Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 11, 2004, is by and between TEGAL CORPORATION (the "Company") and
KINGSBRIDGE CAPITAL LIMITED (the "Investor").
WHEREAS, the Company and the Investor are concurrently entering into
that certain Common Stock Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), pursuant to which the Company may issue, from time to
time, to the Investor up to $25 million worth (as determined in accordance with
the Purchase Agreement) of Common Stock;
WHEREAS, pursuant to the terms of, and in partial consideration for the
Investor entering into, the Purchase Agreement, the Company is concurrently
issuing to the Investor a warrant, exercisable from time to time within five (5)
years following the six-month anniversary of the date of issuance (the
"Warrant") for the purchase of an aggregate of up to 300,000 shares of Common
Stock at a price specified in such Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Purchase Agreement, the Company is
required to provide the Investor with certain registration rights with respect
to the Registrable Securities (as defined in the Purchase Agreement) as set
forth herein;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrant, and in
the Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENT.
(a) Filing of the Registration Statement. Upon the terms and
subject to the conditions set forth in this Agreement, the Company shall file
with the Commission within ten (10) Trading Days following the Closing Date a
registration statement on Form S-3 under the Securities Act or such other form
as deemed appropriate by counsel to the Company for the registration for the
resale by the Investor of the Registrable Securities (the "Registration
Statement").
(b) Effectiveness of the Registration Statement. The Company
shall use commercially reasonable efforts (i) to have the Registration Statement
declared effective by the Commission as soon as reasonably practicable, but in
any event no later than forty-five (45) calendar days, or one hundred twenty
(120) calendar days in the event that the Commission reviews the Registration
Statement, following the Closing Date and (ii) to ensure that the Registration
Statement remains in effect throughout the term of this Agreement as set forth
in Section 4.2, subject to the terms and conditions of this Agreement.
(c) Regulatory Disapproval. Notwithstanding the provisions of
Sections 1.1(b), the date by which a Registration Statement is required to
become effective shall be extended without default or liquidated damages
hereunder or under the Purchase Agreement in the event that the Company's
failure to obtain the effectiveness of the Registration Statement on a timely
basis results solely from the Commission's disapproval of the structure of the
transactions contemplated by the Purchase Agreement. In such event, the parties
agree to cooperate with one another in good faith to arrive at a resolution
acceptable to the Commission; provided, however, that nothing contained in this
Section 1.1(c) shall relieve the Company from its obligation to effect and
maintain the registration of the Warrant Shares on a timely basis.
(d) Failure to Maintain Effectiveness of Registration
Statement. In the event the Company fails to maintain the effectiveness of the
Registration Statement (or the Prospectus) throughout the period set forth in
Section 4.2, other than temporary suspensions as set forth in Section 1.1(e),
and the Investor holds any Registrable Securities at any time during the period
of such ineffectiveness (an "Ineffective Period"), the Company shall pay to the
Investor in immediately available funds into an account designated by the
Investor an amount equal to the product of (x) the total number of Registrable
Securities issued to the Investor under the Purchase Agreement and owned by the
Investor at any time during such Ineffective Period and (y) the result, if
greater than zero, obtained by subtracting the VWAP on the Trading Day
immediately following the last day of such Ineffective Period from the VWAP on
the Trading Day immediately preceding the day on which any such Ineffective
Period began; provided, however, that the foregoing payments shall not apply in
respect of Registrable Securities that are otherwise freely tradable by the
Investor.
(e) Deferral or Suspension During a Blackout Period.
Notwithstanding the provisions of Section 1.1(d), if in the good faith judgment
of the Company, following consultation with legal counsel, it would be
detrimental to the Company or its stockholders for the Registration Statement to
be filed or for resales of Registrable Securities to be made pursuant to the
Registration Statement due to (i) the existence of a material development or
potential material development involving the Company that the Company would be
obligated to disclose in the Registration Statement, which disclosure would be
premature or otherwise inadvisable at such time or would have a Material Adverse
Effect on the Company or its stockholders, or (ii) a filing of a
Company-initiated registration of any class of its equity securities, which, in
the good faith judgment of the Company, would adversely effect or require
premature disclosure of the filing of such Company-initiated registration
(notice thereof, a "Blackout Notice"), the Company shall have the right to (A)
immediately defer such filing for a period of not more than sixty (60) days
beyond the date by which such Registration Statement was otherwise required
hereunder to be filed or (B) suspend use of such Registration Statement for a
period of not more than thirty (30) days (any such deferral or suspension
period, a "Blackout Period"). The Investor acknowledges that it would be
seriously detrimental to the Company and its stockholders for such Registration
Statement to be filed (or remain in effect) during a Blackout Period and
therefore essential to defer such filing (or suspend the use thereof) during
such Blackout Period and agrees to cease any disposition of the Registrable
Securities during such Blackout Period. The Company may not utilize any of its
rights under this Section 1.1(e) to defer the filing of a Registration Statement
(or suspend its effectiveness) more than twice in any twelve (12) month period.
