EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
ENGLOBAL CORPORATION,
TONTINE CAPITAL PARTNERS, L.P.
AND
ADDITIONAL INVESTORS
SEPTEMBER 29, 2005
TABLE OF CONTENTS
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Page
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ARTICLE 1 Definitions.........................................................3
ARTICLE 2 Registration Rights.................................................5
2.1 Required Registration............................................5
2.2 Current Public Information.......................................5
2.3 Demand Registration..............................................5
2.4 Piggyback Registration...........................................7
2.5 Holdback Agreements..............................................9
2.6 Registration Procedures..........................................9
2.7 Conditions Precedent to Company's Obligations Pursuant
to this Agreement.............................................11
2.8 Fees and Expenses...............................................12
2.9 Indemnification.................................................12
2.10 Participation in Registrations..................................15
ARTICLE 3 Transfers of Certain Rights........................................15
3.1 Transfer........................................................15
3.2 Transferees.....................................................16
3.3 Subsequent Transferees..........................................16
ARTICLE 4 Miscellaneous......................................................16
4.1 Recapitalizations, Exchanges, etc...............................16
4.2 No Inconsistent Agreements......................................16
4.3 Amendments and Waivers..........................................16
4.4 Severability....................................................16
4.5 Counterparts....................................................16
4.6 Notices.........................................................17
4.7 Governing Law...................................................17
4.8 Forum; Service of Process.......................................17
4.9 Captions........................................................17
4.10 No Prejudice....................................................17
4.11 Words in Singular and Plural Form...............................17
4.12 Remedy for Breach...............................................18
4.13 Successors and Assigns, Third Party Beneficiaries...............18
4.14 Entire Agreement................................................18
4.15 Attorneys' Fees.................................................18
4.16 Termination of Rights...........................................18
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of September 29, 2005, is
entered into by and among ENGLOBAL CORPORATION, a Nevada corporation (the
"Company"), TONTINE CAPITAL PARTNERS, L.P., a Delaware limited partnership
("Tontine" or a "Purchaser"), and the Persons set forth on the signature pages
attached hereto (each a "Purchaser," and together, the "Purchasers").
RECITALS:
A. The Company desires to issue and sell 2,000,000 shares of its Common
Stock to Tontine as set forth in the Securities Purchase Agreement dated as of
September ___, 2005, entered into by and between the Company and Tontine (the
"Securities Purchase Agreement");
B. Certain members of the Company's management desire to sell up to
1,000,000 shares of the Company's Common Stock to the additional investors who
will become signatory to this Agreement, which sales will be made pursuant to a
Subscription Agreement (the "Secondary Purchase Agreement");
C. It is a condition precedent to the consummation of the transactions
contemplated by the Securities Purchase Agreement that the Company provide for
the rights set forth in this Agreement; and
D. Certain terms used in this Agreement are defined in Article 1 hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
"Affiliate" means any Person that directly or indirectly controls, or is
under control with, or is controlled by such Person. As used in this definition,
"control" (including with its correlative meanings, "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
"Business Day" means any day excluding Saturday, Sunday or any other day
which is a legal holiday under the laws of the State of Texas or is a day on
which banking institutions therein located are authorized or required by law or
other governmental action to close.
"Closing Date" means September 30, 2005.
"Common Stock" means the common stock, par value $0.001 per share, of the
Company.
"Company" has the meaning set forth in the preamble.
"Designated Holder" means a holder of Registrable Securities.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 2.9.
"Losses" has the meaning set forth in Section 2.9.
"Majority Holders" means holders of a majority of the Registrable
Securities.
"Person" means any individual, company, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental body or other entity.
"Piggyback Registration" has the meaning set forth in Section 2.4.
"Purchaser(s)" has the meaning set forth in the preamble.
"Registration Period" means the two years, plus any additional periods
required by the second paragraph of Section 2.1, during which the Registration
Statement contemplated by Section 2.1 is required to remain effective.
"Registrable Securities" means, subject to the immediately following
sentences, (i) shares of Common Stock acquired by the applicable Purchaser from
the Company pursuant to the Securities Purchase Agreement or from certain
members of the Company's management pursuant to the Secondary Purchase
Agreement, and (ii) any shares of Common Stock issued or issuable, directly or
indirectly, with respect to the securities referred to in clause (i) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. In addition,
any particular shares of Common Stock constituting Registrable Securities will
cease to be Registrable Securities when they (x) have been effectively
registered under the Securities Act and disposed of in accordance with a
Registration Statement covering them, (y) have been sold to the public pursuant
to Rule 144 (or by similar provision under the Securities Act), or (z) are
eligible for resale under Rule 144(k) (or by similar provision under the
Securities Act) without any limitation on the amount of securities that may be
sold under paragraph (e) thereof.
