EXHIBIT 10.30
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the 31st day of December, 2003 (the "Effective Date") between ▇▇▇▇▇▇,
Inc., a Delaware corporation (the "Company"), and the parties set forth on the
signature page and Exhibit A hereto (each, a "Purchaser" and collectively, the
"Purchasers").
R E C I T A L S:
A. The Purchasers have purchased shares of the Company's Common Stock (as
defined below) pursuant to Subscription Agreements (each, a "Subscription
Agreement" and collectively, the "Subscription Agreements") by and between the
Company and each Purchaser.
B. The Company and the Purchasers desire to set forth the registration
rights to be granted by the Company to the Purchasers.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth herein and in the Subscription
Agreements, the parties mutually agree as follows:
A G R E E M E N T:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Approved Market" means the OTC Bulletin Board, the Nasdaq National Market,
the Nasdaq SmallCap Market, the New York Stock Exchange, Inc., or the American
Stock Exchange, Inc.
"Business Day" means any day of the year, other than a Saturday, Sunday, or
other day on which the Commission is required or authorized to close.
"Closing Date" means December 31, 2003, or such other time as is mutually
agreed between the Company and the Purchasers for the closing of the sale
referred to in Recital A above.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.01 per share, of the
Company and any and all shares of capital stock or other equity securities of:
(i) the Company which are added to or exchanged or substituted for the Common
Stock by reason of the declaration of any stock dividend or stock split, the
issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
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laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Family Member" means (a) with respect to any individual, such individual's
spouse, any descendants (whether natural or adopted), any trust all of the
beneficial interests of which are owned by any of such individuals or by any of
such individuals together with any organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended, the estate of any such
individual, and any corporation, association, partnership or limited liability
company all of the equity interests of which are owned by those above described
individuals, trusts or organizations and (b) with respect to any trust, the
owners of the beneficial interests of such trust.
"Form S-2" means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the Commission, which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
"Holder" means each Purchaser, SMH, or any of such Purchaser's respective
successors and Permitted Assigns who acquire rights in accordance with this
Agreement with respect to the Registrable Securities directly or indirectly from
a Purchaser or SMH, including from any Permitted Assignee.
"Inspector" means any attorney, accountant, or other agent retained by a
Purchaser for the purposes provided in Section 4(j).
"Majority Holders" means at any time Holders of a majority of the
Registrable Securities.
"Offering Price" means the Offering Price set forth in the Placement Agent
Agreement dated December __, 2003, between the Company and SMH.
"Permitted Assignee" means (a) with respect to a partnership, its partners
or former partners in accordance with their partnership interests, (b) with
respect to a corporation, its shareholders in accordance with their interest in
the corporation, (c) with respect to a limited liability company, its members or
former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, or (f) a party to this Agreement.
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The terms "register," "registered," and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means shares of Common Stock issued to each
Purchaser pursuant to the Subscription Agreements or issued, excluding (i) any
Registrable Securities that have been publicly sold or may be sold immediately
without registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act.
"Registration Default Date" means the date which is 45 days following the
Closing Date; provided, however, (i) if the Registration Statement is subject to
review by the SEC staff, the Registration Default Date shall be the date which
is 120 days following the Closing Date; (ii) if the Registration Statement is
not subject to review by the SEC staff and the 120th day following the Closing
Date falls during an S-2 Blackout Period, the Registration Default Date shall be
the date immediately following the last day of such S-2 Blackout Period, (iii)
if the Registration Statement is subject to review by the SEC staff and the
Company is unable to file necessary pre-effective amendments to the Registration
Statement with the SEC because of an S-2 Blackout Period, the Registration
Default Date shall be extended by the number of calendar days that the Company
is unable to file any such pre-effective amendment during any such S-2 Blackout
Period that occurs prior to the end of the 120-day period, and (iv) if the
Registration Statement is subject to review by the SEC staff and the Company is
unable in the ordinary course of business to comply with Rule 3-12(b) of
Regulation S-X, the Registration Default Date shall be the date ten Business
Days following the date the Company files its Annual Report on Form 10-K for the
year ending December 31, 2003, but no later than April 14, 2004.
"Registration Default Period" means the period following the Registration
Default Date during which any Registration Event occurs and is continuing.
