EXHIBIT 4
NAI TECHNOLOGIES, INC.
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is between NAI TECHNOLOGIES, INC., a
New York corporation (the "Company"), and the person or persons executing this
Agreement.
RECITALS:
In consideration of the purchase by you on the date hereof of certain
securities of the Company to be offered in units (the "Units"), which Units
include (i) $1,000 principal amount of the Company's 12% Convertible
Subordinated Promissory Notes due 2001 (the "Notes"), convertible at the option
of the holder at any time into 500 shares of the Company's Common Stock, par
value $.10 per share ("Common Stock"), upon the terms and conditions, and
subject to the adjustments, set forth in such Notes, and (ii) a warrant (the
"Warrant") entitling the holder to purchase 250 shares of Common Stock upon the
terms and conditions, and subject to the adjustments, set forth in such
Warrants, pursuant to a Confidential Private Placement Memorandum, dated
December 15, 1995, as supplemented (the "Memorandum"), and as an inducement to
you to consummate the transactions contemplated by the Memorandum, the Company
hereby covenants and agrees with you, and with each subsequent holder of
Registrable Securities (as such term is defined below), as follows:
1. Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings ascribed to them:
(a) "Additional Interest" shall have the meaning set forth in Section
2(c) hereof.
(b) "Agreement" shall mean this Registration Rights Agreement, as the
same may be amended, modified or supplemented from time to time.
(c) "Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency then administering the Securities
Act and the Exchange Act.
(d) "Effectiveness Period" shall have meaning set forth in Section
2(a) hereof.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference to
a particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
(f) "Expiration Date" shall mean December 31, 2005.
(g) "Holder" shall mean the Holder, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable
Securities.
(h) "Person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or agency or political subdivision thereof.
(i) "Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement and all other
amendments and supplements to the prospectus, including any post-effective
amendments and all materials incorporated by reference in the prospectus.
(j) "Registrable Securities" shall mean (i) the Notes, (ii) the
Warrants, (iii) the shares of Common Stock issuable upon conversion of the
Notes, (iv) the shares of Common Stock issuable upon exercise of the
Warrants and (v) any securities issued in exchange for or substitution of
any thereof or as a result of a stock split or combination or as a dividend
or other distribution in respect of any thereof. 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
disposed of 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 disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force (and the holders of
Registrable Securities shall have received an opinion of independent
counsel for the Company reasonably satisfactory to such holders to the
foregoing effects), or (D) they shall have ceased to be outstanding.
Subject to this Section 1(g), Registrable Securities, if transferred, will
remain Registrable Securities for the purposes of this Agreement.
(k) "Registration Expenses" shall mean all of the costs and expenses
of each registration hereunder, and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), rating agency fees, National Association of
Securities Dealers (NASD) fees for review of underwriting agreements,
printing expenses (including expenses of printing the Prospectus),
messenger and delivery expenses, the fees and expenses incurred in
connection with the listing of the securities to be registered on each
securities exchange on which the Shares are then listed or proposed to be
listed, and fees and disbursements 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 incidental to such
performance), Securities Act liabilities insurance (if the Company elects
to obtain such insurance), the fees and expenses of any special experts
retained by the Company in connection
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with such Registration, reasonable fees and expenses of one counsel (who
shall be selected by a majority of the holders of Registrable Securities)
for the holders of Registrable Securities incurred in connection with each
Registration hereunder and any reasonable out-of-pocket expenses of such
holders (or the agents who manage any such holder's accounts) excluding any
travel costs and counsel fees except as set forth above (but not including
any underwriting fees, discounts or commissions attributable to the sale of
the Registrable Securities).
(l) "Registration Statement" shall have the meaning assigned to such
term in Section 5(a) of this Agreement.
(m) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute then in effect, and a reference to
a particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
(n) "Shares" shall mean shares of Common Stock, as constituted on the
date hereof, and any securities into which such shares may thereafter be
changed.
(o) "Shelf Registration" shall mean a registration effected pursuant
to Section 2(a) hereof.