"Registration Statement" means a registration statement on Form S-3 (or, if
the Company is not eligible to use Form S-3, such other appropriate registration
form of the SEC pursuant to which the Company is eligible to register the resale
of Registrable Securities) filed by the Company under the Securities Act which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement, which
shall permit the Purchasers to offer and sell, on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, the Registrable Securities.
"Representatives" has the meaning set forth in Section 2.9.
"Required Filing Date" has the meaning set forth in Section 2.1.
"Required Registration Statement" has the meaning set forth in Section 2.1.
"SEC" means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Secondary Purchase Agreement" has the meaning set forth in the recitals.
"Securities Purchase Agreement" has the meaning set forth in the recitals.
"Tontine" has the meaning set forth in the preamble.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Required Registration. The Company shall use its best efforts to
prepare and as promptly as possible after the date hereof, but in any event, not
later than 30 days from the Closing Date (or, if such 60th day is not a Business
Day, by the first Business Day thereafter) (the "Required Filing Date") file a
Registration Statement with the SEC (the "Required Registration Statement") and
cause the Required Registration Statement to be declared effective under the
Securities Act within 90 days after the Closing Date (or, if such 90th day is
not a Business Day, by the first Business Day thereafter). The Company agrees to
include in the Required Registration Statement all information which the
Designated Holders shall reasonably request. If the Company fails to file the
Required Registration Statement or if the Registration Statement is not
effective within the periods set forth above, the Company shall pay Tontine and
each other Purchaser an amount per month equal to 1% of the amount purchased
pursuant to this Agreement by Tontine or such other Purchaser.
The Company shall use its best efforts to keep the Required Registration
Statement continuously effective for a period of two years after the
Registration Statement first becomes effective, plus the number of days during
which such Registration Statement was not effective or usable pursuant to
Sections 2.5(b), 2.6(e) or 2.6(i), or such shorter period as will terminate when
all of the Registrable Securities covered by the Required Registration Statement
have been disposed of in accordance with the Required Registration Statement or
have otherwise ceased to be Registrable Securities. In the event the Company
shall give any notice pursuant to Sections 2.6(e) or (i), the additional time
period mentioned in this Section 2.1 during which the Required Registration
Statement is to remain effective shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Sections 2.6(e) or (i) to and including the date when each seller of a
Registrable Security covered by the Registration Statement shall have received
the copies of the supplemented or amended prospectus contemplated by Sections
2.6(e).
2.2 Current Public Information. The Company covenants that it will use its
best efforts to file all reports required to be filed by it under the Exchange
Act and the rules and regulations adopted by the SEC thereunder, and will use
its best efforts to take such further action as the Purchasers may reasonably
request, all to the extent required to enable the holders of Registrable
Securities to sell Registrable Securities pursuant to Rule 144 or Rule 144A
adopted by the SEC under the Securities Act or any similar rule or regulation
hereafter adopted by the SEC. The Company shall, upon the request of a
Designated Holder, deliver to such Designated Holder a written statement as to
whether it has complied with such requirements during the twelve month period
immediately preceding the date of such request.
2.3 Demand Registration.
(a) Subject to Section 2.3(g), upon the written request of the
Majority Holders, requesting that the Company effect the registration under the
Securities Act of all or part of such Designated Holders' Registrable Securities
and specifying the intended method of disposition thereof, the Company will
promptly give written notice of such requested registration to all Designated
Holders, and thereupon the Company will use its best efforts to effect as
expeditiously as possible the registration under the Securities Act of the
following:
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(i) the Registrable Securities which the Company has been so requested
to be registered by such Designated Holders for disposition in accordance
with the intended method of disposition stated in such request;
(ii) all other Registrable Securities the holders of which shall have
made a written request to the Company for registration thereof within 30
days after the giving of such written notice by the Company (which request
shall specify the intended method of disposition of such Registrable
Securities); and
(iii) all shares of Common Stock which the Company or Persons entitled
to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company may elect to register in connection with the
offering of Registrable Securities pursuant to this Section 2.3;
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any, so to be registered; provided, that,
the provisions of this Section 2.3 shall not require the Company to effect more
than one registration of Registrable Securities in addition to the Required
Registration Statement contemplated by Section 2.1.
(b) The registrations under this Section 2.3 shall be on an
appropriate Registration Statement that permits the disposition of such
Registrable Securities in accordance with the intended methods of distribution
specified by the Majority Holders in their request for registration. The Company
agrees to include in any such Registration Statement all information which
Designated Holders of Registrable Securities being registered shall reasonably
request.
