EXHIBIT IV
REGISTRATION RIGHTS AGREEMENT
By and Among
PURCHASERS OF UNITS
and
▇▇▇▇▇▇ INDUSTRIES, INC.
Common Stock, par value $.01 per share
Dated as of October 15, 1997
Page 64 of 80 Pages
TABLE OF CONTENTS
Page
----
1. Registration Under Securities Act, etc.............................. 1
1.1 Registration on Request........................................ 1
1.2 Piggy-Back Registration........................................ 3
1.3 Registration Procedures........................................ 4
1.4 Underwritten Offerings......................................... 6
1.5 Preparation: Reasonable Investigation ......................... 7
1.6 Qualification to Obligations under Registration Covenants ..... 8
1.7 Indemnification ............................................... 8
2. Definitions ........................................................ 10
3. Rule 144 and Rule 144A ............................................. 12
4. Amendments and Waivers.............................................. 12
5. Nominees for Beneficial Owners...................................... 13
6. Notices1............................................................ 3
7. Assignment.......................................................... 13
8. Calculation of Percentage Interests in Registrable Securities....... 14
9. No Inconsistent Agreements ......................................... 14
10. Remedies ........................................................... 14
11. Severability ....................................................... 14
12. Entire Agreement.................................................... 14
13. Descriptive Headings ............................................... 14
14. Governing Law ...................................................... 14
15. Counterparts........................................................ 15
Page 65 of 80 Pages
REGISTRATION RIGHTS AGREEMENT, dated as of October 15, 1997,
among ▇▇▇▇▇▇ Industries, Inc., a Delaware corporation (the "Company") and each
of the undersigned Purchasers of Units identified on the signature page hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
This Agreement is being entered into in connection with a
Securities Purchase Agreement, of even date herewith between the Company and the
Purchasers (the "Purchase Agreement") providing for the issuance by the Company
to the Purchasers of Units consisting of Senior Convertible Notes (collectively,
the "Notes") of the Company and Warrants (collectively, the "Warrants")
entitling the holders thereof to purchase, upon conversion of the Notes and
exercise of the Warrants, up to 8,000,000 shares (subject to adjustment) of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"),
upon the terms and subject to the conditions set forth therein. It is a
condition precedent to the obligations of the Company and the Purchasers to
consummate the transactions contemplated by the Purchase Agreement that the
Company and the Purchasers enter into this Agreement. Capitalized terms used
herein but not otherwise defined shall have the meanings given them in the
Purchase Agreement.
1. Registration Under Securities Act, etc.
1.1 Registration on Request.
(a) Request. At any time, or from time to time,
upon the written request of one or more holders (the "Initiating Holders") of
Registrable Securities representing not less than 50% (25% in the case of a
registration on Form S-3) of the Registrable Securities that the Company effect
the registration under the Securities Act of all or part of such Initiating
Holders' Registrable Securities, the Company promptly will give written notice
of such requested registration to all registered holders of Registrable
Securities, and thereupon the Company will use its best efforts to effect, at
the earliest possible date, the registration under the Securities Act of (i) the
Registrable Securities which the Company has been so requested to register by
such Initiating Holders, and (ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such holders
together with the Initiating Holders hereinafter are referred to as the "Selling
Holders") by written request given to the Company within 30 days after the
giving of such written notice by the Company, all to the extent requisite to
permit the disposition of the Registrable Securities so to be registered.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 1.1, no securities
other than Registrable Securities and other securities subject to registration
rights granted by the Company shall be included among the securities covered by
such registration unless Initiating Holders of greater than 51% of the
Registrable Securities to be included in such registration shall have consented
in writing to the inclusion of such other securities, which consent shall not be
unreasonably withheld or delayed.
Page 66 of 80 Pages
(c) Registration Statement Form. Registrations
under this Section 1.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(d) Effective Registration Statement. A
registration requested pursuant to this Section 1.1 shall not be deemed to have
been effected unless a registration statement with respect thereto has become
effective and remained effective in compliance with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement for a period of at least 120 days, or
earlier if all Registrable Securities have been sold pursuant to such
registration statement.