(p) "Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(a) of this
Agreement which covers all of the Registrable Securities on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may
be adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
2. Required Registration Under the Securities Act.
(a) The Company shall, for the benefit of the holders of Registrable
Securities, at the Company's cost, file with the Commission on or prior to the
later of (i) ninety (90) days after the initial closing of the private placement
in which the Units are sold in accordance with the Memorandum (the "Closing") or
(ii) March 31, 1996, a Shelf Registration Statement providing for the sale by
the holders of all the Registrable Securities, and shall use its best efforts to
have such Shelf Registration Statement declared effective by the Commission as
soon as practicable and, in any event, within 60 days thereafter. The Company
agrees to use its best efforts to keep the Shelf Registration Statement
continuously effective for a period of three years after the date of
effectiveness (the "Effectiveness Period"). The Company shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration, except for up to 250,000 shares of Common Stock held by the Bank
Lenders (as such term is defined in the Memorandum) and up to 363,636 shares of
Common Stock held by Active Investors II, Ltd. The Company further agrees, if
necessary or appropriate, to supplement or
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amend the Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company agrees to
furnish to the holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the Commission.
(b) Effective Registration Statement. A Shelf Registration Statement
pursuant to Section 2(a) above will not be deemed to have become effective
unless it has been declared effective by the Commission; provided that if, after
it has been declared effective, the offering of Registrable Securities pursuant
to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Registration Statement will be deemed not to
have been effective during the period of such interference, until the offering
of Registrable Securities pursuant to such Registration Statement may legally
resume. The Company will be deemed not to have used its reasonable efforts to
cause the Shelf Registration Statement to become, or to remain, effective during
the requisite period if it voluntarily takes any action that would result in any
such Registration Statement not being effective or in the holders of Registrable
Securities covered thereby not being able to offer and sell such Registrable
Securities during that period.
(c) Additional Interest. In the event that either (i) a Shelf
Registration Statement is not filed with the Commission on or prior to the later
of the 90th day after the Closing or March 31, 1996 (the "Filing Date"), or (ii)
a Shelf Registration Statement is not declared effective on or prior to the 60th
day after the Filing Date, the interest rate borne by the Notes shall be
increased (the "Additional Interest") by one percent per annum from and
including the 91st day after the Closing in the case of clause (i) above and
from and including the 61st day after the Filing Date in the case of clause (ii)
above and shall increase by an additional one percent per annum for each 90-day
period (or portion thereof) that any Additional Interest continues to accrue
pursuant to this Section 2(c); provided that the aggregate increase in such
interest rate pursuant to this Section 2(c) will in no event (other than as
stated in the succeeding proviso) exceed five percent (5%) per annum, and
provided, further, that the interest rate shall increase to eighteen percent
(18%) in the event the Shelf Registration Statement is not effective nine months
after the Closing. Upon (x) the filing of a Shelf Registration Statement in the
case of clause (i) above or (y) the effectiveness of a Shelf Registration
Statement in the case of clause (ii) above, and provided that none of the
conditions set forth in clauses (i) or (ii) above continues to exist, the
interest rate borne by the Notes from the date of such filing or effectiveness,
as the case may be, will be reduced to the original interest rate.
In the event that the Shelf Registration Statement has been declared
effective and subsequently ceases to be effective prior to the end of the
Effectiveness Period, for a period in excess of 10 days, whether or not
consecutive, in any given year, then, the interest rate borne by the Notes shall
be increased by an additional one percent per annum on the 11th day in the
applicable year such Shelf Registration Statement ceases to be effective and
thereafter by an additional one percent per annum for each additional 90 days
that such Shelf Registration Statement is not effective, subject to the same
provisions with respect to the increase in the
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interest rate referred to above; provided that the interest rate borne by the
Notes will not be increased if the Registrable Securities are otherwise freely
tradeable pursuant to Rule 144 under the Securities Act. Upon the effectiveness
of a Shelf Registration Statement, the interest rate borne by the Notes shall be
reduced to their original interest rate unless and until increased as described
in this paragraph.