(c) A registration requested pursuant to this Section 2.3 shall not be
deemed to have been effected (i) unless a Registration Statement with respect
thereto has become effective; provided, that a Registration Statement which does
not become effective after the Company has filed a Registration Statement with
respect thereto solely by reason of the refusal to proceed of the Majority
Holders (other than a refusal to proceed based upon the advice of counsel
relating to a matter with respect to the Company) shall be deemed to have been
effected by the Company at the request of the Majority Holders unless the
Designated Holders electing to have Registrable Securities registered pursuant
to such Registration Statement shall have elected to pay all fees and expenses
otherwise payable by the Company in connection with such registration pursuant
to Section 2.8, (ii) if, after it has become effective, such registration is
withdrawn by the Company (other than at the request of the Majority Holders) or
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason prior to the
expiration of a 180 day period following such Registration Statement's
effectiveness, or (iii) if the conditions to closing specified in any purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than due solely to some act or omission by
the Designated Holders electing to have Registrable Securities registered
pursuant to such Registration Statement.
(d) If a requested registration pursuant to this Section 2.3 involves
an underwritten offering, the underwriter or underwriters thereof shall be
selected by the holders of a majority (by number of shares) of the Registrable
Securities requested to be included in such Registration Statement and shall be
reasonably acceptable to the Company.
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(e) If a requested registration pursuant to this Section 2.3 involves
an underwritten offering, and the managing underwriter shall advise the Company
in writing (with a copy to each Designated Holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration (including securities of the
Company and Right Holders which are not Registrable Securities) exceeds the
number which can be sold in such offering within a price range reasonably
acceptable to the Company and to the holders of a majority (by number of shares)
of the Registrable Securities requested to be included in such Registration
Statement, the Company will include in such registration, to the extent of the
number which the Company is so advised can be sold in such offering, (i) first,
the Registrable Securities which have been requested to be included in such
registration by the Designated Holders pursuant to this Agreement (pro rata
based on the amount of Registrable Securities sought to be registered by such
persons), (ii) second, provided that no securities sought to be included by the
Designated Holders have been excluded from such registration, the securities of
other persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments of the Company (pro rata based on the amount of
securities sought to be registered by such persons) and (iii) third, securities
the Company proposes to register.
(f) The Company shall use its best efforts to keep any Registration
Statement filed pursuant to this Section 2.3 continuously effective (i) for a
period of one year after the Registration Statement first becomes effective,
plus the number of days during which such Registration Statement was not
effective or usable pursuant to Sections 2.5(b), 2.6(e) or 2.6(i); (ii) if such
Registration Statement related to an underwritten offering, for such period as
in the opinion of counsel for the underwriters a prospectus is required by law
to be delivered in connection with sales of Registrable Securities by an
underwriter or dealer, or (iii) for such shorter period as will terminate when
all of the Registrable Securities covered by the Required Registration Statement
have been disposed of in accordance with the Required Registration Statement or
have otherwise ceased to be Registrable Securities. In the event the Company
shall give any notice pursuant to Sections 2.6(e) or (i), the additional time
period mentioned in Section 2.3(f)(i) during which the Required Registration
Statement is to remain effective shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Sections 2.6(e) or (i) to and including the date when each seller of a
Registrable Security covered by the Registration Statement shall have received
the copies of the supplemented or amended prospectus contemplated by Sections
2.6(e).
(g) The right of Designated Holders to register Registrable Securities
pursuant to this Section 2.3 is only exercisable following the expiration of the
Registration Period or, if, prior to the expiration of the Registration Period,
the Company becomes ineligible to register the Registrable Securities on the
Registration Statement contemplated by Section 2.1 or such Registration
Statement otherwise becomes unusable or ineffective and the Company is not able
to correct the misstatements, have the applicable stop order rescinded or
otherwise restore the effectiveness of the Registration Statement as
contemplated by this Agreement.
2.4 Piggyback Registration.
(a) Whenever the Company proposes to register any of its securities
under the Securities Act (other than pursuant to a registration pursuant to
Section 2.3 or a registration on Form S-4 or S-8 or any successor or similar
forms) and the registration form to be used may be used for the registration of
Registrable Securities, whether or not for sale for its own account, the Company
will give prompt written notice (but in no event less than 25 days before the
anticipated filing date) to all Designated Holders, and such notice shall
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describe the proposed registration and distribution and offer to all Designate
Holders the opportunity to register the number of Registrable Securities as each
such Designated Holder may request. The Company will include in such
registration statement all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 15 days after
the Designated Holders' receipt of the Company's notice (a "Piggyback
Registration").
(b) The Company shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggyback Registration to
be included on the same terms and conditions as any similar securities of the
Company or any other security holder included therein and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method of distribution thereof.