"Registration Event" means the occurrence of any of the following events:
(a) the Company fails to file with the SEC the Registration Statement
on or before the Registration Filing Date pursuant to Section 3(a),
(b) the Registration Statement covering Registrable Securities is not
declared effective by the Commission on or before the Registration Default
Date,
(c) after the SEC Effective Date, sales cannot be made pursuant to the
Registration Statement for any reason (including without limitation by
reason of a stop order, or the Company's failure to update the Registration
Statement) except as excused pursuant to Section 3(a) or for the reasons
specified in clause (d), or
(d) the Common Stock generally or the Registrable Securities
specifically are not listed or included for quotation on an Approved
Market, or trading of the Common Stock is suspended or halted on the
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Approved Market, which at the time constitutes the principal market for the
Common Stock, for more than two full, consecutive Trading Days; provided,
however, a Registration Event shall not be deemed to occur if all or
substantially all trading in equity securities (including the Common Stock)
is suspended or halted on the Approved Market for any length of time.
"Registration Statement" means the registration statement required to be
filed by the Company pursuant to Section 3(a).
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SEC Effective Date" means the date the Registration Statement is declared
effective by the Commission.
"S-2 Blackout Period" means, with respect to a registration, a period in
each case commencing on the day immediately after the Company notifies the
Purchasers and SMH that they are required, pursuant to Section 4(f), to suspend
offers and sales of Registrable Securities during which the Company, in the good
faith judgment of its Board of Directors, determines (because of the existence
of, or in anticipation of, any acquisition, financing activity, or other
transaction involving the Company, or the unavailability for reasons beyond the
Company's control of any required financial statements, disclosure of
information which is in its best interest not to publicly disclose, or any other
event or condition of similar significance to the Company) that the registration
and distribution of the Registrable Securities to be covered by such
registration statement, if any, would be seriously detrimental to the Company
and its shareholders and ending on the earlier of (1) the date upon which the
material non-public information commencing the S-2 Blackout Period is disclosed
to the public or ceases to be material and (2) such time as the Company notifies
the selling Holders that the Company will no longer delay such filing of the
Registration Statement, recommence taking steps to make such Registration
Statement effective, or allow sales pursuant to such Registration Statement to
resume; provided, however, that (a) the Company shall limit its use of S-2
Blackout Periods, in the aggregate, to 45 Trading Days in any 12-month period
and (b) no S-2 Blackout Period may commence sooner than 45 days after the end of
a prior S-2 Blackout Period.
"Trading Day" means a day on whichever (a) the national securities
exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in
any such case which at the time constitutes the principal securities market for
the Common Stock other than the OTC Bulletin Board, is open for general trading
of securities.
2. Term. This Agreement shall continue in full force and effect for a
period of two (2) years from the Effective Date, unless terminated sooner
hereunder.
3. Registration.
(a) Registration on Form S-2. As promptly as reasonably practicable
after the date hereof, but in any event not later than 30 days after the
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Closing Date (the "Registration Filing Date"), the Company shall file with
the Commission a shelf registration statement on Form S-2 relating to the
resale by the Holders of all of the Registrable Securities; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification, or compliance pursuant to this Section 3(a),
or keep such registration effective pursuant to Section 4: (i) in any
particular jurisdiction in which the Company would be required to qualify
to do business as a foreign corporation or as a dealer in securities under
the securities or blue sky laws of such jurisdiction or to execute a
general consent to service of process in effecting such registration,
qualification or compliance, in each case where it has not already done so;
or (ii) during any S-2 Blackout Period, in which case the Registration
Filing Date shall be extended to the date immediately following the last
day of such S-2 Blackout Period.