(e) Selection of Underwriters. If the Selling
Holders of at least 50% of all Registrable Securities to be covered by a
registration so elect, the offering of such Registrable Securities pursuant to
this Section 1.1 shall be in the form of an underwritten offering. The
underwriter or underwriters of each underwritten offering of the Registrable
Securities so to be registered shall be selected by the Selling Holders of at
least 50% of the Registrable Securities to be included in such registration and
shall be reasonably acceptable to the Company.
(f) Priority in Requested Registration. If the
managing underwriter of an underwritten offering shall advise the Company in
writing (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration is
sufficiently large to materially adversely affect the success of the offering,
the Company, except as provided in the following sentence, will include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in such offering, Registrable Securities requested to be
included in such registration, pro rata among the Selling Holders requesting
such registration on the basis of the estimated gross proceeds from the sale
thereof. To the extent Registrable Securities so requested to be registered are
excluded from the offering, the holders of such Registrable Securities shall be
deemed not to have used a demand registration pursuant to this Section 1.1.
(g) Limitations on Registration on Request.
Notwithstanding anything in this Section 1.1 to the contrary, the Company shall
not be required to take any action to file a registration statement pursuant to
this Section 1.1:
(i) during the period starting with the sixty days prior
to the Company's good faith estimate of the date of filing of,
and ending 120 days following the effective date of, any
subsequent registered offering of the Company's securities to the
general public;
(ii) in any registration of less than 20% of the
Registrable Securities, unless the aggregate sales price (before
deduction of underwriting discounts and expenses of sale) is at
least $2,000,000 (or $1,000,000 in the case of a registration on
Form S-3); or
2 Page 67 of 80 Pages
(iii) after the Company has effected an aggregate of two
such registrations on Form S-3 and two such registrations on any
other form available to the Company (including additional
registrations on Form S-3).
(h) Expenses. The Company will pay all Registration
Expenses in connection with any registration requested pursuant to this Section
1.1 and each Selling Holder shall pay all underwriting discounts or commissions
with respect to the Registrable Securities sold by such Selling Holder in such
registration.
1.2 Piggy-Back Registration.
(a) Right to Include Registrable Securities. If the
Company at any time proposes to file a registration statement to register any of
its equity securities (or any security convertible into or exchangeable for any
equity security of the Company) under the Securities Act (except for
registration on Form S-4 or S-8 or any successor or similar forms), whether or
not for sale for its own account, it will each such time give prompt written
notice to all registered holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section 1.2. Upon the written
request of any such holder (a "Requesting Holder") (which request shall specify
the amount of Registrable Securities intended to be disposed of by such
Requesting Holder) made as promptly as practicable and in any event within 30
days after the receipt of any such notice (20 days if the Company states in such
written notice or gives telephonic notice to all registered holders of
Registrable Securities, with written confirmation to follow promptly thereafter,
stating that (i) such registration will be on Form S-3 and (ii) such shorter
period of time is required because of a planned filing date), the Company will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Requesting Holders thereof. No registration effected under this Section 1.2
shall relieve the Company of its obligation to effect any registration upon
request under Section 1.1.
(b) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall deliver a written
opinion to the holders of Registrable Securities that the total amount of
Registrable Securities requested to be included in such registration would have
a material adverse effect on such offering, then the Company will include in
such registration, to the extent of the number which the Company is so advised
can be sold in (or during the time of) such offering, first, all securities
proposed by the Company to be sold for its own account, and second, such
Registrable Securities requested to be included in such registration pursuant to
this Agreement and the securities of all other holders who possess registration
rights (the "Other Holders"), pro rata among Requesting Holders and Other
Holders on the basis of the estimated gross proceeds from the sale thereof;
provided that the number of securities included in such registration by the
Requesting Holders and the Other Holders shall not be less than 20% of the total
number of shares included in such registration and, if securities are being
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number of
securities intended to be offered by holders of Registrable Securities than the
fraction of similar reductions imposed on such other persons or entities over
the amount of securities they intended to offer.
3 Page 68 of 80 Pages
(c) Expenses. The Company will pay all Registration
Expenses in connection with any registration effected pursuant to this Section
1.2 and each Selling Holder shall pay all underwriting discounts or commissions
with respect to the Registrable Securities sold by such Selling Holder in such
registration.