(c) Any Designated Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any Registration Statement
pursuant to this Section 2.4 by giving written notice to the Company of its
request to withdraw; provided, that in the event of such withdrawal (other than
pursuant to Section 2.4(e) hereof, the Company shall not be required to
reimburse such holder for the fees and expenses referred to in Section 2.8
hereof incurred by such Designated Holder prior to such withdrawal, unless such
withdrawal was due to a material adverse change to the Company. The Company may
withdraw a Piggyback Registration at any time prior to the time it becomes
effective.
(d) If (i) a Piggyback Registration involves an underwritten offering
of the securities being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction, and (ii) the managing underwriter of such underwritten
offering shall inform the Company and Designated Holders requesting such
registration by letter of its belief that the distribution of all or a specified
number of such Registrable Securities concurrently with the securities being
distributed by such underwriters would interfere with the successful marketing
of the securities being distributed by such underwriters (such writing to state
the basis of such belief and the approximate number of such Registrable
Securities which may be distributed without such effect), then the Company will
be required to include in such registration only the amount of securities which
it is so advised should be included in such registration. In such event: (x) in
cases initially involving the registration for sale of securities for the
Company's own account, securities shall be registered in such offering in the
following order of priority: (i) first, the securities which the Company
proposes to register, (ii) second, Registrable Securities and securities which
have been requested to be included in such registration by Persons entitled to
exercise "piggy-back" registration rights pursuant to contractual commitments of
the Company (pro rata based on the amount of securities sought to be registered
by Designated Holders and such other Persons); and (y) in cases not initially
involving the registration for sale of securities for the Company's own account,
securities shall be registered in such offering in the following order of
priority: (i) first, the securities of any Person whose exercise of a "demand"
registration right pursuant to a contractual commitment of the Company is the
basis for the registration, (ii) second, Registrable Securities and securities
which have been requested to be included in such registration by Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of securities sought to
be registered by Designated Holders and such other Persons), (iii) third, the
securities which the Company proposes to register.
(e) If, as a result of the proration provisions of this Section 2.4,
any Designated Holders shall not be entitled to include all Registrable
Securities in a Piggyback Registration that such Designated Holders has
requested to be included, such holder may elect to withdraw his request to
include Registrable Securities in such registration.
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(f) The right of the Designated Holders to register Registrable
Securities pursuant to this Section 2.4 is only exercisable with respect to
Registrable Securities not then covered by an effective Registration Statement
contemplated by Section 2.1 or Section 2.3. The rights of the Designated Holders
under this Section 2.4 shall survive the expiration of the Registration Period.
2.5 Holdback Agreements.
(a) To the extent not inconsistent with applicable law, in connection
with a public offering of securities of the Company, upon the request of the
Company or the underwriter, in the case of an underwritten public offering of
the Company's securities, each Designated Holder who beneficially owns (as
defined in Rule 13d-3 adopted by the SEC under the Exchange Act) at least 5% of
the outstanding capital stock of the Company will not effect any public sale or
distribution (other than those included in the registration statement being
filed with respect to such public offering) of any securities of the Company, or
any securities, options or rights convertible into or exchangeable or
exercisable for such securities during the 14 days prior to and the 90-day
period beginning on such effective date, unless (in the case of an underwritten
public offering) the managing underwriters otherwise agree to a shorter period
of time. Notwithstanding the foregoing, no Designated Holder shall be required
to enter into any such "lock up" agreement unless and until all of the Company's
executive officers and directors execute substantially similar "lock up"
agreements and the Company uses commercially reasonable efforts to cause each
holder of more than 5% of its outstanding capital stock to execute substantially
similar "lock up" agreements. Neither the Company nor the underwriter shall
amend, terminate or waive a "lock up" agreement unless each "lock up" agreement
with a Designated Holder is also amended or waived in a similar manner or
terminated, as the case may be.
(b) The Company shall have the right at any time, to suspend the
filing of a Registration Statement under Section 2.3 or require that the
Designated Holders of Registrable Securities suspend further open market offers
and sales of Registrable Securities pursuant to a Registration Statement filed
hereunder for a period not to exceed an aggregate of 30 days in any six month
period or an aggregate of 60 days in any twelve-month period for valid business
reasons (not including avoidance of their obligations hereunder) (i) to avoid
premature public disclosure of a pending corporate transaction, including
pending acquisitions or divestitures of assets, mergers and combinations and
similar events; and (ii) upon the occurrence of any of the events specified in
Sections 2.6(e) or (i). If the Company violates the provisions of this Section
2.5(b), it shall pay Tontine and each other Purchaser a penalty equal to 1% per
month of the amount purchased pursuant to this Agreement by Tontine or such
other Purchaser.