(b) Piggyback Registration. If the Company shall determine to register
for sale for cash any of its Common Stock, for its own account or for the
account of others (other than the Holders), other than (i) a registration
relating solely to employee benefit plans or securities issued or issuable
to employees, officers, directors, consultants (to the extent the
securities owned or to be owned by such consultants could be registered on
Form S-8) or any of their Family Members (including a registration on Form
S-8) or (ii) a registration relating solely to a Commission Rule 145
transaction, a registration on Form S-4 in connection with a merger,
acquisition, divestiture, reorganization, or similar event, the Company
may, or in the event that the Registration Statement has not been declared
effective by the Commission and the Registration Default Date has occurred,
the Company shall, promptly give to the Holders written notice thereof (and
in no event shall such notice be given less than 20 calendar days prior to
the filing of such registration statement), and, subject to Section 3(c),
include in such registration (and any related qualification under blue sky
laws or other compliance) (a "Piggyback Registration"), all of the
Registrable Securities specified in a written request or requests, made
within 10 calendar days after receipt of such written notice from the
Company, by any Holder or Holders. However, the Company may, without the
consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other shareholders have elected
to abandon the proposal to register the securities proposed to be
registered thereby.
(c) Underwriting. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders in writing or as a part of the written notice given pursuant to
Section 3(b). In such event the right of any Holder to registration
pursuant to Section 3(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other shareholders of
the Company distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company or selling
shareholders, as applicable. Notwithstanding any other provision of this
Section 3(c), if the underwriter or the Company determines that marketing
factors require a limitation of the number of shares to be underwritten,
the underwriter may exclude some or all Registrable Securities from such
registration and underwriting. The Company shall so advise all Holders
(except those Holders who failed to timely elect to distribute their
Registrable Securities through such underwriting or have indicated to the
Company their decision not to do so), and the number of shares of
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Registrable Securities that may be included in the registration and
underwriting, if any, shall be allocated among such Holders as follows:
(i) In the event of a Piggyback Registration that is initiated by
the Company, the number of shares that may be included in the
registration and underwriting shall be allocated first to the Company
and then, subject to obligations and commitments existing as of the
date hereof, to all selling shareholders, including the Holders, who
have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and
(ii) In the event of a Piggyback Registration that is initiated
by the exercise of demand registration rights by a shareholder or
shareholders of the Company (other than the Holders), then the number
of shares that may be included in the registration and underwriting
shall be allocated first to such selling shareholders who exercised
such demand and then, subject to obligations and commitments existing
as of the date hereof, to all other selling shareholders, including
the Holders, who have requested to sell in the registration, on a pro
rata basis according to the number of shares requested to be included.
No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such
registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from
such registration; provided, however, that, if by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by
other Holders may be included in such registration (up to the maximum of
any limitation imposed by the underwriters), then the Company shall offer
to all Holders who have included Registrable Securities in the registration
the right to include additional Registrable Securities pursuant to the
terms and limitations set forth herein in the same proportion used above in
determining the underwriter limitation.
(e) Other Registrations. Prior to the SEC Effective Date the Company
will not, without the prior written consent of the Majority Holders, file
or request the acceleration of any other registration statement filed with
the Commission, and during any time subsequent to the SEC Effective Date
when the Registration Statement for any reason is not available for use by
any Holder for the resale of any Registrable Securities, the Company shall
not, without the prior written consent of the Majority Holders, file any
other registration statement or any amendment thereto with the Commission
under the Securities Act or request the acceleration of the effectiveness
of any other registration statement previously filed with the Commission,
other than (A) any registration statement on Form S-8 or Form S-4, (B) any
registration statement or amendment which the Company is required to file
or as to which the Company is required to request acceleration pursuant to
any obligation in effect on the date of execution and delivery of this
Agreement and (C) any registration statement or amendment which the Company
is required to file, in the reasonable judgment of counsel to the Company,
to make the Registration Statement available for use by Holders for the
resale of Registrable Securities.