1.3 Registration Procedures. If and whenever the Company is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 1.1 and 1.2, the Company will, as
expeditiously an possible use its best efforts to:
(i) prepare and (within 90 days after the end of the
period within which requests for registration may be given to the
Company or in any event as soon thereafter as practicable) file
with the Commission the requisite registration statement to
effect such registration and thereafter use its best efforts to
cause such registration statement to become effective;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration
statement for a period of at least 120 days or until all such
Registrable Securities have been sold, whichever is earlier;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement such number of conformed
copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and
any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements
of the Securities Act, and such other documents, as such seller
may reasonably request;
(iv) register or qualify all Registrable Securities and
other securities covered by such registration statement under
such other securities or blue sky laws of such States of the
United States of America where an exemption is not available and
as the sellers of Registrable Securities covered by such
registration statement shall reasonably request; keep such
registration or qualification in effect for so long as such
registration statement remains in effect; and take any other
action which may be reasonably necessary or advisable to enable
such sellers to consummate the disposition in such jurisdictions
of the securities to be sold by such sellers, except that the
Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
4 Page 69 of 80 Pages
(v) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such
other federal or state governmental agencies or authorities as
may be necessary in the opinion of counsel to the Company and
counsel to the seller or sellers of Registrable Securities to
enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish at the effective date of such registration
statement and, if applicable, the date of the closing under the
underwriting agreement, to each seller of Registrable Securities,
and each such seller's underwriters, if any, a signed counterpart
of (x) an opinion of counsel for the Company, dated the effective
date of such registration statement and (y) a "comfort" letter
signed by the independent public accountants who have certified
the Company's financial statements included or incorporated by
reference in such registration statement, covering substantially
the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to
the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' comfort
letters delivered to the underwriters in underwritten public
offerings of securities and, in the case of the accountants'
comfort letter, such other financial matters, and, in the case of
the legal opinion, such other legal matters, as the sellers of
the Registrable Securities covered by such registration
statement, or the underwriters, may reasonably request;
(vii) notify each seller of Registrable Securities covered
by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they
were made, and at the request of any such seller promptly prepare
and furnish to it a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include 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 not
misleading in the light of the circumstances under which they
were made;
(viii) otherwise comply with all applicable rules and
regulations of the Commission, and, if required, make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities
5 Page 70 of 80 Pages
Act and Rule 158 promulgated thereunder, and promptly furnish to
each such seller of Registrable Securities a copy of any
amendment or supplement to such registration statement or
prospectus;
(ix) keep each Selling Holder and each Requesting Holder
advised in writing as to the initiation and progress of any
registration under Section 1.1 or 1.2 hereunder, as the case may
be;
(x) provide and cause to be maintained a transfer agent
and registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration; and
(xi) list all Registrable Securities covered by such
registration statement on any national securities exchange on
which Registrable Securities of the same class and, if
applicable, series, covered by such registration statement are
then listed or on the National Association of Securities Dealers
Automated Quotations ("NASDAQ") if the Registrable Securities are
reported on NASDAQ.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities, as is required by law or
the Commission to be included within the registration statement or as the
company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in subdivision (vii) of this
Section 1.3 , such holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating to
such Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 1.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
1.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested
by the underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 1.1, the Company
will use all reasonable efforts to enter into an underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to each such holder and the underwriters and
to contain such representations and warranties by the Company and such other
terms as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 1.7.
The holders of the Registrable Securities proposed to be sold by such
underwriters will reasonably cooperate with the Company in the
6 Page 71 of 80 Pages
negotiation of the underwriting agreement. Such holders of Registrable
Securities to be sold by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company other than representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method of distribution or any other representations required by applicable law.
(b) Incidental Underwritten Offerings. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 1.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. Any such Requesting
Holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Requesting Holder, such Requesting Holder's Registrable Securities and such
Requesting Holder's intended method of distribution or any other representations
required by applicable law.