2.6 Registration Procedures. The Company will use its best efforts to
effect the registration of Registrable Securities pursuant to this Agreement in
accordance with the intended methods of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) before filing the Registration Statement, the Company will furnish
to the counsel selected by the holders of a majority of the Registrable
Securities a copy of such Registration Statement, and will provided such counsel
with all correspondence with the SEC regarding the Registration Statement;
(b) prepare and file with the SEC 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 for the period
provided for in Section 2.1 or Section 2.3, or the periods contemplated by the
Company or the Persons requesting any Registration Statement filed pursuant to
Section 2.4;
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(c) furnish to each seller of Registrable Securities such number of
copies of such Registration Statement, each amendment and supplement thereto,
the prospectus included in the Registration Statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other state securities or blue sky laws as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller and to keep each such registration or qualification (or exemption
therefrom) effective during the period which the Registration Statement is
required to be kept effective (provided, that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in the Registration Statement contains an untrue statement
of a material fact or omits any fact 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, the Company will as soon as possible
prepare and furnish to such seller a reasonable number of copies of a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be approved for trading on any automated
quotation system of a national securities association on which similar
securities of the Company are quoted;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;
(h) enter into such customary agreements (including underwriting
agreements) and take all other customary and appropriate actions as the holders
of a majority of the Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(i) notify each Designated Holder of any stop order issued or
threatened by the SEC;
(j) otherwise comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months
beginning with the first day of the Company's first full calendar quarter after
the effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such Registration Statement for sale in any
jurisdiction, the Company will use its best efforts to promptly obtain the
withdrawal of such order;
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(l) if requested by a Designated Holder, obtain one or more comfort
letters, dated the effective date of the Registration Statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the Company's independent public
accountants in customary form and covering such matter of the type customarily
covered by comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request;
(m) provide a legal opinion of the Company's outside counsel, dated
the effective date of such Registration Statement (and, if such registration
includes an underwritten offering, dated the date of the closing under the
underwriting agreement), with respect to the Registration Statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature;
(n) subject to execution and delivery of mutually satisfactory
confidentiality agreements, make available at reasonable times for inspection by
any seller of Registrable Securities, any managing underwriter participating in
any disposition of such Registrable Securities pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such seller
or any managing underwriter, during normal business hours of the Company at the
Company's corporate office in Houston, Texas and without unreasonable disruption
of the Company's business or unreasonable expense to Company and solely for the
purpose of due diligence with respect to the Registration Statement, legally
disclosable, financial and other records and pertinent corporate documents of
the Company and its subsidiaries reasonable requested by such persons, and cause
the Company's employees and independent accountants to supply all similar
information reasonably requested by any such seller, managing underwriter,
attorney, accountant or agent in connection with the Registration Statement, as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility;
(o) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers; and
(p) take all other steps reasonably necessary to effect the
registration of the. Registrable Securities contemplated hereby.
2.7 Conditions Precedent to Company's Obligations Pursuant to this
Agreement. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement that each of the Designated
Holders whose Registrable Securities are to be registered pursuant to this
Agreement shall furnish such Designated Holder's written agreement to be bound
by the terms and conditions of this Agreement prior to performance by the
Company of its obligations under this Agreement. By executing and delivering
this Agreement, each Designated Holder represents and warrants that the
information concerning, and representations and warranties by, such Designated
Holder, including information concerning the securities of the Company held,
beneficially or of record, by such Designated Holder, furnished to the Company
pursuant to the Securities Purchase Agreement or otherwise, are true and correct
as if the same were represented and warranted on the date any Registration
Statement required pursuant to this Agreement is filed with the SEC or the date
of filing with the SEC of any amendment thereto, and each Designated Holder
covenants to immediately notify the Company in writing of any change in any such
information, representation or warranty and to refrain from offering or
11
disposing of any securities pursuant to any Registration Statement until the
Company has reflected such change in such Registration Statement. By executing
and delivering this Agreement, each Designated Holder further agrees to furnish
any additional information as the Company may reasonably request in connection
with any action to be taken by the Company pursuant to this Agreement, and to
pay such Designated Holder's expenses which are not required to be paid by the
Company pursuant to this Agreement.