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(f) Failure to File Registration Statement. If a Registration Event
occurs, then the Company will make payments to each Purchaser, as
liquidated damages to the Purchaser by reason thereof, and not as a
penalty, at a rate equal to one percent (1%) of the Offering Price per
share of Common Stock held by such Purchaser per month, for each calendar
month of the Registration Default Period (pro rated for any period less
than 30 days); provided, however, if a Registration Event occurs (or is
continuing) on a date more than one-year after the Purchaser acquired the
Registrable Securities (and thus the one-year holding period under Rule
144(d) has elapsed), liquidated damages shall be paid only with respect to
that portion of a Purchaser's Registrable Securities that cannot then be
immediately resold in reliance on Rule 144. Each such payment shall be due
and payable within five days after the end of each calendar month of the
Registration Default Period until the termination of the Registration
Default Period and within five days after such termination. Such payments
shall constitute the Purchaser's exclusive remedy at law, but not in
equity, for such events. The Registration Default Period shall terminate
upon (i) the filing of the Registration Statement in the case of clause (a)
of the definition of "Registration Event," (ii) the SEC Effective Date in
the case of clause (b) of the definition of "Registration Event," (iii) the
ability of the Purchaser to effect sales pursuant to the Registration
Statement in the case of clause (c) of the definition of "Registration
Event," (iv) the listing or inclusion and/or trading of the Common Stock on
an Approved Market, as the case may be, in the case of clause (d) of the
definition of "Registration Event," and (v) in the case of the events
described in clauses (b) and (c) of the definition of "Registration Event,"
the earlier termination of the Registration Default Period. The amounts
payable as partial liquidated damages pursuant to this paragraph shall be
payable in lawful money of the United States. Amounts payable as partial
liquidated damages to each Purchaser hereunder with respect to each share
of Registrable Securities shall cease when the Purchaser no longer holds
such share of Registrable Securities or such share of Registrable
Securities can be immediately sold by the Purchaser in reliance on Rule
144.
4. Registration Procedures. In the case of each registration,
qualification, or compliance effected by the Company pursuant to Section 3
hereof, the Company will keep each Holder including securities therein
reasonably advised in writing (which may include e-mail) as to the initiation of
each registration, qualification, and compliance and as to the completion
thereof. At its expense with respect to any registration statement filed
pursuant to Section 3, the Company will:
(a) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form S-2 or any other
form for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of
the Registrable Securities in accordance with the intended method(s) of
distribution thereof, and use its commercially reasonable efforts to cause
such registration statement to become and remain effective at least for a
period ending with the first to occur of (i) the sale of all Registrable
Securities covered by the registration statement, (ii) the availability
under Rule 144 for the Holder to immediately, freely resell without
restriction all Registrable Securities covered by the registration
statement, and (iii) one year after a registration statement filed pursuant
to Section 3(a) is declared effective by the Commission (in either case,
the "Effectiveness Period"); provided, however, if at the end of such
one-year period, any Holder is not able to immediately, freely resell all
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Registrable Securities that it owns, the Effectiveness Period shall
continue until terminated pursuant to clause (i) or (ii); and not later
than two business days before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the
Company shall (i) furnish to each Holder a copy of the "Plan of
Distribution" and "Selling Shareholder" portions of the registration
statement and the other portions of such documents proposed to be filed
that the Company considers not to contain material, non-public information
(excluding any exhibits other than applicable underwriting documents), in
substantially the form proposed to be filed and (ii) notify each Holder of
Registrable Securities covered by such registration statement of any stop
order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered;
(b) if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue
resolution of any comments to the satisfaction of the Commission;
(c) prepare and file with the Commission 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 during the Effectiveness Period (but in any event at
least until expiration of the 90-day period referred to in Section 4(3) of
the Securities Act and Rule 174, or any successor thereto, thereunder, if
applicable), and 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 method(s) of
disposition by the sellers thereof set forth in such registration
statement;
(d) furnish, without charge, to each Holder of Registrable Securities
covered by such registration statement (i) a reasonable number of copies of
such registration statement (including any exhibits thereto other than
exhibits incorporated by reference), each amendment and supplement thereto
as such Holder may request, (ii) such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any other prospectus filed under Rule 424 under the
Securities Act) as such Holders may request, in conformity with the
requirements of the Securities Act, and (iii) such other documents as such
Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder, but only during the
Effectiveness Period;
(e) use its commercially reasonable best efforts to register or
qualify such Registrable Securities under such other applicable securities
or blue sky laws of such jurisdictions as any Holder of Registrable
Securities covered by such registration statement reasonably requests as
may be necessary for the marketability of the Registrable Securities (such
request to be made by the time the applicable registration statement is
deemed effective by the Commission) and do any and all other acts and
things which may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder; provided that the Company shall 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 paragraph (e),
(ii) subject itself to taxation in any such jurisdiction, or (iii) consent
to general service of process in any such jurisdiction;
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(f) as promptly as practicable after becoming aware of such event,