In the event that, within sixty (60) calendar days following any Settlement
Date, the Company gives a Blackout Notice to the Investor of a Blackout Period
and the VWAP on the Trading Day immediately preceding such Blackout Period ("Old
VWAP") is greater than the VWAP on the first Trading Day following such Blackout
Period that the Investor may sell its Registrable Securities pursuant to an
effective Registration Statement ("New VWAP"), then the Company shall either:
(X) issue to the Investor the number of additional shares of Common Stock
("Blackout Shares") equal to one hundred twenty percent (120%) of the difference
between (1) the product of the number of Registrable Securities purchased by the
Investor during the preceding sixty (60) calendar days under the Purchase
Agreement and actually held by Investor immediately prior to the Blackout Period
multiplied by the Old VWAP, divided by the New VWAP, and (2) the number of
Registrable Securities purchased by the Investor under the Purchase Agreement
during the preceding sixty (60) calendar days and actually held by Investor
immediately prior to the Blackout Period or (Y) pay to the Investor an amount
equal to the product of (1) the number of Registrable Securities purchased by
the Investor under the Purchase Agreement during the preceding sixty (60)
calendar days and actually held by Investor immediately prior to the Blackout
Period and (2) the result obtained by subtracting the New VWAP from the Old
VWAP.
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(f) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the amounts payable under Sections 1.1(d) and 1.1(e)
and the Blackout Shares deliverable under Section 1.1(e) above shall constitute
liquidated damages and not penalties. The parties further acknowledge that (i)
the amount of loss or damages likely to be incurred by the Investor is incapable
or is difficult to precisely estimate, (ii) the amounts specified in such
sections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of the
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.
(g) Additional Registration Statements. In the event and to
the extent that the Registration Statement fails to register a sufficient amount
of Common Stock necessary for the Company to issue and sell to the Investor and
the Investor to purchase from the Company all of the Registrable Securities to
be issued, sold and purchased under the Purchase Agreement and the Warrant, the
Company shall prepare and file with the Commission an additional registration
statement or statements in order to effectuate the purpose of this Agreement,
the Purchase Agreement, and the Warrant.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company shall effect the registration
with respect to the sale of the Registrable Securities by the Investor in
accordance with the intended methods of disposition thereof. Without limiting
the foregoing, the Company in each such case will do the following as
expeditiously as possible, but in no event later than the deadline, if any,
prescribed therefor in this Agreement:
(a) Subject to Section 1.1(e), the Company shall (i) prepare
and file with the Commission the Registration Statement; (ii) use commercially
reasonable efforts to cause such filed Registration Statement to become and to
remain effective (pursuant to Rule 415 under the Securities Act or otherwise);
(iii) prepare and file with the Commission such amendments and supplements to
the Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the time
period prescribed by Section 4.2 and in order to effectuate the purpose of this
Agreement, the Purchase Agreement, and the Warrant; and (iv) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the Investor set forth in
such Registration Statement; provided, however, that the Investor shall be
responsible for the delivery of the Prospectus to the Persons to whom the
Investor sells the Shares and the Warrant Shares.
(b) If so requested by a managing underwriter or underwriters,
if any, or the holders of a majority of the Registrable Securities being sold in
connection with the filing of a Registration Statement under the Securities Act
for the offering on a continuous or delayed basis in the future of all of the
Registrable Securities (a "Shelf Registration"), the Company shall (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such holders agree should
be included therein, and (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after the Company
has received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the Company
shall not be required to take any action pursuant to this Section 2.1(b)(ii)
that would, in the opinion of counsel for the Company, violate applicable law.