2.8 Fees and Expenses. All expenses incident to the Company's performance
of or compliance with this Agreement including, without limitation, all
registration and filing fees payable by the Company, fees and expenses of
compliance by the Company with securities or blue sky laws, printing expenses of
the Company, messenger and delivery expenses of the Company, and fees and
disbursements of counsel for the Company and all independent certified public
accountants of the Company, and other Persons retained by the Company will be
borne by the Company, and the Company will pay its internal expenses (including,
without limitation, all salaries and expenses of the Company's employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance of the Company and the
expenses and fees for listing or approval for trading of the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed or on any automated quotation system of a national
securities association on which similar securities of the Company are quoted. In
connection with any Registration Statement filed hereunder, the Company will pay
the reasonable fees and expenses of a single counsel retained by the Designated
Holders of a majority (by number of shares) of the Registrable Securities
requested to be included in such Registration Statement. The Company shall have
no obligation to pay any underwriting discounts or commissions attributable to
the sale of Registrable Securities and any of the expenses incurred by any
Designated Holder which are not payable by the Company, such costs to be borne
by such Designated Holder or Holders, including, without limitation,
underwriting fees, discounts and expenses, if any, applicable to any Designated
Holder's Registrable Securities; fees and disbursements of counsel or other
professionals that any Designated Holder may choose to retain in connection with
a Registration Statement filed pursuant to this Agreement (except as otherwise
provided herein); selling commissions or stock transfer taxes applicable to the
Registrable Securities registered on behalf of any Designated Holder; any other
expenses incurred by or on behalf of such Designated Holder in connection with
the offer and sale of such Designated Holder's Registrable Securities other than
expenses which the Company is expressly obligated to pay pursuant to this
Agreement.
2.9 Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each Designated Holder and its general or limited
partners, officers, directors, members, managers, employees, advisors,
representatives, agents and Affiliates (collectively, the "Representatives")
from and against any loss, claim, damage, liability, attorney's fees, cost or
expense and costs and expenses of investigating and defending any such claim
(collectively, the "Losses"), joint or several, and any action in respect
thereof to which such Designated Holder or its Representatives may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereto)
arise out of or are based upon (i) any breach by the Company of any of its
representations, warranties or covenants contained in this Agreement, (ii) any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus or preliminary or summary prospectus or any
amendment or supplement thereto or (iii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company shall reimburse each such
12
Designated Holder and its Representatives for any legal or any other expenses
incurred by them in connection with investigating or defending or preparing to
defend against any such Loss, action or proceeding; provided, however, that the
Company shall not be liable to any such Designated Holder or other indemnitee in
any such case to the extent that any such Loss (or action or proceeding, whether
commenced or threatened, in respect thereof) arises out of or is based upon (x)
an untrue statement or alleged untrue statement or omission or alleged omission,
made in such Registration Statement, any such prospectus or preliminary or
summary prospectus or any amendment or supplement thereto, in reliance upon, and
in conformity with, written information prepared and furnished to the Company by
any Designated Holder or its Representatives expressly for use therein and, with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to the Registration
Statement, to the extent that a prospectus relating to the Registrable
Securities was required to be delivered by such Designated Holder under the
Securities Act in connection with such purchase, there was not sent or given to
such person, at or prior to the written confirmation of the sale of such
Registrable Securities to such person, a copy of the final prospectus that
corrects such untrue statement or alleged untrue statement or omission or
alleged omission if the Company had previously furnished copies thereof to such
Designated Holder or (y) use of a Registration Statement or the related
prospectus during a period when a stop order has been issued in respect of such
Registration Statement or any proceedings for that purpose have been initiated
or use of a prospectus when use of such prospectus has been suspended pursuant
to Sections 2.5(b), 2.6(e) or (i); provided that in each case, that such Holder
received prior written notice of such stop order, initiation of proceedings or
suspension from the Company. In no event, however, shall the Company be liable
for indirect, incidental or consequential or special damages of any kind. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Designated Holders.
(b) In connection with the filing of the Registration Statement by the
Company pursuant to this Agreement, the Designated Holders will furnish to the
Company in writing such information as the Company reasonably requests for use
in connection with such Registration Statement and the related prospectus and,
to the fullest extent permitted by law, each such Designated Holder will
indemnify and hold harmless the Company and its Representatives from and against
any Losses, severally but not jointly, and any action in respect thereof to
which the Company and its Representatives may become subject under the
Securities Act or otherwise, insofar as such Losses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) the purchase or sale of Registrable Securities during a suspension as
set forth in Sections 2.5(b), 2.6(e) or (i) in each case after receipt of
written notice of such suspension, (ii) any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, prospectus or
preliminary or summary prospectus or any amendment or supplement thereto, or
(iii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but, with
respect to clauses (ii) and (iii) above, only to the extent that such untrue
statement or omission is made in such Registration Statement, any such
prospectus or preliminary or summary prospectus or any amendment or supplement
thereto, in reliance upon and in conformity with written information prepared
and furnished to the Company by such Designated Holder expressly for use therein
or by failure of such Designated Holder to deliver a copy of the Registration
Statement or prospectus or any amendments or supplements thereto, and such
Designated Holder will reimburse the Company and each Representative for any
legal or any other expenses incurred by them in connection with investigating or
defending or preparing to defend against any such Loss, action or proceeding;
provided, however, that such Designated Holder shall not be liable in any such
case to the extent that prior to the filing of any such Registration Statement
or prospectus or amendment or supplement thereto, such Designated Holder has
furnished in writing to the Company information expressly for use in such
Registration Statement or prospectus or any amendment or supplement thereto
which corrected or made not misleading information previously furnished to the
Company. The obligation of each Designated Holder to indemnify the Company and
its Representatives shall be limited to the net proceeds received by such
Designated Holder from the sale of Registrable Securities under such
Registration Statement. In no event, however, shall any Designated Holder be
liable for indirect, incidental or consequential or special damages of any kind.