1.5 Preparation: Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company (i) shall give the holders of
Registrable Securities registered under such registration statement, their
underwriters, if any, and their respective counsel and accountants the
reasonable opportunity to participate (at the expense of such holder or holders)
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, (ii) shall give each of them such reasonable access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act and (iii) shall promptly notify the registered
holders of Registrable Securities and their counsel of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
7 Page 72 of 80 Pages
1.6 Qualification to Obligations under Registration Covenants.
The Company shall be entitled to postpone for a reasonable period of time (but
not exceeding 90 days) the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to Section 1.1 if the Company
determines, in its reasonable judgment, that such registration and offering
would interfere with any financing, acquisition, corporate reorganization or
other material transaction involving the Company or any of its affiliates and
promptly gives the holders of Registrable Securities requesting registration
thereof pursuant to Section 1.1 written notice of such determination, containing
a general statement of the reasons for such postponement and an approximation of
the anticipated delay. If the Company shall so postpone the filing of a
registration statement, holders of Registrable Securities requesting
registration thereof pursuant to Section 1.1 and representing not less than 50%
of the Initiating Holders shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 1.1
hereof.
1.7 Indemnification.
(a) Indemnification by the Company. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 1.1 or 1.2, each seller of any
Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, and their respective
directors, officers, partners, employees and affiliates against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or any such director, officer, partner, employee, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment 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 light of the circumstances in which they were made not misleading,
and the Company will reimburse such seller or underwriter and each such
director, officer, partner, employee, affiliate and controlling Person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the
8 Page 73 of 80 Pages
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, employee, affiliate, partner or controlling Person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. As a condition
to including any Registrable Securities in any registration statement, the
Company shall have received an undertaking satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in subdivision
(a) of this Section 1.7) the Company, and each director of the Company, each
officer of the Company and each other Person, if any, who participates as an
underwriter in the offering or sale of such securities and each other Person who
controls the Company or any such underwriter within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability of
such indemnifying party under this Section 1.7(b) shall be limited to the amount
of proceeds received by such indemnifying party in the offering giving rise to
such liability. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such securities
by such seller.
(c) Notices of Claims, etc. Promptly after receipt
by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of this
Section 1.7, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 1.7, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation, provided, however, that if the indemnified party reasonably
believes it is advisable for it to be represented by separate counsel because
there exists a conflict of interest between its interests and those of the
indemnifying party with respect to such claim, or there exist defenses available
to such indemnified party which may not be available to the indemnifying party,
or if the indemnifying party shall fail to assume responsibility for such
9 Page 74 of 80 Pages
defense, the indemnified party may retain counsel satisfactory to it and the
indemnifying party shall pay all reasonable fees and expenses of such counsel.
No indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. No indemnifying party shall,
without the consent of the indemnified party, 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 or which
requires action other than the payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided
for in this Section 1.7 shall for any reason be held by a court to be
unavailable to an indemnified party under subparagraph (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subparagraph (a) or
(b) hereof, the indemnified party and the indemnifying party under subparagraph
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating the same), (i) in such proportion as is appropriate to
reflect the relative fault of the Company and the prospective sellers of
Registrable Securities covered by the registration statement which resulted in
such loss, claim, damage or liability, or action in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement. 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. Such
prospective sellers' obligations to contribute as provided in this subparagraph
(d) are several in proportion to the relative value of their respective
Registrable Securities covered by such registration statement and not joint. In
addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld or delayed.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
section 1.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities 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.
(f) Indemnification Payments. The indemnification
and contribution required by this Section 1.7 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 expense, loss, damage or liability is incurred.
2. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective meanings:
10 Page 75 of 80 Pages
"Affiliate" means any person that directly or indirectly controls
or is controlled by or is under common control with any Purchaser. For purposes
of this definition, an Affiliate of any Purchaser shall be deemed to include any
corporation, partnership, limited liability company or other entity in which
such Purchaser (whether directly, or indirectly through any other Person that is
an Affiliate) is an officer or director, general partner, managing member or
otherwise holds a significant equity interest.
"Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" is defined in the
second introductory paragraph on page 1.
"Company" is defined in the first
introductory paragraph on page 1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include a reference to the comparable section, if any, of any such similar
Federal statute.
"Initiating Holder" is defined in Section 1.1.
"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Purchaser" and "Purchasers" are defined in the first
introductory paragraph on page 1.