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(c) In connection with the filing of a Shelf Registration, the
Company shall enter into such reasonable agreements and take all such other
reasonable actions in connection therewith (including those reasonably requested
by the managing underwriters, if any, or the holders of a majority of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities, and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, the Company shall (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company (including
with respect to businesses or assets acquired or to be acquired by the Company),
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm such representations and warranties if and
when requested; (ii) if an underwriting agreement is entered into, it shall
contain indemnification provision and procedures no less favorable to the
selling holders of such Registrable Securities and the underwriters, if any,
than those set forth herein (or such other provisions and procedures acceptable
to the holders of a majority of Registrable Securities covered by such
Registration Statement and the managing underwriters, if any); and (iii) deliver
such documents and certificates as may be reasonably requested by the holders of
a majority of the Registrable Securities being sold, their counsel and the
managing underwriters, if any, to evidence the continued validity of their
representations and warranties made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company.
(d) If the Investor determines to engage an underwriter in
connection with the offering of any Registrable Securities (other than the
resale broker-dealers identified in the Prospectus as such), the Investor will
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary indemnification and
contribution obligation, with the managing underwriter of such offering, and
will take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless the Investor
has notified the Company in writing of its election to exclude all of its
Registrable Securities from such Registration Statement; provided, however, that
the Investor shall consult with the Company prior to any such underwritten
offering and defer such offering for a reasonable period upon the commercially
reasonable request of the Company. The Investor may not participate in any
underwriting distribution hereunder unless it (i) agrees to sell its Registrable
Securities on the basis provided in any underwriting agreements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting agreements, and (iii) agrees to pay all underwriting discounts and
commissions and other fees and expenses of investment bankers and any manager or
managers of such underwriting, and legal expenses of the underwriter, applicable
with respect to its Registrable Securities.
(e) Three (3) Trading Days prior to filing the Registration
Statement or Prospectus, or any amendment or supplement thereto (excluding
amendments deemed to result from the filing of documents incorporated by
reference therein), the Company shall deliver to the Investor and to counsel
representing the Investor, in accordance with the notice provisions of Section
4.8, copies of the Registration Statement, Prospectus and/or any amendments or
supplements thereto as proposed to be filed, together with exhibits thereto,
which documents will be subject to review by the Investor and such counsel, and
thereafter deliver to the Investor and such counsel, in accordance with the
notice provisions of Section 4.8, such number of copies of the Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the Prospectus (including each preliminary prospectus) and
such other documents or information as the Investor or counsel may reasonably
request in order to facilitate the disposition of the Registrable Securities.
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(f) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable Securities covered by
the Registration Statement such number of conformed copies of the Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the Prospectus (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 promulgated under the
Securities Act relating to such seller's Registrable Securities, and such other
documents, as such seller may reasonably request to facilitate the disposition
of its Registrable Securities.
(g) After the filing of the Registration Statement, the
Company shall promptly notify the Investor of any stop order issued or
threatened by the Commission in connection therewith and take all commercially
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(h) The Company shall use commercially reasonable efforts to
(i) register or qualify the Registrable Securities under such other securities
or blue sky laws of each jurisdiction in the United States as the Investor may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Investor to consummate the disposition of the Registrable Securities; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 2.1(g), subject itself to taxation in any such
jurisdiction, consent or subject itself to general service of process in any
such jurisdiction, change any existing business practices, benefit plans or
outstanding securities or amend or otherwise modify the Charter or Bylaws.
(i) The Company shall enter into customary agreements and take
such other actions as are reasonably required in order to expedite the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).
(j) The Company shall make available to the Investor (and will
deliver to Investor's counsel),(A) subject to restrictions imposed by the United
States federal government or any agency or instrumentality thereof, copies of
all public correspondence between the Commission and the Company concerning the
Registration Statement and will also make available for inspection by the
Investor and any attorney, accountant or other professional retained by the
Investor (collectively, the "Inspectors"),(B) upon reasonable advance notice
during normal business hours all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with the
Registration Statement. Records that the Company determines, in good faith, to
be confidential and that it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless the disclosure or release of such Records
is requested or required pursuant to oral questions, interrogatories, requests
for information or documents or a subpoena or other order from a court of
competent jurisdiction or other process; provided, however, that prior to any
disclosure or release pursuant to the immediately preceding clause, the
Inspectors shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waive such Inspectors' obligation not to disclose such Records; and, provided,
further, that if failing the entry of a protective order or the waiver by the
Company permitting the disclosure or release of such Records, the Inspectors,
upon advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records that counsel has advised the Inspectors
that the Inspectors are compelled to disclose; provided, however, that upon any
such required disclosure, such Inspector shall use his or her best efforts to
obtain reasonable assurances that confidential treatment will be afforded such
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information. The Investor agrees that information obtained by it solely as a
result of such inspections (not including any information obtained from a third
party who, insofar as is known to the Investor after reasonable inquiry, is not
prohibited from providing such information by a contractual, legal or fiduciary
obligation to the Company) shall be deemed confidential and shall not be used
for any purposes other than as indicated above or by it as the basis for any
market transactions in the securities of the Company or its affiliates unless
and until such information is made generally available to the public. The
Investor further 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 its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
(k) To the extent required by law or reasonably necessary to
effect a sale of Registrable Securities in accordance with prevailing business
practices at the time of any sale of Registrable Securities pursuant to a
Registration Statement, the Company shall deliver to the Investor a signed
counterpart, addressed to the Investor, of (1) an opinion or opinions of counsel
to the Company, and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Investor therefor reasonably requests.