The Company shall notify Commonwealth Associates within three business
days after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). The Additional
Interest due shall be payable on each interest payment date to the record holder
of Notes entitled to receive the interest payment to be paid on such date as set
forth in the Notes. Each obligation to pay Additional Interest shall be deemed
to accrue from and including the day following the applicable Event Date.
(d) Specific Enforcement. Without limiting the remedies available to
the holders of Registrable Securities, the Company acknowledges that any failure
by the Company to comply with its obligations under Section 2(a) hereof may
result in material irreparable injury to such holders for which there is no
adequate remedy at law, that it would not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, any such
holder of Registrable Securities may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 2(a) hereof.
3. Piggyback Registration Rights.
(a) Right to Piggyback. Whenever the Company proposes to register any
Shares (or securities convertible into or exchangeable or exercisable for
Shares) under the Securities Act, at any time on or before the Expiration Date,
for its own account or for the account of other Persons exercising demand
registration rights other than (i) pursuant to Section 4 below or (ii) under a
Registration Statement on Form S-4, Form S-8 or any successor form filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing employees or security holders (a "Piggyback Registration"),
the Company will give prompt written notice to all holders of Registrable
Securities of its intention to effect such a Registration and will use its best
efforts, subject to Section 3(b) below, to include in such Piggyback
Registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within thirty (30) days after
the receipt of the Company's notice. Except as may otherwise be provided in this
Agreement, Registrable Securities with respect to which such request for
Registration has been received will be registered by the Company and offered to
the public on the same terms and subject to the same conditions applicable to
the Piggyback Registration to be sold by the Company or by the other Persons
selling under such Piggyback Registration.
(b) Priority on Piggyback Registrations. If a Piggyback Registration
relates to an underwritten offering and the managing underwriter or underwriters
advise the Company in writing that in its or their opinion the number of
securities proposed to be sold in a Piggyback Registration exceeds the number
which can be sold in such offering within a price
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range acceptable to the Company or the other Persons exercising demand
registration rights, the Company will include in such Piggyback Registration the
number of securities which, in the opinion of such underwriter or underwriters,
can be sold within such price range, which securities shall be allocated as
follows: (w) first, the securities proposed to be sold by other Persons
exercising demand registration rights granted on or prior to the date hereof,
(x) second, so long as the Senior Indebtedness (as defined in the Memorandum)
remains outstanding, up to an aggregate of 250,000 shares of Common Stock held
by the Bank Lenders, provided, that such priority shall be effective for up to
only two such Piggyback Registration opportunities, (y) third, Registrable
Securities held by the Holder and requested to be included in such Piggyback
Registration, together with any other securities requested to be included in
such Piggyback Registration by other holders, pro rata among the Holder and the
other holders of Registrable Securities (on the basis of the amount of
Registrable Securities then owned by each such holder) requested to be included
in such Piggyback Registration, and (z) fourth, the securities the Company
proposes to sell.
(c) Underwriting. If a Piggyback Registration for which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holder in the notice given pursuant to Section 3(a),
which notice shall include the name of the managing underwriter or underwriters.
4. Demand Registration Rights.
(a) Right to Demand. At any time on or before the Expiration Date, the
holders of not less than a majority of the Registrable Securities then
outstanding may make up to two written requests (provided in each case such
holders have not registered Registrable Securities pursuant to Section 2 or 3
above within 120 days prior to such request) to the Company for registration
with the Commission under and in accordance with the provisions of the
Securities Act of not less than $250,000 of the Registrable Securities (a
"Demand Registration"). Within ten (10) days after receipt of such request, the
Company shall give written notice of such requested registration to all other
holders of Registrable Securities, and, subject to the priority provisions set
forth in Section 4(b) below, will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion within thirty (30) days after the Company gives such notice. Unless
expressly agreed to by the Holder, no securities of the Company or of any other
Person other than Registrable Securities shall be included in a Demand
Registration except pursuant to the exercise of any piggyback registration
rights granted on or prior to the date hereof. Except as otherwise provided
herein, a registration will not count as a Demand Registration until it has
become effective and the holders of the Registrable Securities included in such
registration are legally permitted to sell all of their Registrable Securities
that are requested to be so included unless the holders of Registrable
Securities included in such Demand Registration fail to take such actions as are
required on their part to cause the registration to become effective, in which
case such registration shall count as a Demand Registration.