notify each Holder 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 which comes to the Company's
attention if as a result of such event the prospectus included in such
registration statement contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading and the Company shall
promptly prepare and furnish to such Holder a supplement or amendment to
such prospectus (or prepare and file appropriate reports under the Exchange
Act) so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, unless
suspension of the use of such prospectus otherwise is authorized herein or
in the event of an S-2 Blackout Period, in which case no supplement or
amendment need be furnished (or Exchange Act filing made) until the
termination of such suspension or S-2 Blackout Period;
(g) comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all
material respects with the Securities Act and the Exchange Act and with all
applicable rules and regulations of the Commission with respect to the
disposition of all securities covered by such registration statement;
(h) as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities being offered or sold pursuant
to the Registration Statement of the issuance by the Commission of any stop
order or other suspension of effectiveness of the Registration Statement at
the earliest possible time;
(i) permit the Holders of Registrable Securities being included in the
Registration Statement and their legal counsel, at such Holders' sole cost
and expense (except as otherwise specifically provided in Section 6) to
review and have a reasonable opportunity to comment on the Registration
Statement and all amendments and supplements thereto at least two Business
Days prior to their filing with the Commission and shall not file any such
document to which the Majority Holders reasonably object;
(j) make available for inspection by any Holder and any Inspector
retained by such Holder, at such Holder's sole expense, all Records as
shall be reasonably necessary to enable such Holder to exercise its due
diligence responsibility, and cause the Company's officers, directors, and
employees to supply all information which such Holder or any Inspector may
reasonably request for purposes of such due diligence; provided, however,
that such Holder shall hold in confidence and shall not make any disclosure
of any record or other information which the Company determines in good
faith to be confidential, and of which determination such Holder is so
notified at the time such Holder receives such information, unless (i) the
disclosure of such record is necessary to avoid or correct a misstatement
or omission in the Registration Statement and a reasonable time prior to
such disclosure the Holder shall have informed the Company of the need to
so correct such misstatement or omission and the Company shall have failed
to correct such misstatement of omission, (ii) the release of such record
is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or (iii) the information in
such record has been made generally available to the public other than by
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disclosure in violation of this or any other agreement. The Company shall
not be required to disclose any confidential information in such records to
any Inspector until and unless such Inspector shall have entered into a
confidentiality agreement with the Company with respect thereto,
substantially in the form of this Section 4(j), which agreement shall
permit such Inspector to disclose records to the Holder who has retained
such Inspector. Each Holder agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, the records deemed confidential. The Company shall hold in
confidence and shall not make any disclosure of information concerning a
Holder provided to the Company pursuant to this Agreement unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) disclosure of such information to the Staff of the
Division of Corporation Finance is necessary to respond to comments raised
by the Staff in its review of the Registration Statement, (iii) disclosure
of such information is necessary to avoid or correct a misstatement or
omission in the Registration Statement, (iv) release of such information is
ordered pursuant to a subpoena or other order from a court or governmental
body of competent jurisdiction, or (v) such information has been made
generally available to the public other than by disclosure in violation of
this or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning a Holder is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to such Holder and allow such Holder, at
such Holder's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information;
(k) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the OTC Bulletin
Board or such other principal securities market on which securities of the
same class or series issued by the Company are then listed or traded;
(l) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(m) cooperate with the Holders of Registrable Securities being offered
pursuant to the Registration Statement to issue and deliver certificates
(not bearing any restrictive legends) representing Registrable Securities
to be offered pursuant to the Registration Statement within five Trading
Days after delivery of certificates to the Company and enable such
certificates to be in such denominations or amounts as the Holders may
reasonably request and registered in such names as the Holders may request;
(n) during the Effectiveness Period, refrain from bidding for or
purchasing any Common Stock or any right to purchase Common Stock or
attempting to induce any Person to purchase any such security or right if
such bid, purchase or attempt would in any way limit the right of the
Holders to sell Registrable Securities by reason of the limitations set
forth in Regulation M under the 1934 Act; and
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(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.
5. Suspension of Offers and Sales. Each Holder of Registrable Securities
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 4(f) hereof or of the commencement of an
S-2 Blackout Period, such Holder shall discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(f) hereof or notice of the end of
the S-2 Blackout Period, and, if so directed by the Company, such Holder shall
deliver to the Company (at the Company's expense) all copies (including, without
limitation, any and all drafts), other than permanent file copies, then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in Section 4(a)(iii) hereof shall be
extended by the greater of (i) ten business days or (ii) the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 4(f) hereof to and including the date when each Holder of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 4(f) hereof.
