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Exhibit 10.22
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of December 20,
1996 between HIRSCH INTERNATIONAL CORP., a Delaware corporation (the "Company"),
and JIMMY L. YATES, residing at 3801 Hollow Creek Road, Fort Worth, Texas 76116
(the "Holder").
RECITALS
WHEREAS, the Holder has simultaneously herewith acquired One Hundred
Thirty-one Thousand Five Hundred Seven (131,507) shares (collectively, the
"Shares") of Common Stock (the "Common Stock") of the Company pursuant to a
certain Stock Purchase Agreement of even date herewith between the Company and
the Holder; and
WHEREAS, the Company has agreed to register the Shares on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein set forth, it is hereby agreed between the
Company and the Holder as follows:
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. Form S-3 and Form S-1 Registration Rights. On or before June
30, 1997, the Company shall file a registration statement on Form S-3 to permit
resale of the Registrable Securities of the Holder during the period of
effectiveness of such Form S-3 registration statement; provided, however, that
in the event that at the time of filing of such registration statement, the
Company is not eligible for use of Form S-3, then the Company shall file a
registration statement on Form S-1 rather than Form S-3. Any such registration
on Form S-3 or Form S-1 shall be subject to the following:
(a) The Company shall take all steps reasonably necessary to cause the
registration on Form S-3 or Form S-1 to become effective, and to remain
effective until December 20, 1997, or until all Shares have been distributed by
the Holder whichever first occurs. Holder shall promptly notify the Company at
such time as all of the Shares have been distributed.
(b) The Company shall not be required to effect more than one (1)
registration on either Form S-3 or Form S-1 pursuant to this Section 1.2;
(c) The Company shall not be required to prepare or effect any registration
pursuant to this Section 1.2 unless the Registrable Securities to be sold by the
Holder represents all of the total Registrable Securities;
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(d) The Company may include in such Form S-3 or Form S-1 registration
statements securities of other selling security holders, without limitation, and
securities offered for its own account;
...provided, however, any such inclusion shall not require the Holder to
immediately sell his Registrable Securities or to participate in any
underwriting, it being contemplated that the Holder may not immediately sell
Registrable Securities at the time of registration but instead will sell
Registrable Securities from time to time thereafter (i) on the NASDAQ National
Market, (ii) otherwise than on the NASDAQ National Market at market prices
prevailing at the time of sale or at negotiated prices, or (iii) by a
combination of the foregoing methods; and
(e) The Company hereby undertakes to use its best effort to meet the
criteria for use of Form S-3 at the earliest possible date and to continue to
qualify for such use until December 20, 1998.
Section 1.2. Expense of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Article I shall be borne by the Company. All Selling Expenses relating to
Registrable Securities by the Holder or other holders shall be borne by the
holders of such securities pro rata on the basis of the number of shares so
registered and to be sold by each.
Section 1.3. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Article I,
the Company will keep the Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will:
(a) Keep such registration, qualification or compliance effective until
December 20, 1997 or until the Holder has completed the distribution described
in the registration statement relating thereto, whichever first occurs.
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request, but only during
the period that the Company would be required to keep the registration
effective.
(c) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
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(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holder, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
(e) Notify the Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
Section 1.4. Indemnification. (a) The Company will indemnify the Holder
with respect to which registration, qualification or compliance has been
effected pursuant to this Article I, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will pay to such
Holder, each such underwriter and each person who controls any such underwriter,
as incurred, any legal and any other expenses reasonably incurred in connection
with investigating, preparing or defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein.
(b) The Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such holder, each of its officers, directors or partners and each person
controlling such holder within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages and liabilities (or actions in
respect thereof) including any of the foregoing incurred in settlement of any
litigation commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a
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material fact contained in any such registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, or any violation by the
Holder of any rule or regulation promulgated under the Securities Act applicable
solely to the Holder (which is not otherwise applicable to or violated by the
Company) and relating to action or inaction required solely of the Holder (and
not relating to or required of the Company) in connection with such
registration, qualification or compliance, and will pay to the Company, such
holders, such directors, officers, partners, persons, underwriters or control
persons, as incurred, any legal or any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document or any amendment or supplement thereto in reliance upon and in
conformity with written information which shall have been furnished to the
Company by such Holder; provided, however, that the obligations of such Holder
hereunder shall be limited to an amount equal to the net proceeds to such Holder
of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 1.4 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense, and provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Article I unless such failure resulted in actual
detriment to the Indemnifying Party. Notwithstanding the above, however, if
representation of one or more Indemnified Parties by the counsel retained by the
Indemnifying Party would be inappropriate due to actual conflicting interests
between such Indemnified Parties (the "Conflicting Indemnified Parties") and any
other party represented by such counsel in such proceeding, then such
Conflicting Indemnified Parties shall have the right to retain one separate
counsel, chosen by the holders of a majority of the Registrable Securities
included in the registration, at the expense of the Indemnifying Party. No
Indemnifying Party, (i) in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation, or (ii)
shall be liable for amounts paid in any settlement if such settlement is
effected without the consent of the Indemnifying Party.