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(b) Priority on Demand Registrations. If the managing underwriter or
underwriters of a Demand Registration advise the Company in writing that in its
or their opinion the number of securities proposed to be sold in such Demand
Registration exceeds the number which can be sold in such offering, the Company
will include in such Demand Registration only the number of securities which, in
the opinion of such underwriter or underwriters, can be sold in such offering
which securities shall be allocated on a pro rata basis among the Registrable
Securities and such other securities requested to be included in such Demand
Registration pursuant to the exercise of any piggyback registration rights
granted on or prior to the date hereof.
(c) Selection of Underwriters. If any Demand Registration is an
underwritten offering, a majority in interest of the Holders will select a
managing underwriter or underwriters to administer the offering which managing
underwriter or underwriters shall be of nationally recognized standing and shall
be reasonably acceptable to the Company; provided, however, that the holders of
Registrable Securities acknowledge that Commonwealth Associates has a right of
first refusal to act as underwriter in connection with any offering of Common
Stock if the terms offered by Commonwealth Associates are comparable to those
being offered by other investment banking firms to similarly-situated companies,
and hereby consent to the use of Commonwealth Associates as underwriter in
connection with any Demand Registration.
5. Registration Procedures. With respect to any Registration pursuant
to the exercise of rights provided by Sections 2, 3 and 4 of this Agreement, the
Company will (subject to Sections 2(a) and 12 hereof) promptly:
(a) prepare and file with the Commission a Registration Statement (a
"Registration Statement") which includes the Registrable Securities and use
its best efforts to cause such Registration Statement to become effective
as promptly as practicable; provided that before filing a Registration
Statement or any amendments thereto or any Prospectus, the Company will
furnish to one counsel selected by the holders of a majority of the
Registrable Securities to be included and the underwriters, if any, draft
copies of all such documents proposed to be filed at least five (5)
business days prior thereto, which documents will be subject to the
reasonable review of such counsel and underwriters, and the Company will
not file any Registration Statement or amendment thereto or any Prospectus
to which a majority of such holders shall reasonably object (provided that
nothing herein shall prevent the Company from making a timely filing of any
report required to be filed by it pursuant to the Exchange Act in such form
as it determines is appropriate) and will notify the holders of Registrable
Securities of any stop order issued or threatened by the Commission in
connection therewith and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for a period of not less than
four (4) months (or such shorter period which will terminate when all
Registrable Securities covered by such Registration Statement have been
sold or withdrawn, but not prior to the expiration of any applicable period
referred to in Section
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4(3) of the Securities Act and Rule 174 thereunder, if applicable, or such
longer period pursuant to Section 2(a) hereof); cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement
or Prospectus supplement;
(c) furnish to each seller of Registrable Securities and the
underwriter or underwriters, if any, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, upon
request, and such number of conformed copies thereof and such number of
copies of the Prospectus (including each preliminary Prospectus), and any
documents incorporated by reference therein, as such seller or underwriter
may reasonably request in order to facilitate the disposition of the
Registrable Securities being sold by such seller (it being understood that
the Company consents to the use of the Prospectus by such seller and the
underwriter or underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by the Prospectus);
(d) notify each seller of Registrable Securities at any time when a
Prospectus relating to Registrable Securities is required to be delivered
under the Securities Act, when the Company becomes aware of the happening
of any event as a result of which the Prospectus included in such
Registration Statement (as then in effect) contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements therein (in the case of the Prospectus or any preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading and, as promptly as practicable thereafter, prepare and file
with the Commission and make available a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading;
(e) use its best efforts to cause all Registrable Securities to be
listed, by the date such Registrable Securities cease to be Registrable
Securities as a result of Registration or otherwise, on each securities
exchange or national quotation system on which the Shares are then listed
or proposed to be listed, if any;
(f) make generally available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act
no later than 45 days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement, which earnings statement
shall cover said 12-month period; provided, however, that in the event that
the first day of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement shall also be the first day of
the Company's fiscal year, such earnings statement shall be made generally
available no later than 90 days after the end of such 12-month period;
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(g) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(h) if requested by the managing underwriter or underwriters or any