(l) The Company shall otherwise comply with all applicable
rules and regulations of the Commission, including, without limitation,
compliance with applicable reporting requirements under the Exchange Act.
(m) The Company shall appoint a transfer agent and registrar
for all of the Registrable Securities covered by such Registration Statement not
later than the effective date of such Registration Statement.
(n) The Company may require the Investor to promptly furnish
in writing to the Company such information as may be required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or the NASD or any state securities commission and
all such information regarding the Investor, the Registrable Securities held by
the Investor and the intended method of disposition of the Registrable
Securities. The Investor agrees to provide such information requested in
connection with such registration within five (5) Business days after receiving
such written request and the Company shall not be responsible for any delays in
obtaining or maintaining the effectiveness of the Registration Statement caused
by the Investor's failure to timely provide such information.
(o) The Investor will use cooperate with the Company, as
reasonably requested by the Company, in connection with the preparation and
filing of any Registration Statement hereunder, unless the Investor has notified
the Company in writing of such Investor's irrevocable election to exclude all of
the Investor's Registrable Securities from such Registration Statement.
(p) Upon receipt of a Blackout Notice from the Company, the
Investor shall immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until (i) the Company advises the Investor that the Blackout Period has
terminated and (ii) the Investor receives copies of a supplemented or amended
prospectus, if necessary. If so directed by the Company, the Investor will
deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in the Investor's
possession (other than a limited number of file copies) of the prospectus
covering such Registrable Securities that is current at the time of receipt of
such notice.
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Section 2.2. REGISTRATION EXPENSES. The Company shall pay all registration
expenses incurred in connection with the Registration Statement (the
"Registration Expenses"), including, without limitation: (i) all registration,
filing, securities exchange listing and fees required by the National
Association of Securities Dealers, (ii) all registration, filing, qualification
and other 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), (iii) all word processing,
duplicating, printing, messenger and delivery expenses, (iv) the Company's
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred by the Company in connection with the listing of the
Registrable Securities, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with the delivery by independent
certified public accountants of such special audit(s) or comfort letter(s)
requested pursuant to Section 2.1(i) hereof), (vii) the fees and expenses of any
special experts retained by the Company in connection with such registration and
amendments and supplements to the Registration Statement and Prospectus, (viii)
all reasonable fees and expenses of counsel for the Investor to the extent
incurred in connection with the review, and assistance in preparation, of the
Registration Statement, correspondence with the Commission and amendments and
supplements to the Registration Statement and Prospectus, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
ARTICLE III
INDEMNIFICATION
Section 3.1. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Investor, its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and each Person or entity, if any, who controls the Investor within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, together
with the partners, Affiliates, officers, directors, employees and duly
authorized agents of such controlling Person or entity (collectively, the
"Controlling Persons"), from and against any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and costs and expenses of investigating and defending any such
claim) (collectively, "Damages"), joint or several, and any action or proceeding
in respect thereof to which the Investor, its partners, affiliates, officers,
directors, employees and duly authorized agents, and any Controlling Person, may
become subject under the Securities Act or otherwise, as incurred, insofar as
such Damages (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, or in any preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement relating to the
Registrable Securities or arises out of, or are 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 under the circumstances not
misleading, and shall reimburse the Investor, its partners, affiliates,
officers, directors, employees and duly authorized agents, and each such
Controlling Person, for any legal and other expenses reasonably incurred by the
Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person, as incurred, in investigating
or defending or preparing to defend against any such Damages or actions or
proceedings; provided, however, that the Company shall not be liable to the
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extent that any such Damages arise out of the Investor's (or any other
indemnified Person's) failure to send or give a copy of the final prospectus or
supplement (as then amended or supplemented) to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final prospectus or
supplement; provided, further, that the Company shall not be liable to the
extent that any such Damages arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement, or any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Investor or any other person who participates as an underwriter in the offering
or sale of such securities, in either case, specifically stating that it is for
use in the preparation thereof.
