or inoperative, this Agreement shall
be construed with the invalid or inoperative provision deleted and the rights
and obligations of the parties shall be construed and enforced accordingly.
(k) Neuter and Gender. Whenever in this Agreement the
context may require, the neuter shall be deemed to include the feminine or
masculine and vice versa.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf on the date first above written.
AMERICAN FILM TECHNOLOGIES, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Executive Officer
AGREED TO AND ACCEPTED
THIS 3RD DAY OF FEBRUARY 1997
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
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