holder of Registrable Securities, promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters or such holder requests to be included therein
with respect to the number of Registrable Securities being sold by such
holder to such underwriter or underwriters, the purchase price being paid
therefor by such underwriter or underwriters and with respect to any other
terms of the underwritten offering of the Registrable Securities to be sold
in such offering; and promptly make all required filings of such Prospectus
supplement or post-effective amendment;
(i) as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a Registration Statement,
deliver a copy of such document to each holder of Registrable Securities;
(j) on or prior to the date on which the Registration Statement is
declared effective, use its best efforts to register or qualify, and
cooperate with the holders of a majority of the Registrable Securities, the
underwriter or underwriters, if any, and their counsel, in connection with
the registration or qualification of the Registrable Securities covered by
the Registration Statement for offer and sale under the securities or blue
sky laws of each state and other jurisdiction of the United States as a
majority of the such holders or underwriter reasonably requests in writing,
to use its best efforts to keep each such registration or qualification
effective, including through new filings, or amendments or renewals, during
the period such Registration Statement is required to be kept effective
pursuant to Section 5(b) hereof and to do any and all other acts or things
necessary or advisable to permit the disposition in all such jurisdictions
of the Registrable Securities covered by the applicable Registration
Statement;
(k) cooperate with the holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold under the
Registration Statement and enable such securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or any such holder may request;
(l) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States as may
be necessary to enable such holder of Registrable Securities or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
(m) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as the holders
of a majority of the Registrable
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Securities being sold or the underwriters retained by such holders, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(n) make available for inspection by a representative of the sellers
of Registrable Securities, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney, accountant or
other agent retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company and its direct and indirect
subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise their due diligence reasonably, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such Inspectors in connection with such
Registration Statement; provided that the Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed to the Inspectors unless
(x) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement or (y) the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction; provided, however, that any decision not
to disclose information pursuant to clause (x) shall be made after
consultation with counsel for the Company, and such representative of the
sellers agrees that it will, upon learning that disclosure of such Records
is sought in a court of competent jurisdiction, give notice to the Company
and allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential;
(o) use its best efforts to obtain a cold comfort letter from the
Company's independent public accountants in customary form and covering
such matters of the type customarily covered by cold comfort letters as a
representative of the sellers of Registrable Securities reasonably request;
and
(p) furnish each seller of Registrable Securities with an opinion of
its counsel (reasonably acceptable to such seller) to the effect that (i)
such registration statement has become effective under the Securities Act
and no order suspending the effectiveness of such registration statement,
preventing or suspending the use of such registration statement, any
preliminary prospectus, any final prospectus, or any amendment or
supplement thereto has been issued, nor has the SEC instituted or
threatened to institute any proceedings with respect to such an order, (ii)
such registration statement and each prospectus forming a part thereof
(including each preliminary prospectus), and any amendment or supplement
thereto, complies as to form with the Securities Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any
material misstatement or omission in such registration statement or any
prospectus, as amended or supplemented except no opinion need be expressed
as to the financial statements and related schedules, and counsel shall be
entitled to rely on opinions of other counsel reasonably satisfactory to
such sellers regarding matters of foreign law and intellectual property.
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The Holder, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(d), will forthwith
discontinue disposition of the Registrable Securities until the Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
5(d) or until it is advised in writing (the "Advice") by the Company that the
use of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings which are incorporated by reference in the Prospectus,
and, if so directed by the Company, the Holder will, or will request the
managing underwriter or underwriters, if any, to deliver to the Company all
copies, other than permanent file copies then in the Holder's possession, of the
Prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event the Company shall give any such notice, the time period
mentioned in Section 5(b) shall be extended by the number of business days
during the period from and including the date of the giving of such notice to
and including the date when the Holder shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 5(d) or the Advice.
