Exhibit 3
REGISTRATION RIGHTS
1. Shelf Registration
(a) Shelf Registration. The Company shall, as promptly as
practicable, after the Closing file with the SEC a
Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the
Purchased Stock (as hereinafter defined) (the "Initial Shelf
Registration"). The Company shall use its best efforts to file
with the SEC the Initial Shelf Registration on the earlier of
(i) June 30, 1998 or (ii) 10 days from the date of filing of
the Company's Form 10-K for the year ended March 31, 1998, and
shall use its best efforts to cause such Shelf Registration to
be declared effective under the Securities Act as promptly as
practicable thereafter. The Initial Shelf Registration shall
be on Form S-3 or another appropriate form permitting
registration of such Purchased Stock for resales by holders in
the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company
shall not permit any securities other than the Purchased Stock
to be included in any Shelf Registration without the consent
of the holders of Purchased Stock. The Company shall use its
best efforts to keep the Initial Shelf Registration
continuously effective under the Securities Act of 1933, as
amended (the "Securities Act") until the date which is 36
months from the date of filing (the "Effectiveness Period") or
such shorter period ending when (i) all Purchased Stock
covered by the Initial Shelf Registration have been sold in
the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering
all of the Purchased Stock has been declared effective under
the Securities Act.
(b) Subsequent Shelf Registration. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be
effective for any reasons at any time during the Effectiveness
Period (other than because of the sale of all of the
securities registered thereunder), the Company shall use its
best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall
within 30 days of such cessation of effectiveness amend the
Shelf Registration in a manner to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415
covering all of the Purchased Stock (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed,
the Company shall use its best efforts to cause the Subsequent
Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent
Shelf Registration continuously effective for a period equal
to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registration was
previously continuously
effective. As used herein, the term "Shelf Registration" means
the Initial Shelf Registration and any Subsequent Shelf
Registration.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend any Shelf Registration if required by the
rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by
the holders of a majority of the Purchased Stock covered by
such Shelf Registration or by any underwriter of such
Purchased Stock, in each case, with the Company's consent,
which consent shall not be unreasonably withheld or delayed.
2. Required Registration. Commencing upon the expiration of the 36 month
period specified in Section 1, if the Company shall receive a written
request therefor from any holder of the Purchased Stock not theretofore
registered under the Securities Act, and sold, the Company shall
prepare and file a registration statement under the Securities Act
covering the shares of Purchased Stock which are the subject of such
request and shall use its best efforts to cause such registration
statement to become effective. In addition, upon the receipt of such
request, the Company shall promptly give written notice to all other
record holders (if any) of shares of Purchased Stock not theretofore
registered under the Securities Act and sold that such registration is
to be effected. The Company shall include in such registration
statement such shares of Purchased Stock for which it has received
written requests to register by such other record holders within 30
days after the delivery of the Company's written notice to such other
record holders. The Company shall be obligated to prepare, file and
cause to become effective only three registration statements pursuant
to this Section 2.
Without the written consent of the holders of seventy-five percent
(75%) of the Purchased Stock for which registration has been requested
pursuant to this paragraph 2, neither the Company nor any other holder
of securities of the Company may include securities in such
registration if in the good faith judgment of the managing underwriter
of such public offering the inclusion of such securities would
interfere with the successful marketing of the Purchased Stock or
require the exclusion of any portion of the Purchased Stock to be
registered.
3. Incidental Registration. Each time the Company shall determine to
proceed with the actual preparation and filing of a registration
statement under the Securities Act in connection with the proposed
offer and sale for cash of any of its securities by it or any of its
security holders (other than a registration statement on a form that
does not permit the inclusion of shares by its security holders), the
Company will give written notice of its determination to all record
holders of Purchased Stock not theretofore registered under the
Securities Act and sold. Upon the written request of a record holder of
any shares of Purchased Stock given within 30 days after receipt of any
such notice from the Company, the Company will, except as herein
provided, cause all such shares of Purchased Stock, the record holders
of which have so requested registration thereof, to be included in such
registration statement, all to the extent requisite to permit the sale
or other disposition by the prospective seller or sellers of the
Purchased Stock to be so registered; provided, however, that nothing
herein shall prevent the Company from, at any time, abandoning or
delaying any such registration initiated by it; provided further,
however, that if the Company determines not to proceed with a
registration after the registration statement has been filed with the
Commission and the Company's decision not to proceed is primarily based
upon the anticipated public offering price of the securities to be sold
by the Company, the Company shall promptly complete the registration
for the benefit of those selling security holders who wish to proceed
with a public offering of their securities. If any registration
pursuant to this paragraph 3 shall be underwritten in whole or in part,
the Company may require that the Purchased Stock requested for
inclusion pursuant to this paragraph 3 be included in the underwriting
on the same terms and conditions as the securities otherwise being sold
through the underwriters. If in the good faith judgment of the managing
underwriter of a proposed underwritten public offering the inclusion of
all of the Purchased Stock originally covered by a request for
registration would reduce the number of shares to be offered by the
Company or interfere with the successful marketing of the shares of
stock offered by the Company, the number of shares of Purchased Stock
otherwise to be included in the underwritten public offering may be
reduced pro rata (by number of shares) among the holders thereof
requesting such registration, provided, however, that after any such
required reduction the Purchased Stock to be included in such offering,
together with any shares to be included in such offering that are being
offered by other selling shareholders, shall constitute at least 25% of
the total number of shares to be included in such offering. Those
shares of Purchased Stock which are thus excluded from the underwritten
public offering shall be withheld from the market by the holders
thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines if necessary in order to effect the
underwritten public offering.