(b) In connection with any Registration Statement with respect to which
the Investor is participating, the Investor will indemnify and hold harmless, to
the same extent and in the same manner set forth in the preceding paragraph, the
Company, each of directors, each its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act (each a
"Company Indemnified Person") against any Damages to which any Company
Indemnified Person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as the such Damages arises out of or is based upon (a) any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are 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 under the circumstances not misleading to the extent
that such violation occurs in reliance upon and in conformity with written
information furnished to the Company by the Investor or on behalf of the
Investor expressly for use in connection with such Registration Statement or (b)
any failure by the Investor to comply with prospectus delivery requirements of
the Securities Act, the Exchange Act or any other law or legal requirement
applicable to sales under the Registration Statement.
Section 3.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. All claims for
indemnification under Section 3.1 shall be asserted and resolved in accordance
with the provisions of Section 11.02 and 11.03 of the Purchase Agreement.
Section 3.3. ADDITIONAL INDEMNIFICATION. Indemnification similar to that
specified in the preceding sections of this Article III (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will make the maximum contribution with
respect to any amounts for which it would otherwise be liable under this Article
III to the fullest extent permitted by law. However, (a) no contribution will be
make under circumstances where maker of such contribution would not have been
required to indemnify the indemnified party under the fault standards set forth
in this Article III, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation, and (c) contribution (together with
any indemnification obligations under this Agreement) by any seller of
Registrable Securities will be limited in amount of proceeds received by such
seller from the sale of such Registrable Securities.
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ARTICLE IV
MISCELLANEOUS
Section 4.1. NO OUTSTANDING REGISTRATION RIGHTS. Except as set forth on Schedule
4.03 of the Purchase Agreement or in the Commission Documents, the Company
represents and warrants to the Investor that there is not in effect on the date
hereof any agreement by the Company pursuant to which any holders of securities
of the Company have a right to cause the Company to register or qualify such
securities under the Securities Act or any securities or blue sky laws of any
jurisdiction.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at the earlier of (i) such time
that is two years following the termination of the Purchase Agreement or (ii)
such time as all Registrable Securities have been issued and have ceased to be
Registrable Securities. Notwithstanding the foregoing, Sections 1.1(c) and
1.1(d), Article III, Section 4.8, and Section 4.9 shall survive the termination
of this Agreement.
Section 4.3. RULE 144. The Company will, at its expense, promptly take such
action as holders of Registrable Securities may reasonably request to enable
such holders of Registrable Securities to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act ("Rule 144"), as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. If at any time the Company is not required to file
such reports, it will, at its expense, forthwith upon the written request of any
holder of Registrable Securities, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144 or such other information as necessary to permit sales pursuant to
Rule 144. Upon the request of the Investor (which request shall not be made more
than once per calendar quarter), the Company will deliver to the Investor a
written statement, signed by the Company's principal financial officer, as to
whether it has complied with such requirements.
Section 4.4. CERTIFICATE. The Company will, at its expense, forthwith upon the
request of any holder of Registrable Securities (which request shall not be made
more than once per calendar quarter), deliver to such holder a certificate,
signed by the Company's principal financial officer, stating (a) the Company's
name, address and telephone number (including area code), (b) the Company's
Internal Revenue Service identification number, (c) the Company's Commission
file number, (d) the number of shares of each class of Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this Agreement may be
waived, provided that such waiver is set forth in a writing executed by both
parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
9
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder of the
Registrable Securities (unless sold pursuant to an effective registration
statement or in accordance with Rule 144 under the Securities Act), provided
that the Company shall have the right to require any holder of Registrable
Securities to execute a counterpart of this Agreement as a condition to such
holder's claim to any rights hereunder. This Agreement, together with the
Purchase Agreement and the Warrant(s) 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.
Section 4.7. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party
hereto.
Section 4.8. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be given in
accordance with Section 12.04 of the Purchase Agreement.
Section 4.9. GOVERNING LAW. This Agreement shall be construed under the laws of
the State of New York.
Section 4.10. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
TEGAL CORPORATION
By: /s/ Thomas R. Mika
--------------------------------
Thomas R. Mika
Executive Vice President and Chief
Financial Officer
KINGSBRIDGE CAPITAL LIMITED
By: /s/ Valentine O'Donoghue
---------------------------------
Valentine O'Donoghue
Director