The Holder shall furnish to the Company such information regarding the
Registrable Securities held by it and the intended method of disposition thereof
and other information concerning the Holder as the Company shall reasonably
request and as shall be required in connection with the Registration Statement
to be filed by the Company.
6. Holdback Arrangements.
(a) Restrictions on Public Sale by Holder of Registrable Securities. To
the extent not inconsistent with applicable law, the Holder agrees not to effect
any public sale or distribution of the securities being registered or a similar
security of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 or Rule
144A under the Securities Act, during and not exceeding 180 days after the
effective date of a Registration Statement relating to an underwritten
Registration of Registrable Securities, as may be reasonably requested by the
managing underwriter or underwriters, except as part of such Registration
Statement.
(b) Restrictions on Public Sale by the Company. The Company agrees (x)
not to effect any public sale or distribution of any securities similar to those
being registered, or any securities convertible into or exchangeable or
exercisable for such securities (other than any such sale or distribution of
such securities in connection with any merger or consolidation involving the
Company or a subsidiary thereof or the acquisition by the Company or a
subsidiary thereof of the capital equity or substantially all of the assets of
any other Person or with respect to any employee benefit or stock plan), during
the fourteen (14) days prior to, and during such period not exceeding 180 days
after the effective date of any Registration Statement except as part of such
Registration Statement; and (y) that any agreement entered into after the date
of this Agreement pursuant to which the Company issues or agrees to issue any
privately placed securities shall contain a provision under which holders of
such securities agree not to effect any public sale or distribution of any such
securities during the period described in (x) above, in each case including a
sale pursuant to Rule 144 or Rule 144A under the Securities Act (except
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as part of any such registration, if permitted); provided, however, that the
provision of this Section 6(b) shall not prevent the conversion or exchange of
any securities pursuant to their terms as in effect prior to the commencement of
such period into or for other securities.
(c) Other Registrations. If the Company has previously filed a
Registration Statement with respect to Registrable Securities, and if such
previous registration has not been withdrawn or abandoned, the Company will not
file or cause to be effective any other registration of any of the Shares (or
securities convertible into or exchangeable or exercisable for the Shares) under
the Securities Act (except on Form S-4 or S-8 or any successor forms or filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing employees or security holders), whether on its own or at the
request of any holder or holders of the Shares (or securities convertible into
or exchangeable or exercisable for the Shares), until a period of at least 120
days has elapsed from the effective date of such previous registration (provided
that in the case of a Demand Registration such period shall commence on the date
the Company is first served the notice of demand registration and shall continue
until at least 180 days have elapsed from the effective date of such Demand
Registration).
7. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each holder of Registrable Securities and each of such holder's
officers, directors and agents and each Person, if any, who controls a holder of
Registrable Securities within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, an "Indemnitee") from and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon information with respect to such Indemnitee furnished
in writing to the Company by such Indemnitee expressly for use therein. It is
agreed that the indemnification agreement contained in this Section 7(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage or
liability if such settlement is effected without the consent of the Company
(which consent has not been unreasonably withheld). The Company also agrees to
indemnify any underwriters on substantially the same basis as that of the
indemnification of the holders of Registrable Securities provided in this
Section 7(a).
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(b) Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
the holders of Registrable Securities (or its officers, directors or agents) or
any Person controlling any such holder in respect of which indemnity may be
sought from the Company, the Company shall be permitted to assume the defense of
such claim, unless in the reasonable judgment of such Indemnitee a conflict of
interest may exist between such Indemnitee and the Company with respect to such
claim or differing or additional defenses may be available to such Indemnitee.