"Purchase Agreement" is defined in the second introductory
paragraph on page 1.
"Registrable Securities" means (i) any shares of Common Stock
issued from time to time upon conversion of the Notes or exercise of the
Warrants and (ii) any Related Registrable Securities. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration of them
under the Securities Act, or (d) they shall have ceased to be outstanding. All
references to percentages of Registrable Securities shall be calculated pursuant
to Section 8.
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"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 1, including, without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the reasonable fees and
disbursements of counsel for the Company (and one special counsel to the Selling
Holders) and of its independent public accountants, including the expenses of
"cold comfort" letters required by or incident to such performance and
compliance, any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities (excluding any underwriting discounts or
commissions with respect to the Registrable Securities) with respect to an
underwritten offering.
"Related Registrable Securities" means any securities of the
Company issued or issuable with respect to the Registrable Securities by way of
a dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
"Requesting Holder" is defined in Section 1.2.
"Securities Act" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time. References to a particular section
of the Securities Act of 1933 shall include a reference to the comparable
section, if any, of any such similar statute.
"Selling Holder" is defined in Section 1.1.
"Warrants" is defined in the second introductory paragraph
on page 1.
3. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, (b) Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or (c) any similar rules or
regulations hereafter adopted by the Commission, including, without limiting the
generality of the foregoing, filing on a timely basis all reports required to be
filed by the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether the Company has complied with such requirements.
4. Amendments and Waivers. This Agreement may be amended
(including to add as parties hereto future purchasers of securities of the
Company) and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company shall
have obtained the written consent to such amendment, action or omission to act
of the holder or holders of at least two thirds of the Registrable Securities
affected by such amendment, action or omission to act. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 4, whether or not such Registrable
Securities shall have been marked to indicate such consent.
12 Page 77 of 80 Pages
5. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities hold by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
6. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
by registered or certified first-class mail, return receipt requested,
telex, telegram, telecopier, reputable courier service or personal delivery:
(a) if to the Purchasers, addressed to them in the manner
set forth in the Purchase Agreement, or at such other address as
it shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company
in writing, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder
of such Registrable Securities who has furnished an address to
the Company; or
(c) if to the Company, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as the
Company shall have furnished to each holder of Registrable
Securities at the time outstanding.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being sent by reputable courier service; three business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
7. Assignment. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and assigns and, with respect to each
Purchaser, any holder who is an affiliate or successor entity to such Purchaser
or a transferee therefrom of any Registrable Securities, subject to the
provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Notwithstanding the foregoing, a
Purchaser may not assign its rights hereunder to a competitor of the Company or
to a transferee that is acquiring beneficial ownership of fewer than 50,000
shares of Common Stock, with appropriate adjustments for recapitalizations and
the like. The Company must be given notice of any such assignment by a Purchaser
and the transferee must agree to be bound by the terms of this Agreement. The
Purchasers named on the
13 Page 78 of 80 Pages
signature page of this Agreement (and not any other holder of Registrable
Securities or any other Person) shall be permitted, in connection with a
transfer or disposition of Registrable Securities, to eliminate or impose
conditions or constraints on the ability of the transferee, as a holder of
Registrable Securities, to request a registration pursuant to Sections 1.1 and
1.2 and shall provide the Company with copies of such conditions or constraints
and the identity of such transferees.
8. Calculation of Percentage Interests in Registrable Securities.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of shares of
Registrable Securities outstanding at the time such calculation is made.
9. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement. The grant of registration rights to other securities holders of the
Company shall not, by itself, be deemed to be inconsistent with this Agreement.
10. Remedies. Each holder of Registrable Securities, is entitled
to exercise all rights granted by law, including recovery of damages; such
rights not to extend to incidental or consequential damages.
11. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchaser shall be enforceable to the fullest extent permitted by law.
12. Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
13. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
14. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of New York applicable to agreements made and to be performed
entirely within such State.
14 Page 79 of 80 Pages
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
PURCHASERS:
WHITE OWL CAPITAL PARTNERS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ANTONY ▇. ▇. ▇▇▇▇▇
-----------------------------------
Antony ▇. ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
15 Page 80 of 80 Pages