6. Registration Expenses. The Company shall pay all expenses in connection
with any registration, including, without limitation, all registration, filing,
stock exchange fees, printing expenses, all fees and expenses of complying with
securities or blue sky laws, and the fees and disbursements of counsel for the
Company and of its independent accountants; provided that, in any underwritten
registration, each party shall pay for its own underwriting discounts and
commissions and transfer taxes. Except as provided in Section 9, the Company
shall not be responsible for the expenses of any attorney or other advisor
employed by a Holder of Registrable Securities.
7. Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected prior to the Effectiveness Date and in accordance with
applicable securities laws; (b) such transferee or assignee agrees in writing to
become subject to the terms of this Agreement; and (c) the Company is given
written notice by such Holder of such transfer or assignment, stating the name
and address of the transferee or assignee and identifying the Registrable
Securities with respect to which such rights are being transferred or assigned.
8. Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing.
11
9. Indemnification.
(a) In the event of the offer and sale of Registrable Securities held
by Holders under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder, its directors, officers, partners, each other person who
participates as an underwriter in the offering or sale of such securities,
and each other person, if any, who controls or is under common control with
such Holder or any such underwriter within the meaning of Section 15 of the
Securities Act, or Section 20 of the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, and expenses to which the
Holder or any such director, officer, partner or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
shares were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they
were made not misleading, and the Company shall reimburse the Holder, and
each such director, officer, partner, underwriter and controlling person
for any legal or any other expenses reasonably incurred by them in
connection with investigating, defending or settling any such loss, claim,
damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by or on behalf of such Holder specifically stating that it is for
use in the preparation thereof or (ii) if the person asserting any such
loss, claim, damage, liability (or action or proceeding in respect thereof)
who purchased the Registrable Securities that are the subject thereof did
not receive a copy of an amended preliminary prospectus or the final
prospectus (or the final prospectus as amended or supplemented) at or prior
to the written confirmation of the sale of such Registrable Securities to
such person because of the failure of such Holder or underwriter to so
provide such amended preliminary or final prospectus and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact made in such preliminary prospectus was corrected in the
amended preliminary or final prospectus (or the final prospectus as amended
or supplemented). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holders, or any
such director, officer, partner, underwriter or controlling person and
shall survive the transfer of such shares by the Holder.
(b) As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to this
Agreement, each such Holder agrees to be bound by the terms of this Section
9 and to indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its directors and officers, and each other person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Company or any such director or officer or
12
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information about such
Holder as a Holder of the Company furnished to the Company, and such Holder
shall reimburse the Company, and each such director, officer, and
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating, defending, or settling and such
loss, claim, damage, liability, action, or proceeding; provided, however,
that such indemnity agreement found in this Section 9(b) shall in no event
exceed the gross proceeds from the offering received by such Holder. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer by any Holder
of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 9(a) or (b) hereof (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the indemnifying
party of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 9(a) or (b) hereof,
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses
not available to the indemnifying party in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof, unless in such indemnified party's reasonable judgment a conflict
of interest between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defenses thereof or the
indemnifying party fails to defend such claim in a diligent manner, other
than reasonable costs of investigation. Neither an indemnified nor an
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its consent. No indemnifying party shall,
without the consent of the 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 of such claim
or litigation. Notwithstanding anything to the contrary set forth herein,
and without limiting any of the rights set forth above, in any event any
party shall have the right to retain, at its own expense, counsel with
respect to the defense of a claim.
(d) In the event that an indemnifying party does or is not permitted
to assume the defense of an action pursuant to Section 9(c) or in the case
13
of the expense reimbursement obligation set forth in Section 9(a) and (b),
the indemnification required by Section 9(a) and (b) hereof shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills received or expenses, losses,
damages, or liabilities are incurred.