If defense of a claim is assumed by the Company, Indemnitees shall not be liable
for any settlement of such action or proceedings effected without their prior
written consent. The Company will not 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 Indemnitee of a release from all
liability in respect of such claim or litigation. If the Company is not entitled
to, or elects not to, assume the defense of a claim, it will not be obligated to
pay the fees and expenses of more than one counsel for the Indemnitees as a
group with respect to such claim in each jurisdiction in which a claim is
brought, unless in the reasonable judgment of any Indemnitee a conflict of
interest may exist between such Indemnitee and any other Indemnitee with respect
to such claim or differing or additional defenses may be available to such
Indemnitee, in which event the Company shall be obligated to pay the fees and
expenses of such additional counsel. Each holder of Registrable Securities
agrees to give prompt written notice to the Company after its receipt of any
written notice of the commencement of any action, suit, proceedings or
investigation or threat thereof made in writing for which such holder may claim
indemnification or contribution pursuant to this Agreement; provided, however,
that failure to give such notice shall not limit the Indemnitee's right to
indemnification or contribution hereunder unless and to the extent that the
Company did not otherwise learn of such action and such failure results in the
forfeiture by it of substantial rights and defenses.
(c) Indemnification by the Holders. Each holder of Registrable
Securities agrees to indemnify and hold harmless the Company, and its directors,
officers and agents and each Person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company to such
holder but only with respect to information furnished in writing by such holder
with respect to such holder which contained a material misstatement of fact or
omission of a material fact expressly for use in any Registration Statement or
any amendment thereto or any Prospectus, or any preliminary Prospectus relating
to the Registrable Securities. In case any action or proceeding shall be brought
against the Company, each holder of Registrable Securities or any of such
holder's respective directors, officers or agents, or any such controlling
Person, in respect of which indemnity may be sought against such holder, such
holder shall have the rights and duties given to the Company, and the Company,
or its directors, officers or agents or such controlling Person, shall have the
rights and duties given to such holder by Section 7(b).
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(d) Contribution. If the indemnification provided for in this Section 7
is unavailable to the Company, the holders of Registrable Securities or the
underwriters in respect to any losses, claims, damages, liabilities or judgments
referred to herein, then each such indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments in such proportion as is appropriate to reflect the relative fault of
the indemnifying parties and indemnified parties in connection with such
statements or omissions which resulted in the losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 7(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitation set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No Person guilty of fraudulent
misrepresentations (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 misrepresentations. For the purposes of this Section 7(d), each
director of the Company, each officer who signed the Registration Statement and
each Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act shall have the same rights to contribution as the Company.
8. Participation in Underwritten Registrations. No holder of
Registrable Securities may participate in any underwritten Registration
hereunder (which shall be conducted in accordance with the provisions of Section
2, 3 or 4) unless such holder (i) agrees to sell such holder's Registrable
Securities on the basis provided in any customary underwriting arrangements
(approved by the holders of Registrable Securities as provided herein) and (ii)
completes and executes all questionnaires, powers of attorney, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and these registration rights; provided, however, such
holder shall not be required to make representations or give indemnifications
except with respect to information provided in writing by the holder of
Registrable Securities concerning such holder and its plan of distribution.
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9. Rule 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if the Company
is not required to file such reports, it will, upon the request of the holders
of Registrable Securities, make publicly available other information so long as
necessary to permit sales under Rule 144 under the Securities Act), that it will
take such further action as the holders of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holders to
sell Registrable Securities without registration under the Securities Act within
the limitations of the exemptions provided by (i) Rule 144 under the Securities
Act, as such rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of the holders
of Registrable Securities, the Company will deliver to each such holder a
written statement as to whether it has complied with the requirements of this
Section 9.
10. Registration Expenses. The Registration Expenses related to the
Shelf Registration, first Demand Registration and any Piggyback Registration
shall be borne solely by the Company.
11. Stand-Off and Special Audit.
(a) Stand-Off. If at the time of any request for a Demand Registration
pursuant to Section 4, the Company (i) is engaged or has fixed plans to engage,
within thirty (30) days of the time of the request, in a registered public
offering as to which the holders of Registrable Securities may, pursuant to
Section 4, include all Registrable Securities proposed to be sold by them, and
which in fact becomes effective within 90 days after the request, or (ii) is
engaged in any other activity which, in the good faith determination of the
Company's board of directors, would be adversely affected by the Demand
Registration to the material detriment of the Company, then the Company may at
its option direct that such request be delayed for a period not to exceed six
(6) months from the effective date of such offering or the date of commencement
of such other material activity, as the case may be, provided that each holder
of Registrable Securities has had no other request delayed during the six months
prior to such request.