Section 1.5. Information by Holder. The Holder of Registrable Securities
included in any registration shall furnish to the Company such information on
the distribution proposed by such
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Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Article I.
Section 1.6. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, the Company agrees to:
(a) Use its best efforts to make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act at
all times after the date hereof.
(b) Use its best efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act of 1934, as amended (at any time it is subject to
such reporting requirements).
(c) So long as the Holder owns any Restricted Securities, to furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public) and of the
Securities Act and the Securities Exchange Act of 1934 (at any time after it has
become subject to such reporting requirements) and a copy of the most recent
annual or quarterly report of the Company.
Section 1.7. Transfer of Registration Rights. The rights to cause the
Company to register securities granted under Article I may not be assigned
without the prior written consent of the Company in each instance, except
pursuant to will or the laws of descent and distribution. No transferee,
assignee or other person purporting to exercise rights under this Article I who
is not a signatory to this Agreement shall be entitled to do so unless and until
such person agrees to be bound by the terms of this Article I.
Section 1.8. "Market Stand Off" Agreement. The Holder hereby agrees that it
shall not, to the extent required by the Company and an underwriter of Common
Stock (or other securities) of the Company, sell or otherwise transfer or
dispose (other than to donees who agree to be similarly bound) of any
Registrable Securities during the ninety (90) day period following the effective
date of a registration statement of the Company filed under the Securities Act;
provided, however, that such agreement shall not apply to Registrable Securities
being registered and sold pursuant to such registration statement.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder until the end of such ninety (90) day period.
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ARTICLE II
MISCELLANEOUS
Section 2.1. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of New York.
Section 2.2. Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. No assignment of this
Agreement may be made by either party at any time, without the other party's
prior written consent.
Section 2.3. Entire Agreement; Amendment. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought
Section 2.4. Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
addressed (a) if to the Company, at 200 Wireless Boulevard, Hauppauge, New York
11788, Attention: General Counsel, or at such other address as the Company shall
have furnished to the Holder in writing and (b) if to the Holder, at such
address as is set forth on the signature page hereto, or at such other address
as the Holder shall have furnished to the Company in writing. Each such notice
or other communication shall for all purposes of this Agreement be treated as
effective or having been given when delivered if delivered personally, or, if
sent by mail, at the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and postage prepaid as aforesaid.
Section 2.5. Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to the Company
or the Holder upon any breach or default of any party under this Agreement,
shall impair any such right, power or remedy of the Company or such Holder nor
shall it be construed to be a waiver of any such breach or default, or any
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of the
Company or any Holder of any breach or default under this Agreement, or any
waiver on the part of any such party of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to the Company or the Holder, shall be
cumulative and not alternative.
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Section 2.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by only one of the parties hereto,
each of which shall be enforceable against the party actually executing such
counterpart, and all of which together shall constitute one instrument.
Section 2.7. 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 provisions; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 2.8. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 2.9. Definitions. As used in this Agreement, the following terms
have the meanings specified or referred to in this Section 2.9:
"Agreement" has the meaning specified in the first paragraph of this
Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Company" has the meaning specified in the first paragraph of this
Agreement.
"Form S-1 and Form S-3" shall mean such forms, as currently identified, for
registration of securities under the Securities Act, or any substantially
similar, equivalent or successor forms under the Securities Act.
"Holders" shall mean the persons named on the signature page hereof and any
permitted transferee of registration rights.
"Registrable Securities" means Shares which have not been sold to the
public, and shares of the Company's Common Stock issued with respect to the
Shares upon any stock split, stock dividend, recapitalization, or similar event,
which have not been sold to the public, which, in each case, are not eligible
for resale in reliance upon Rule 144 under the Securities Act.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Article I hereof, including, without limitation, all
registration, qualification, listing and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
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"Restricted Securities" shall mean any share certificate representing
Registrable Securities bearing a legend restricting further public distribution
thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale and all fees and disbursements of counsel for
any holder.
IN WITNESS WHEREOF, each of the undersigned has caused the foregoing
Agreement to be executed by one of its duly authorized officers as of the date
first above written.
HIRSCH INTERNATIONAL CORP.
By:_____________________________
Its:_______________________
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JIMMY L. YATES
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