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(c) Promptly after receipt by any Person in respect of which indemnity
may be sought pursuant to Section 2.9(a) or 2.9(b) (an "Indemnified Party") of
notice of any claim or the commencement of any action, the Indemnified Party
shall, if a claim in respect thereof is to be made against the Person against
whom such indemnity may be sought (an "Indemnifying Party"), promptly notify the
Indemnifying Party in writing of the claim or the commencement of such action;
provided, that the failure to notify the Indemnifying Party shall not relieve
the Indemnifying Party from any liability which it may have to an Indemnified
Party under Section 2.9(a) or 2.9(b) except to the extent of any actual
prejudice resulting therefrom. If any such claim or action shall be brought
against an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its
Representatives who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the written opinion of counsel to such Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any claim or pending or threatened
proceeding in respect of which the Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such claim or proceeding other than the
payment of monetary damages by the Indemnifying Party on behalf of the
Indemnified Party. Whether or not the defense of any claim or action is assumed
by the Indemnifying Party, such Indemnifying Party will not be subject to any
liability for any settlement made without its consent, which consent will not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 2.9 is
unavailable to the Indemnified Parties in respect of any Losses referred to
herein, then each 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 in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Designated
Holders on the other from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company on the one hand and the Designated Holders on the other in
connection with the statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of each Designated Holder on the other shall be
determined by reference to, among other things, whether any action taken,
including any 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.
14
The Company and the Designated Holders agree that it would not be just and
equitable if contribution pursuant to this Section 2.9(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 referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 2.9, no Designated Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities of such Designated Holder were offered to the public exceeds the
amount of any Losses which such Designated Holder has otherwise paid by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. Each Designated Holder's
obligations to contribute pursuant to this Section 2.9 is several in the
proportion that the proceeds of the offering received by such Designated Holder
bears to the total proceeds of the offering received by all the Designated
Holders. The indemnification provided by this Section 2.9 shall be a continuing
right to indemnification with respect to sales of Registrable Securities and
shall survive the registration and sale of any Registrable Securities by any
Designated Holder and the expiration or termination of this Agreement. The
indemnity and contribution agreements contained herein are in addition to any
liability that any Indemnifying Party might have to any Indemnified Party.
2.10 Participation in Registrations.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
(b) Each Person that is participating in any registration under this
Agreement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.6(e) or (i) above,
such Person will forthwith discontinue the disposition of its Registrable
Securities pursuant to the Registration Statement and all use of the
Registration Statement or any prospectus or related document until such Person's
receipt of the copies of a supplemented or amended prospectus as contemplated by
such Section 2.6(e) 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 Designated Holder's possession of such documents at the time of
receipt of such notice. Furthermore, each Designated Holder agrees that if such
Designated Holder uses a prospectus in connection with the offering and sale of
any of the Registrable Securities, the Designated Holder will use only the
latest version of such prospectus provided by Company.
ARTICLE 3
TRANSFERS OF CERTAIN RIGHTS
3.1 Transfer. The rights granted to the Purchasers under this Agreement are
non-transferable except for a transfer, without any consideration whatsoever, to
a person or entity which is an Affiliate of the transferor, and any such
15
transfer, in any case, shall be subject to the provisions of Sections 3.2 and
3.3; provided that nothing contained herein shall be deemed to permit an
assignment, transfer or disposition of the Registrable Securities in violation
of the terms and conditions of the Securities Purchase Agreement, the Secondary
Purchase Agreement or applicable law.
3.2 Transferees. Any permitted transferee to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Purchaser under this Agreement to the same extent
as if such transferee were a Purchaser hereunder.
3.3 Subsequent Transferees. A transferee to whom rights are transferred
pursuant to this Section 3 may not again transfer such rights to any other
person or entity, other than as provided in Sections 3.1 or 3.2 above.
ARTICLE 4
MISCELLANEOUS
4.1 Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to (i) the
Registrable Securities, (ii) any and all shares of Common Stock into which the
Registrable Securities are converted, exchanged or substituted in any
recapitalization or other capital reorganization by the Company and (iii) any
and all equity securities of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in conversion of, in exchange for or in
substitution of, the Registrable Securities and shall be appropriately adjusted
for any stock dividends, splits, reverse splits, combinations, recapitalizations
and the like occurring after the date hereof. The Company shall cause any
successor or assign (whether by merger, consolidation, sale of assets or
otherwise) to enter into a new registration rights agreement with the Designated
Holders on terms substantially the same as this Agreement as a condition of any
such transaction.