(b) Provisions for Special Audit. In the event that a special audit of
the Company's financial statements would be required to effect a Registration
pursuant to Section 4, the Company shall promptly notify each holder of
Registrable Securities that a special audit is required. In such event, such
holders shall have the right to either (i) withdraw such request for
Registration, in which case the request shall not count as a Demand Registration
to which such holders are entitled under this Agreement or (ii) pay the expenses
of conducting the special audit.
12. Public Trading Market. Until the earlier of (a) three (3) years
after the date hereof or (b) the date on which there are no Registrable
Securities, the Company shall use its best efforts to maintain a public trading
market for its Shares.
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13. Representations and Warranties of the Company.
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Restated Certificate of Incorporation or By-laws of the Company,
or any provision of any indenture, agreement or other instrument to which it or
any of its properties or assets is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company.
(b) This Agreement has been duly executed, and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
14. Miscellaneous.
(a) Other Registration Rights. Except as provided in the Memorandum,
the Company does not have and shall not grant registration rights with respect
to any securities of the Company to any Person that are superior to, or that
adversely affect, the registration rights granted to the holders of Registrable
Securities pursuant to this Agreement. The Company shall not enter into any
agreement inconsistent with any of the provisions hereof.
(b) Amendments. This Agreement may not be amended without the written
consent of the Company and a majority of the holders of Registrable Securities.
(c) Successors and Assigns. The Company may not sell, assign, transfer
or otherwise convey any of its rights or delegate any of its duties under this
Agreement, except to a corporation which has succeeded to substantially all of
the business and assets of the Company and has assumed in writing its
obligations under this Agreement, and this Agreement shall be binding on the
Company and such successor. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the Holder and its successors and assigns.
Without limiting the generality of the foregoing, any transferee of Registrable
Securities shall have the rights set forth in this Agreement, and such rights
shall be enforceable against the Company by such transferees as third-party
beneficiaries.
(d) Notices. All notices and other communications provided for
hereunder shall be given and shall be effective as provided in the Warrant.
(e) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
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(f) Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences 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 such provision, paragraph, word, clause, phrase or sentence in
every other respect and of the remaining provisions, paragraphs, words, clauses,
phrases or sentences hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) Remedies. Without affecting the rights of holders of the
Registrable Securities in any way pursuant to Section 2(d) hereof, the Company
acknowledges that monetary damages will not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions hereof and agrees,
to the fullest extent permitted by law, to waive the defense of adequacy of
legal remedies in any action for specific performance hereof.
(j) Merger, etc. If, directly or indirectly, (i) the Company shall
merge with and into, or consolidate with, any other Person, (ii) any Person
shall merge with and into, or consolidate with, the Company and the Company
shall be the surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of the Registrable
Securities shall be changed into or exchanged for stock or other securities of
any other Person, then, in each such case, proper provision shall be made so
that such Person shall be bound by the provisions of this Agreement and the term
"Company" shall thereafter be deemed to refer to such Person.
IN WITNESS WHEREOF, each of the undersigned has duly caused this
Registration Rights Agreement to be signed on its behalf as of this ______
day of February 1996.
NAI TECHNOLOGIES, INC.
By:
-----------------------------
Name:
Title:
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FOR INDIVIDUALS:
---------------------------------
Signature of Investor
---------------------------------
Name of Investor (please print)
---------------------------------
Residence Address (please print)
FOR CORPORATIONS:
---------------------------------
Name of Corporation
---------------------------------
Executive Officer (please print)
By:
-----------------------------
Signature of Executive Officer
FOR PARTNERSHIPS:
---------------------------------
Name of Partnership
---------------------------------
Name of partner (please print)
By:
--------------------------
Signature of Partner
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