(e) If the indemnification provided for in this Section 9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall (i) contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or
expense as is appropriate to reflect the proportionate relative fault of
the indemnifying party on the one hand and the indemnified party on the
other (determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission relates to
information supplied by the indemnifying party or the indemnified party and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, not only the proportionate relative fault of
the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the
indemnified party on the other, as well as any other relevant equitable
considerations. No indemnified party guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any indemnifying party who was not guilty of
such fraudulent misrepresentation.
(f) Other Indemnification. Indemnification similar to that specified
in the preceding subsections of this Section 9 (with appropriate
modifications) shall be given by the Company and each Holder of Registrable
Securities with respect to any required registration or other qualification
of securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
10. Rule 144. For a period of at least 24 months following the Closing
Date, the Company will use its commercially reasonable best efforts (a) to
timely file all reports required to be filed by the Company after the date
hereof under the Securities Act and the Exchange Act (including the reports
pursuant to Section 13(a) or 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144) and the rules and regulations adopted by the
Commission thereunder), (b) if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell shares of Common Stock under Rule 144, and
(c) to take such further action as any Purchaser may reasonably request, all to
the extent required from time to time to enable the Purchasers to sell shares of
Common Stock without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144, including causing its attorneys to issue
and deliver any appropriate legal opinion required to permit a Purchaser to sell
shares of Common Stock under Rule 144 upon receipt of appropriate documentation
relating to such sale.
14
11. Independent Nature of Each Purchaser's Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to purchase
Common Stock and enter into this Agreement has been made by each Purchaser
independently of any other Purchaser. Nothing contained herein and no action
taken by any Purchaser pursuant hereto, shall be deemed to constitute such
Purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser acknowledges that no other
Purchaser has acted as agent for the Purchaser in connection with making its
investment in Common Stock and that no other Purchaser will be acting as agent
of the Purchaser in connection with monitoring its investment in the Common
Stock or enforcing its rights under this Agreement. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
12. Miscellaneous
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and the United States
of America, both substantive and remedial. Any judicial proceeding brought
against either of the parties to this agreement or any dispute arising out
of this Agreement or any matter related hereto shall be brought in the
courts of the State of Rhode Island, Providence County, or in the United
States District Court for the District of Rhode Island and, by its
execution and delivery of this agreement, each party to this Agreement
accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any person other than
the parties to this Agreement.
(b) Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, Permitted Assigns, executors and administrators of the parties
hereto. In the event the Company merges with, or is otherwise acquired by,
a direct or indirect subsidiary of a publicly traded company, the Company
shall condition the merger or acquisition on the assumption by such parent
company of the Company's obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
(d) Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and
sufficient if delivered by hand, by facsimile transmission, by registered
or certified mail, postage pre-paid, by electronic mail, or by courier or
overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
15
If to the Company: ▇▇▇▇▇▇, Inc.
400 Massasoit Avenue, Suite 200
East Providence, Rhode Island 02914-2020
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
------------------
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇@▇▇▇.▇▇▇
If to the Purchasers: To each Purchaser at the address
set forth on Exhibit A
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: ( ▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
or at such other address as any party shall have furnished to the other parties
in writing.
(e) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Holder of any Registrable Securities, upon
any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be
a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereunder 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 any Holder of
any breach or default under this Agreement, or any waiver on the part of
any Holder 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 any holder, shall be cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(g) Severability. In the case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
16
(h) Amendments. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by
the Company and by the holders of an 80% majority of the number of shares
of Registrable Securities outstanding as of the date of such amendment or
waiver. The Purchasers acknowledge that by the operation of this Section
12(h), the holders of an 80% majority of the outstanding Registrable
Securities may have the right and power to diminish or eliminate all rights
of the Purchasers under this Agreement.
(i) Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written consent of
the Holders of at least a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder
of any securities of the Company that would grant such holder registration
rights senior to those granted to the Holders hereunder.
[Signatures on following page]
17
This Registration Rights Agreement is hereby executed as of the date first
above written.
COMPANY:
▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Chief Financial Officer
PURCHASERS:
The Purchasers listed on Exhibit A attached hereto
BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.,
AGENT AND ATTORNEY-IN-FACT
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Executive Officer
The Purchasers listed on Exhibit B attached hereto
BY: ▇▇▇▇▇▇▇ & COMPANY, INC.,
AGENT AND ATTORNEY-IN-FACT
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
Its: Vice President and Managing Director
18