4.2 No Inconsistent Agreements. The Company has not and shall not enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Purchasers in this Agreement. The Parties acknowledge and
agree that the Company may grant registration rights hereafter, which shall be
pari passu with the registration rights of the Purchasers, and shall not be
deemed to conflict with this covenant.
4.3 Amendments and Waivers. The provisions of this Agreement may be amended
and the Company may take action herein prohibited, or omit to perform any act
herein required to be performed by it, if, but only if, the Company has obtained
the written consent of holders of at least a majority of the Registrable
Securities then in existence.
4.4 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid wider applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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4.6 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy, telex or similar writing) and
shall be deemed given or made as of the date delivered, if delivered personally
or by telecopy (provided that delivery by telecopy shall be followed by delivery
of an additional copy personally, by mail or overnight courier), one day after
being delivered by overnight courier or four business days after being mailed by
registered or certified mail (postage prepaid for the most expeditious form of
delivery, return receipt requested), to the parties at the following addresses
(or to such other address or telex or telecopy number as a party may have
specified by notice given to the other party pursuant to this provision):
If to the Company, to:
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Attention:
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Telephone: ( ) -
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Facsimile: ( ) -
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With copy to:
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Attention:
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Telephone: ( ) -
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Facsimile: ( ) -
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If to a Purchaser, to:
The address or facsimile number of each Purchaser set forth on
the signature page of this Agreement.
4.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to the conflicts
of laws rules or provisions.
4.8 Forum; Service of Process. Any legal suit, action or proceeding brought
by any party or any of its Affiliates arising out of or based upon this
Agreement shall be instituted in any federal or state court in Harris County,
Texas, and each party waives any objection which it may now or hereafter have to
the laying of venue or any such proceeding, and irrevocably submits to the
jurisdiction of such courts in any such suit, action or proceeding.
4.9 Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
4.10 No Prejudice. The terms of this Agreement shall not be construed in
favor of or against any party on account of its participation in the preparation
hereof.
4.11 Words in Singular and Plural Form. Words used in the singular form in
this Agreement shall be deemed to import the plural, and vice versa, as the
sense may require.
17
4.12 Remedy for Breach. The Company hereby acknowledges that in the event
of any breach or threatened breach by the Company of any of the provisions of
this Agreement, the Designated Holders would have no adequate remedy at law and
could suffer substantial and irreparable damage. Accordingly, the Company hereby
agrees that, in such event, the Designated Holders shall be entitled, and
notwithstanding any election by any Designated Holder to claim damages, to
obtain a temporary and/or permanent injunction to restrain any such breach or
threatened breach or to obtain specific performance of any such provisions, all
without prejudice to any and all other remedies which any Designated Holders may
have at law or in equity.
4.13 Successors and Assigns, Third Party Beneficiaries. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto, each assignee of the Designated Holders permitted pursuant
to Article 3 and their respective permitted successors and assigns and
executors, administrators and heirs. Designated Holders are intended third party
beneficiaries of this Agreement and this Agreement may be enforced by such
Designated Holders.
4.14 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
4.15 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any actual or alleged breach by any party of any representation,
warranty, covenant or agreement in this Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and expenses of such action
or suit from the other party in addition to any other relief ordered by any
court.
4.16 Termination of Rights. Upon the expiration of the Registration Period
all rights of Designated Holders under Section 2.1 of this Agreement will
terminate. All rights under this Agreement will terminate when the Designated
Holders no longer hold any Registrable Securities.
4.17 Force Majeure. Notwithstanding anything to the contrary in this
Agreement, no party to this Agreement will be liable for any failure or delay in
its performance under this Agreement due to any cause beyond its reasonable
control, including natural disasters, war, embargo, riot, sabotage, labor
shortage, act of terrorism, or governmental act, provided that the delayed party
(a) gives the other parties prompt notice of such cause, and (b) uses reasonable
commercial efforts to correct promptly such failure or delay in performance.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date and year first written above.
COMPANY:
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ENGLOBAL CORPORATION
By:
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Title:
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PURCHASERS:
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TONTINE CAPITAL PARTNERS, L.P.
By:
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Title:
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JURISDICTION: Delaware
ADDRESS: 55 Railroad Avenue, 3rd Floor
Greenwich, CT 06830
Telephone: (203) 769-2000
Facsimile: (203) 769-2010
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Number of Shares of Common Stock: 2,000,000
[FORM OF SIGNATURE PAGE FOR ADDITIONAL INVESTORS]
PURCHASER:
By:
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Title:
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JURISDICTION:
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ADDRESS:
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Telephone:
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Facsimile:
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Aggregate Number of Shares of Common Stock
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