4. Registration Procedures. If and whenever the Company is required by the
provisions of paragraph 1, 2 or 3 hereof to effect the registration of
shares of Purchased Stock under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to
cause such registration statement to become and remain
effective for such period as may be reasonably necessary to
effect the sale of such securities, not to exceed (i)
thirty-six months in the case of the Shelf Registration
specified in Section 1 and (ii) nine months with respect to a
registration statement not covered by Section 1;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus
contained therein as may be necessary to keep such
registration statement effective for such period as may be
reasonably necessary to effect the sale of such securities,
not to exceed (i) thirty-six months in the case of the Shelf
Registration specified in Section 1 and (ii) nine months with
respect to a registration statement not covered by Section 1;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the
registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering
of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such
participating holders may reasonably request in writing within
20 days following the original filing of such registration
statement, except that the Company shall not for any purpose
be required to execute a general consent to service of process
or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified.
(e) notify the security holders participating in such
registration, promptly after it shall receive notice thereof,
of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(f) notify such holders promptly of any request by the Commission
for the amending or supplementing of such registration
statement or prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon the
request of any such holders, any amendments or supplements to
such registration statement or prospectus which, in the
opinion of counsel for such holders (and concurred in by
counsel for the Company), is required under the Securities Act
or the rules and regulations thereunder in connection with the
distribution of the Purchased Stock by such holder;
(h) prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or
supplement to such registration statement or prospectus as may
be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required
to be delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading;
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any
proceeding for the purpose and promptly use its best efforts
to prevent the
issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of
such holders shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act
or the rules and regulations thereunder, after having been
furnished with a copy thereof at least five business days
prior to the filing thereof, unless in the opinion of counsel
for the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any
liabilities under any applicable federal or state law and such
filing will not violate applicable law; and
(k) at the request of any such holder, furnish: (i) an opinion,
dated as of the closing date, of the counsel representing the
Company for the purposes of such registration, addressed to
the underwriters, if any, and to the holder or holders making
such request, covering such matters as such underwriters and
holder or holders may reasonably request; and (ii) letters
dated as of the effective date of the registration statement
and as of the closing date, from the independent certified
public accountants of the Company, addressed to the
underwriters, if any, and to the holder or holders making such
request, covering such matters as such underwriters and holder
or holders may reasonably request.
(l) use its best efforts to have the Purchased Stock listed on the
Nasdaq Stock Market or such other of the principal market or
principal exchange on which the Company's stock is then listed
or quoted.
5. Expenses. With respect to each registration, the Company shall bear all
fees, costs and expenses including, without limitation,: all
registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and
disbursements of counsel for the underwriter or underwriters of such
securities (if the Company and/or selling security holders are required
to bear such fees and disbursements), all internal Company expenses,
all legal fees and disbursements and other expenses of complying with
state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified, and the
premiums and other costs of policies of insurance against liability (if
any) arising out of such public offering and underwriting discounts and
commissions and transfer taxes relating to the shares included in the
offering by the selling security holders.
6. Indemnification. In the event that any Purchased Stock is included in a
registration statement under paragraph 1, 2 or 3 hereof:
(a) The Company will indemnify and hold harmless each holder of
shares of Purchased Stock which are included in a registration
statement pursuant to the provisions of paragraph 1, 2 or 3
hereof, its directors and officers, and any underwriter (as
defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter
within the meaning of the Securities Act, from and against,
and will reimburse such holder and each such underwriter and
controlling person with respect to, any and all loss, damage,
liability, cost and expense to which such holder or any such
underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or
arise out of or are based upon the 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; provided, however, that the Company will not be
liable in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with
information furnished by such holder, such underwriter or such
controlling person in writing specifically for use in the
preparation thereof.
(b) Each holder of shares of Purchased Stock which are included in
a registration pursuant to the provisions of this paragraph 1,
2 or 3 hereof will indemnify and hold harmless the Company,
its directors and officers, any controlling person or any
underwriter from and against, and will reimburse the Company,
its directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage,
liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject
under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any
untrue or alleged untrue statement of any material fact
contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or the 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, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by
such holder specifically for use in the preparation thereof.
Notwithstanding the foregoing, each holder's liability for
indemnification shall be limited to the amount of the holder's
original purchase price of the Purchased Stock.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) and (b) of this paragraph 6 of
notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions such indemnified
party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party
of the commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have
the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, provided, however, if
the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties
which are different from or additional to those available to
the indemnifying party, or if there is a conflict of interest
which would prevent counsel for the indemnifying party from
also representing the indemnified party, the indemnified party
or parties shall have the right to select separate counsel to
participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the
provisions of said paragraph (a) or (b) for any legal or other
expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party shall
have employed counsel in accordance with the proviso of the
preceding sentence, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
the notice of the commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying
party.
7. Special Definition. "Purchased Stock" shall mean the Company's Common Stock
into which the Company's Class A Convertible Preferred Stock is convertible,
together with Common Stock underlying Warrants, purchased pursuant to the Class
A Convertible Preferred Stock Purchase Agreement dated April 21, 1998 and the
stock or other securities of the Company issued in a conversion, stock split or
reclassification of, or a stock dividend or other distribution on or in
substitution or exchange for, or otherwise in connection with, any of the
foregoing securities, or in a merger or consolidation involving the Company or a
sale of all or substantially all of the Company's assets.